The past two decades have seen enormous growth in payment systems. We launched the first mobile commerce transaction in the world on WAP (9.6 KBPS) in March 2000 on www.digitalmall.com when mobile phones were black and white only, so the product catalog was limited with the display. It was really slow and the 'worldwide wait' was even longer when modems were 56kbps and mobile internet was just starting.
The first transaction was on Vodacom South Africa and then we replicated the solution with Vodafone in the UK, Australia, and New Zealand and rolled it out globally.
Twenty-plus years ago mobile payments, contactless cards, and digital wallets were in their infancy but we knew that with the evolution of faster mobile networks, the applications would evolve and mobile payments would become mainstream, hence why we invested early despite the fact that the technology was clumsy and the customer experience was not ideal at the time.
What makes a payment system survive?
Today, payments are ubiquitous. But as new payment systems continue to emerge, only a few are likely to survive in the long run. What does it take to create a payment offering with stamina? It's a billion-dollar question with a fundamentally simple two-part answer: large-scale access to stores of value so that senders and receivers can exchange funds, plus a trusted operator that routes transactions between counterparties and enforces fair governance standards.
A host of structural changes over the past few years are lowering barriers to entry: Customers are congregating in ecosystems and marketplaces where they consume similar services. Technological advances are enabling companies to quickly scale up new products across critical masses. APIs are enabling payments to be easily integrated with other products. Higher digital spending is allowing new "plug and play" solutions to be adopted without the need to roll out physical POS devices. Blockchain technology can be used for payments by creating a decentralized, transparent, and secure ledger for recording transactions.
Ubiquitous payments and the cashless society
Ubiquitous payments refer to the ability to make and receive payments anytime, anywhere, and using any device. It is closely related to the idea of a cashless society, where traditional payment methods such as cash and checks are replaced by electronic payment systems that are more efficient, secure, and convenient.
The adoption of ubiquitous payments has been driven by the increasing use of smartphones and other mobile devices, as well as the growing popularity of e-commerce and online shopping. The COVID-19 pandemic has accelerated the shift towards digital payments, as consumers have become more cautious about handling physical cash.
These changes have triggered a proliferation of new consumer-to-merchant payment networks and schemes. New aspirants in developing countries, such as Alipay and WeChat in China, Paytm in India, and MercadoPago in Argentina, are leapfrogging physical card infrastructure. Tech companies are capitalizing on their consumer reach to establish intermediaries in the form of Apple Pay, Google Pay, and others.
Omnichannel and embedded payments
Consumers think of shopping as one experience, whether online, in-store, or on a mobile device, and so must business. Consumers move to the center of the shopping experience, and we are seeing omnichannel payments taking center stage.
Omnichannel evolution resulted in embedded payments, whereby customers can complete transactions without being redirected to an external payment gateway or website. It enables a seamless checkout experience for customers and helps businesses streamline their payment processes. There are several types of embedded payment solutions available, including APIs and SDKs, which allow businesses to integrate payment processing functionality into their own applications.
AI and machine learning in payments
Artificial intelligence and machine learning are playing an increasingly important role in the payments industry, allowing for faster, more efficient, and more secure payment processing. Key applications include fraud detection through analysing large amounts of data to identify patterns and anomalies, personalisation of customer recommendations and promotions, risk management through transaction data analysis, AI-powered chatbots for customer support, and automation of payment processing to reduce manual intervention.
Blockchain and smart contracts
Using AI, ML and new payment architecture such as blockchain allows multiple parties to access and update the same database without the need for intermediaries such as banks or other financial institutions. When a payment is made on a blockchain network, the transaction is verified and recorded on the ledger by a network of nodes or computers, ensuring that the transaction is secure and tamper-proof.
One of the main advantages of using blockchain for payments is that it eliminates the need for intermediaries, which can reduce transaction fees and processing times. Blockchain has been able to give underbanked groups access to money, allows people to make cross-border payments, and uses smart contracts to act as a means toward faster and safer payment processing.
Smart Contract systems can halt payments when agreed terms are violated, while the use of cryptocurrencies can alleviate the regulatory red tape that often is the case with international payment processing. American Express believes that blockchain can solve these problems, and "will support real-time domestic and cross-border payments at lower costs versus traditional services."
#DoingSomethingGreat is providing ubiquitous payment solutions to create frictionless commerce.