By Alan Irwin, Senior Director of Product at Global Payments
In the last year, retailers, merchants and customers alike have had to come to terms with adapting to new payment methods and branching out more and more from traditional methods such as cash and even card payments. After initially being shaken by the pandemic in 2020, the payments space adapted to challenges in face-to-face payments such as social distancing with renewed determination in 2021, and even took on fresh adversaries with advancements in cybercrime. What’s more, new payment models saw unprecedented growth, such as QR codes and Buy Now Pay Later (BNPL) as Klarna challengers such as Zilch and a host of digital banks bolstered their offerings in an attempt to steal a slice of the BNPL pie. Additionally, retailers such as Amazon and Tesco took huge strides forwards in the UK market with NFC payments as they opened their first checkout-free trial stores.
This growth and advancement within the payments space has shown no sign of tiring as we launch into 2022, and there is no doubt that in a year’s time, we will look back at another year of astonishing accomplishments. However, in my opinion, there are 3 principal areas in payments that are worth keeping an even closer eye on.
The SCA deadline draws near
As the 14 March deadline looms, we can safely bet that Strong Customer Authentication (SCA) will present the biggest talking point for the payments industry next year. Acquirers and issuers alike are continuing to find their feet with compliance – and while SCA is often seen as a pain point, many merchants who have embraced it are already enjoying the benefits. This could be speedier two-factor authentication for their customers, or increased challenge and liability control.
However, 2022 will signal the year in which all non-exempt merchants need to make the move. In particular, we’ll see more opting to apply real-time Transaction Risk Analysis and Exemption Optimisation solutions so they can flag to issuers when they are comfortable taking the liability on certain types of transactions and therefore control when they do (or don’t) want to influence frictionless payment experiences. In short, trading potential chargeback exposure for a seamless customer checkout experience.
A boost in loyalty plays
We are starting to see big steps towards unified omnichannel commerce, and this is an area where consumers will enjoy huge benefits in 2022. Increasingly, they will see examples of different payments made (these could be card, PayPal, or Open Banking transactions) being tied back to their single account with recognition and rewards delivered for these purchases, such as loyalty points. We have already seen Starbucks do this with QR code payments on their app, for example. Loyalty and engagement plays, both digital and in-store, give providers the ability to track omnichannel activities of their customers. Similarly, most digital shoppers and app-users will have experienced some kind of gamified shopping experience, such as collecting 10 coffee stamps or sampling all beers within an IPA range, resulting in spendable tokens. This approach will only continue in 2022 as brands tweak their loyalty programmes, providing maximum value to customers as they ramp up focus on retention after a tough couple of years.
POS terminals go to the next level
The shift away from traditional, proprietary, restricted hardware and software – payment terminals with small screens and manual buttons – to Android-based POS terminals will not only ramp up throughout 2022, but will also bring new customer checkout experiences with it. These terminals have large touchscreens, similar to tablets, opening up opportunities to introduce new payment options both in store and digitally (e.g. PayLink). They can display QR codes for Alipay or WeChat Pay, own-brand loyalty apps, BNPL options or even Open Banking, whilst still offering contactless payments via digital wallets or cards. As merchants look to roll out new terminals, it will also be an opportunity to reassess the payment methods they accept in an effort to reach new customer segments and open up potential new revenue streams.
New year, new innovations!
In essence, in a year’s time merchants will be able to provide a diversified payment experience using familiar features like QR codes and POS terminals. Advancements in payments technology and the integration of new services will make checkout journeys vastly smoother, faster and more secure for both sides of every transaction. From new gamified rewards initiatives and faster two-factor authentication services, to increased control over transaction liability, or even paying your bills via QR code, both retailers and consumers stand to benefit from another record year of payments innovations.