Communication between devices – dubbed ‘the Internet of Things’ – will be ‘game changing’ for the payments industry, according to Visa’s innovation director Jonathan Vaux. (See also: What is the Internet of Things?)
The fact a growing number of devices in our homes are connected not just to the internet but also to each other could offer huge potential, Vaux told Techworld.
“Will I be able to press a ‘pay’ button to buy something when I’m in the middle of a game? Or buy something through my TV when I see it advertised?” he asks.
The use of personal devices (as opposed to cash or cards) not just to pay but to be paid yourself will become “increasingly prevalent”, Vaux adds.
Too early to say ‘cash is dead’
The area of greatest opportunity for mobile payments is in displacing cash – for example paying money to friends, in fast food restaurants, or paying a gardener or cleaner, he says.
Visa is currently exploring whether it could use social networking to create private payment networks that allow you to make frequent, quick transactions to friends and family, according to Vaux.
“There is a big difference psychologically between paying someone you trust and know and paying someone a long distance away,” he adds.
However Vaux refuses to join the legions of techies eagerly predicting the ‘death of cash’.
“I don’t think you can underestimate that fallback safety procedure of having some cash in your pocket, as the payment method of last record. It’s very dangerous to pronounce something is dead,” he says
However, he adds: “A lot of the features people use cash for, like control, budgeting and so on, will become a lot easier. Also merchants increasingly won’t want to take cash payments, just as no one wants to get cheques anymore.”
New tech should make payments ‘as quick and easy as possible’
As the UK’s enthusiastic adoption of contactless cards (103 million transactions in September, up 16 percent on the previous month) shows, there’s demand for any new tech that makes customers’ ‘payment experiences’ and sales as quick and easy as possible, according to Vaux.
“If I’m going to get a sandwich at lunchtime speed is very important – likewise paying for a journey on TfL. That’s where contactless cards are so useful. If I’m buying clothes or white goods, it doesn’t matter so much,” he says.
The payments landscape is becoming increasingly fragmented and moving away from a ‘one size fits all’ approach, he adds.
Visa is increasingly plugging into “part of a wider number of user journeys”, integrating into a wider ecosystem rather than as a standalone company – see Apple Pay for example, he says.
Integrating mobile cash into cars
The next frontier could be integrating payments into cars, something Visa started testing this year, according to Vaux.
“In this era of the ‘connected car’ you will see apps on your dashboard, which will link to both payments and functionalities within the car. So if you’re getting petrol or going to a drive-through restaurant, that will make it a much more frictionless experience,” he explains.
Startups could be a 'threat’
Many of these new technologies are of course being developed by startups such as Stripe, a web and mobile payments firm launched just four years ago. Visa invested an undisclosed sum in July 2015.
Vaux admits startups can be a threat, especially to companies that don’t keep an eye on ensuring top quality customer experience.
“If people are designing a very good customer experience and your service is a hindrance to that experience, they’ll find another way to pay. But if you can integrate with them, great – they [startups] can present a real opportunity,” he says.
Rather than buying up startups, an approach favoured by some of the big tech giants, Visa is focusing on investing in them and working with them, according to Vaux.
As well as Stripe, Visa is also working with an (unnamed) startup working in the area of identity and biometrics, he says.
“We are not looking to become a biometrics vendor. But we want to better understand that technology, provide a standard so people know our services are safe and work, and perhaps find some tech we could incorporate into our services,” Vaux explains.
‘We’ve always been a network’
In the area of identity, a team within Visa is also currently investigating the potential use of blockchain technology for document transmission ID, he adds.
“Visa is very light footed, and we’ve always been a connected network since we began. We try to be inclusive and incorporate best of breed stuff into our ecosystem. We always keep an eye out for those sorts of tech that will drive a better customer experience,” Vaux says.
Many of these may not be obviously applicable to payments at first, he says – for example geolocation tech like Google Maps, he says.
“What I’m thinking about is how you can integrate payments into different experiences – be it apps, rewards, coupons, maps – there are so many different environments in which you could potentially make payments,” Vaux adds.