We’re kicking off 2018 by taking a look at Visa’s recent report on the state of payments. For the last three years, Visa has released an annual “Innovations for a Cashless World” report, which examines the state of payments, fintech, and our ongoing shift towards a digital-first market. The report is based out of Visa’s Future of Payments study, which surveys thousands of people and organizations across 16 different countries. Below are the five key points that Visa’s report arrived at after surveying 2017’s data.
1. “From Card to Cloud”
One of the biggest concepts found in the Visa report is a shift in how we think of payments as a whole. Since the very first credit card, consumers, business owners, banks, and more have all referred to the owner of the card as the “cardholder.” We identify people in transactions by their card; cardholder, card number, etc. However, in a world hurting towards mobile-first payments, this concept of a cardholder is now obsolete. The way we pay is changing. Any given “cardholder” could now be identified by the tokens they are represented by in online transactions or by the mobile wallets they use just as easily as by their card.
Shiv Singh, Visa’s Senior Vice President of Innovation, explained in an interview with PYMTS exactly why this shift matters. “We are seeing an evolution where it is less about where Visa cards are accepted, but rather how they are accepted,” said Singh. “That might mean QR codes, or mobile accounts, or even cards – but the consumer isn’t just thinking so much about the card, but about how their secure, digitized, cloud-based account profile can be used.”
Our payments identities are no longer confined to the little pieces of plastic we carry, but rather the all-encompassing accounts that those cards represent. The shift towards using mobile pay, increased online shopping, and in-app ordering for everything from takeout to rides to dog-walking means that our payment identities are increasingly cloud-based rather than wholly tied to our cards.
2. “Everything as a Point of Sale”
The POS as we’ve long known it is no more. The rise of mobile payments in numerous industries means that anyone anywhere can accept payments. When you get a ride with Uber or Lyft, there is no cash register or card reader involved, and yet both customer and driver are able to pay and be paid respectively, without a POS system in sight.
Even in traditional retail or brick-and-mortar settings, businesses are demanding more and more from their POS setups. They no longer exist in a bubble of accepting and processing payments. The modern “POS” now operates more like an all-in-one reporting system. Many business owners forgo traditional POS setups entirely, opting for mobile card readers attached to phones or tablets to allow increased mobility to be where the customers are. This has been a rapid shift within the last 5 years, and there are no signs of it slowing as we head into the new year.
3. “Paying in Messaging Platforms”
Just as everything has become a POS for businesses, payments between individuals has sped up exponentially via mobile payments in recent years. The rise in popularity of P2P apps like Venmo have made clear that the modern consumer wants to be able to send money to whomever they want, whenever they want, as quickly and easily as possible.
As P2P apps have grown, the social elements of payments have also become increasingly important. Venmo integrates with both your phone contacts and Facebook friends and features a Facebook-esque home “feed.” This social importance means that payments via messaging are not just a logical next step but a natural fit for the modern consumer. As Visa’s report states: “A messaging app is a natural fit with e-commerce: It’s personalized. It has your contacts. By leveraging social data, it can provide rich context and recommendations.” Social payments are the obvious next step in the world of transactions.
4. “Transactions without Borders”
Discussion of blockchains has flourished recently with the explosive ride Bitcoin has been on in recent months. Visa details the basic principles of this technology, describing “a shared, networked digital ledger, also known as a blockchain,” that can “record transactions as they occur.” The transaction data is then “shared but not copied, making it a useful platform for new kinds of currencies and payments.”
In his interview with PYMTS, Shiv Singh also discussed his belief that distributed ledger technology will be of increasing importance in the next few years, with “most of Visa’s clients keen to better understand the potential of the blockchain, whether it is to tackle B2B cross-border payments or to better manage data and contracts.”
Singh noted that the blockchain ecosystem is growing rapidly “across many industries outside of financial services, a number of compelling use cases are emerging, with shipping and logistics topping the list.”
Given the power and wide-spread potential for this technology, Singh believes that it is “an area to which anyone in the payments and commerce industry must pay immense attention.”
5. “The API Economy”
APIs, or application programming interfaces, are connective tissue of today’s digital-centric world. Visa calls them “the standard by which companies exchange data and build smart, seamless, omni-channel experiences customers demand.” The API Economy allows numerous companies to each focus in and perfect a small piece of a much larger picture, rather than trying to paint the whole picture themselves.
Within the payments world, APIs are especially useful as they allow for greater innovation. Focusing in on specific consumer or merchant issues means that every step of the process is highly investigated, tested, and vetted to ensure a seamless final experience for all participants.
Visa’s report reflects the overall trends that drive everything we do here at Pineapple Payments. The payments industry is rapidly evolving. The way we view money as a whole is changing and merchants need to be equipped to handle this ever-shifting standard. Which is why we believe in providing customized solutions to keep you ahead of whatever the market throws your way! Contact us today to learn more about how Pineapple can help you thrive in this changing payments landscape.