Tobias Schreyer, Co-founder of the PPRO Group
The advancement in digital technology has welcomed many new trends over the last couple of years, and the payment industry is constantly evolving and adapting to keep pace. Already in 2014, we have seen an increased move into a cashless society, and I believe this will continue in 2015, with a further decline in conventional retail banking.
Digital services such as e-money accounts with linked debit and prepaid cards are quickly emerging as popular alternatives to traditional banking, not just in the UK, but around Europe and the rest of the world.
The knock-on effect from this will result in a major shift in 2015 from current favoured online payment methods like debit / credit cards and PayPal, to a broader set of online and mobile payment options. These will not only accommodate changes in the UK banking market, but also accommodate payment preferences from consumers beyond UK shores looking to purchase goods from British retailers.
With consumers constantly looking for increased speed and ease of use, they will gradually turn to e-money accounts, which offer the benefits of a traditional bank account with the addition of increased privacy, reduced charges, faster responses and improved consumer interfaces.
As the payment landscape continues to heat up, e-money accounts with linked prepaid cards have evolved and will encapsulate a new market of prospective users. I predict prepaid cards will become an important asset to the average consumer, proving to be a useful alternative to traditional credit / debit cards. For some, they can ensure their money is budgeted more wisely and for others, businesses and consumers alike, it can offer a secure alternative for making wage transfers and for allocating employees with company cards.
This signals change for traditional banking methods, as consumers increasingly move to online funds management; the need for personal interaction has been removed, thus inciting the decline in bank branches. Conventional banking methods will become redundant, with e-money accounts and prepaid cards shaping the payment market place of the future.
Mobile payments are also set to develop in 2015. Whilst mobile payments aren’t new – Google Wallet and PayPal are already in existence – the introduction of Apple Pay to the iPhone 6 and new iPads is set to position Apple as the most powerful force in mobile payments. Other brands are also jumping on this bandwagon – for example SnapChat and the introduction of SnapCash which offers its users the opportunity to send and transfer money using the app. It has been indicated that 2015 will see these payment options enter into the UK market, and this will encourage the whole industry to adapt at a faster rate.
Following the initial response from the US, UK retailers have the chance to prepare in advance and should anticipate that consumer uptake will be fast so they will need to be ready to accommodate the widest possible customer base.
Biometrics are also on the rise and though adoption has been slow in the more established Western European markets, this gradual evolution will continue further than just biometric authentication for payments on Apple devices. A WorldPay survey indicated that 49 per cent of European consumers would most like to see biometric payments emerge as a payment technology alternative. In a new effort to move away from the use of passwords, Barclays is to introduce voice recognition for users of its telephone banking service as well as finger vein biometric scanners. The voice recognition system will verify customers based on their speech patterns and will be offered initially to Barclay’s Wealth customers, and then to the rest of its 12 million customers early next year. I see this as increasing throughout 2015 with more and more banks adopting this technique. With fraud losses on UK cards totalling £450.4 million in 2013, the addition of biometric data as part of an identity verification process would no doubt be welcomed by banks and improve user experience.
Payment trends are constantly evolving in line with developments in technology, with those mentioned above as well as payments via social media and bitcoin. Businesses need to ensure they can offer the widest range of options and keep up with the market trends to ensure they’re meeting consumers’ needs, which will in turn, have a positive impact on their business.
 Fraud the Facts 2014: The definitive overview of payment industry fraud and measures to prevent it – Financial Fraud Action UK 2014.