Pete Bettles, Chief Operating Officer at Global Payments UK&I
Often in the most economically uncertain times, great innovations are born. While market volatility in the UK reigned in 2018, and is likely to continue into 2019 as Brexit decisions come to a critical turning point, the upside for the year ahead will likely be the next generation of innovations that will set the pace and direction of change for the next 10 years.
Like a star athlete whose sheer talent and charisma seems to change the behavior of all the players on the other team, digital giants like Alibaba, Tencent, Apple, Google and Amazon are changing the behavior of the many industries where they choose to compete. Furthermore, they’re working to reset consumer expectations around what a great shopping experience enabled through technology needs to look like.
In 2019, businesses of all sizes will need to constantly evaluate how they adapt to ever-changing consumer expectations and adopt new technologies that eliminate the lines of distinction between online and offline.
Welcome to global commerce in 2019, where unified experiences are now the absolute minimum.
Mobile payments “evolution” becomes “revolution”
The decline of cash usage is no secret. In the UK alone, notes and coins are set to fall to just 21% of sales by 2026. While cards are a mainstay of most consumers’ purses and wallets, with debit cards set to overtake cash as the most frequently used payment method in the UK this year, mobile payments are seeing a slow and steady increase in adoption. Contactless payments such as Google Pay and Apple Pay are growing globally at a compound annual growth rate of nearly 31%.
This ‘tap and pay’ mentality has also meant that while mobile payments are becoming a major way in which to pay for goods and services, the contactless card remains a dominant method of payment – the most recent statistics show that in April 2017 alone, £3.9 billion was spent in the UK via this method. As this simple behavior is exercised,repeated and becomes preferred, whether that’s contactless cards or mobile payments, the trend toward faster, more secure and more frictionless commerce will continue to accelerate.
Chinese e-wallet models signal a tech shift for developed markets
In the UK, only about 24% of consumers have used a mobile wallet. In China, by contrast, the number of e-wallet users jumps to 47% percent. WeChat and Alipay have demonstrated the power that’s possible when a mobile device combines commerce and messaging functions to create a single, unified experience for consumers.
This year we’ll see a stronger uptick in the adoption of alternative payment methods in developed markets like Canada, the US and the UK as the wallets from Alipay and WeChat look to expand.One of the primary reasons? The rollout of Rich Communication Services (RCS) and other improved protocols to markets around the world, starting in 2019.
RCS will take texting to the next level, enabling more engaging interactions than SMS with full multimedia support. Over 50 operators, 12 OEMs, Google and Microsoft currently, or will soon, support the protocol; and the rich, conversational interactions that RCS supports will drive considerable focus and investment in 2019. While there is still a question of how rapidly the market will evolve,businesses will soon have an additional platform through which to engage with customers.
PSD2 making way for alternative payment methods
PSD2 may have been implemented at the beginning of 2018, and while it could appear as though little change has occurred as of yet, what’s been going on in the background has the potential to drastically alter how people to choose to pay in the EU. For example, we’re already starting to seethe likes of Trustly and iDeal gain momentum, defined in PSD2 as Payment Initiation Service Providers (PISPs), which allow consumers to pay using their online banking tool rather than with a credit or debit card. While in the UK cards are still typically king, as mobile wallet providers look to expand, familiarity of alternative payment methods will continue to rise, boosted by the changes that PSD2 will enable across Europe, such as Open Banking standards.
Securing the European ecommerce landscape with Strong Customer Authentication
Another key change coming as part of PSD2 is the requirement to carry out Strong Customer Authentication (SCA), otherwise known as two-factor authentication, on the majority of European ecommerce transactions from September 2019 onwards. This change is likely to cause substantial disruption at first, but will add significant security to European payments, benefiting merchants and consumers alike. SCA will consist of authentication via at least two discrete elements of the following three categories: Possession (something only you own), Inherence (something only you are) and Knowledge (something only you know). Additionally, there are various situations where merchants can avail of exemptions to these requirements, avoiding the need for authentication when transactions are deemed to be low risk. 2019 will be a challenging year for businesses to get to grips with these new regulatory requirements, but at the same time, vital to ensuring they have the right solution that will balance security with a great user experience.
Unified commerce becomes table stakes
Unified experiences extend well beyond supporting both online and offline commerce. Today’s consumers expect seamless experiences powered by mobile ordering, in-store pickup of online orders and using a mobile device in-store to shop, browse and learn about products. Conversely, business expectations have changed as well, driving demand fora single settlement statement across all channels, simple integrations between payment activity and financial reporting, and a common, holistic view of customer behaviours across channels.
In 2019, “omni-channel” will officially become old school, and the era of what we call“unified commerce” will truly begin. Each of these changes and evolutions will require business owners to stay nimble and strive to offer shopper experiences that are unique and easy. We see 2019 as a revolutionary year for global commerce, ushering in a more unified and democratised era where businesses can reach more consumers than ever, and on their terms.