Invisible Payments Key to Omni-Channel Commerce

  • ID: 3940073
  • Report
  • Region: Global
  • Smart Insights
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FEATURED COMPANIES

  • ACI Worldwide
  • China UnionPay
  • First Data
  • Ingenico Group
  • Orderella
  • Spire Payments
  • MORE

The report “Invisible payments key to omni-channel commerce” conducts a detailed analysis of this emerging market segment. Looking to the payments industry as a whole, the author analyzes the main trends shaping the payments landscape in the last years, as well as retail. Focusing on the needs identified in the market, drivers and constraints for the implementation of invisible payment systems are presented, while highlighting the potential benefits for multiple stakeholders.

Invisible payment is about to make payments frictionless and frustration-free for all stakeholders. For this, new solutions must build on client-centric innovation, while introducing automation of processes. This will be the keystone for building omni-channel commerce. As commerce will become more channel agnostic, it will also become more device agnostic as customers expect to transact from any device, any time, anywhere. Invisible payment solutions must be interoperable with all major retailers and be seamless available on multiple channels (e.g. mobile, online, in-store).

In this report, titled “Invisible payments key to omni-channel commerce”, a global vision through the value chain is also offered, evaluating the business models and positioning the multiple stakeholders in this market. The report includes a discussion regarding interoperability, security and privacy issues, and the regulation landscape.

The introduction of invisible payments will strongly impact the payments value chain. Many activities will be moved to the back-end while processes become even more automated. Invisible payments will mostly be processed in the cloud, with automation of identification and authentication phases.

This report covers the market landscape and its growth prospects over the coming years. The author forecasts payments mix of electronic transactions (billion transactions), retail sales (in-store, mCommerce and eCommerce) and retail sales’ payment mix (EUR trillion) from 2016 until 2021. Compounded Annual Growth Rates (CAGRs) are also calculated for the same period. Market segmentation is done in five regions: Asia, CEMEA (Central Europe, Eastern Europe, Middle East and Africa), Latin America, North America and Western Europe. The report also includes a discussion about the key vendors operating in this market.

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FEATURED COMPANIES

  • ACI Worldwide
  • China UnionPay
  • First Data
  • Ingenico Group
  • Orderella
  • Spire Payments
  • MORE

Acknowledgements
Executive Summary

Table of Contents

Table of Figures

1. Introduction

2. Payment instruments
2.1. Cash
2.2. Banking card
2.3. Bank transfer
2.3.1. Direct debit
2.4. Checks
2.5. Alternative payment instruments
2.5.1. Mobile payments
2.5.2. Virtual bank card
2.5.3. eWallets
2.5.4. Pre-paid cards
2.5.5. Digital currencies

3. Trends impacting the payment industry
3.1. Non-cash payments
3.1.1. Mobile payments
3.1.2. Contactless payments
3.1.2.1. Wearables and connected commerce
3.2. Nonbank payments
3.3. Instant payments
3.4. Biometrics
3.5. Big data
3.6. Other trends
3.6.1. Blockchain
3.6.2. Omni-channel payments
3.6.3. Peer-to-Peer payments
3.6.4. Cross border payments
3.6.4.1. Developing markets
3.6.5. Social commerce

4. Benefits of payments innovation

5. Invisible payments
5.1. Drivers
5.1.1. Technology development
5.1.2. Sensibility of online transactions
5.1.3. Disrupters
5.1.4. Modernization of payments infrastructure
5.1.5. Consumer demand
5.1.6. Regulation
5.2. Challenges
5.2.1. Cash usage
5.2.2. Cost of upgrade systems
5.2.3. Security
5.2.4. Consumer adoption
5.2.5. Retailer adoption
5.2.6. Business model
5.2.7. Risk management
5.2.8. Legacy systems
5.3. Keys for success of new solutions
5.3.1. Technology advancements
5.3.2. Localized implementations
5.3.3. Data analytics and business intelligence
5.3.4. Bringing value to retailers
5.3.5. To bring customers in

6. Payment solutions for in-store commerce
6.1. Technologies
6.1.1. The role of connected devices
6.1.1.1. Mobile devices
6.1.1.2. Beacons, geolocation and others
6.1.2. The back end system

7. Payment solutions for eCommerce and mCommerce
7.1. Technologies
7.1.1. One-click payments
7.1.1.1. Card-on-File
7.1.2. Buy buttons
7.1.3. In-app payments

8. Value chain

9. Stakeholders
9.1. Hardware manufacturers
9.1.1. POS vendors
9.1.2. Handset vendors
9.2. Software manufacturers
9.3. Fintech startups
9.4. Retailers
9.5. Consumers
9.6. Financial institutions
9.6.1. Acquirers
9.6.2. Issuers
9.7. Payment processors and payment aggregators
9.8. Invisible payment service providers
9.9. Secure transactions industry stakeholders
9.10. Other players

10. Business model

11. Security
11.1. Security architecture
11.1.1. Enrolment
11.1.1.1. Know your customers
11.1.2. Authentication
11.1.2.1. Biometrics
11.1.2.2. Fraud detection capabilities
11.2. Technologies
11.2.1. Cloud based systems
11.2.2. Encryption
11.2.2.1. Tokenization
11.2.2.1. P2P Encryption

12. Privacy
12.1. Data protection rule in the EU
12.2. Data protection rule in the US

13. Interoperability

14. Standardization
14.1. Payment Card Industry standards
14.2. EMV
14.3. ISO 20022

15. Regulation
15.1. Europe
15.2. US

16. Scalability

17. Use Cases
17.1. Alibaba’s Smile to Pay
17.2. Amazon Echo and Alexa
17.3. Amazon Dash
17.4. Amazon One-click
17.5. Apple iBeacons
17.6. Google Hands Free
17.7. MasterCard Selfie Pay or Identity Check
17.8. PayPal One Touch
17.9. Starbucks
17.10. Velocity
17.11. Uber

18. Forecast
18.1. Asia
18.1.1. Payment mix of electronic transactions
18.1.2. Retail sales
18.1.3. Retail sales’ payments mix
18.1.4. Forecast analysis
18.2. CEMEA
18.2.1. Payment mix of electronic transactions
18.2.2. Retail sales
18.2.3. Payments mix for retail sales
18.2.4. Forecast analysis
18.3. Latin America
18.3.1. Payment mix of electronic transactions
18.3.2. Retail sales
18.3.3. Payments mix for retail sales
18.3.4. Forecast analysis
18.4. North America
18.4.1. Payment mix of electronic transactions
18.4.2. Retail sales
18.4.3. Payments mix for retail sales
18.4.4. Forecast analysis
18.5. Western Europe
18.5.1. Payment mix of electronic transactions
18.5.2. Retail sales
18.5.3. Payments mix for retail sales
18.5.4. Forecast analysis
18.6. Total
18.6.1. Payment mix of electronic transactions
18.6.2. Retail sales
18.6.3. Payments mix for retail sales

19. More future developments

20. Companies and organizations
20.1. ACI Worldwide
20.2. Aevi
20.3. Alibaba
20.4. Amazon
20.5. ATAM
20.6. Apple
20.7. Braintree
20.8. China UnionPay
20.9. CNRFID
20.10. eBay
20.11. E la Carte
20.12. EyeVerify
20.13. Fidesmo
20.14. FIDO Alliance
20.15. First Data
20.16. FlyPay
20.17. Galitt
20.18. Gemalto
20.19. Giesecke & Devrient
20.20. GlobalPlatform
20.21. GSMA Mobile Connect
20.22. Ingenico Group
20.23. Inside Secure
20.24. Klarna
20.25. Knowbile Consulting
20.26. MasterCard
20.27. MyCheck
20.28. OmnyPay
20.29. Orderella
20.30. Paym
20.31. PayPal
20.32. Paytm
20.33. PayU
20.34. SecureKey
20.35. SlimPay
20.36. Spire Payments
20.37. Stripe
20.38. Trustly
20.39. Uber
20.40. Verifone
20.41. Visa
20.42. W3C
20.43. WorldPay
20.44. Zapp

21. Glossary

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FEATURED COMPANIES

  • ACI Worldwide
  • China UnionPay
  • First Data
  • Ingenico Group
  • Orderella
  • Spire Payments
  • MORE

Invisible payments are expected to be the next revolution in the payments industry. Since the creation of the payment card, only small innovations have occurred, such as contactless payments. Bank cards keep being theost successful and used electronic payment instrument, without any other instrument bringing strong competition to the market.

Consequently, it has emerged the need and demand for the introduction of alternative payment methods that will bring true disruption to the market. Both consumers and retailers are demanding payment instruments that will make paying for goods and services quicker and easier.

New invisible payment instruments’ value proposition lies exactly here: to alter the customer-facing processes to deliver a seamless and effortless experience. In the future, payments will be frictionless and frustration-free for all stakeholders. For this, new solutions must build on client-centric innovation, while introducing automation of processes.

But the true value of invisible payment instruments goes beyond payments, they must include value-added services (VAS), innovative offerings built on renewed infrastructure, and holistic solutions for both consumers and retailers. Paying for a transaction is today a valuable data point that helps retailers to build knowledge to better manage their fulfillment channels. Retailers can also understand better their existing sales and build their strategies of marketing, customer service, and customer engagement accordingly.

The latter is even more important as omni-channel commerce gets closer to become a reality. Commerce’s future will be more omni-channel, namely using all sales channels interchangeably to serve the customer independently of location. Customers will need more integrated solutions that are interoperable with all major retailers and available on multiple channels (e.g. mobile, online, in-store).

Other drivers for invisible payments development include the pressure and desire for adopting non-cash and non-bank transactions, new technology developments, such as blockchain or biometrics, the entrance of non-traditional players in the payments industry and need for more competition, social commerce development, security needs, etc. Some stakeholders are aware of these drivers and are taking action to introduce more innovation in the payments industry. For instance, the European Union has been working on its new PSD2 legislation, which will access several of these points and could become a strong enabler of invisible payments’ uptake.

Despite its potential to become a solution for all retail channels (i.e. in-store, eCommerce and mCommerce), the transition to invisible payments will no be without its challenges. Issues preventing faster payment innovation include legacy systems, existing operating models, lack of a hard business case, costly upgrades, consumer and retailer resistance, risk management… Other inherent challenges include interoperability, privacy issues, or regulation. Though many solutions will emerge rapidly, the true challenge will be to attain scale.

Nonetheless, security concerns are the first constraint for payment innovation. They drive indecision and hinder investment, which in turn lead to more risk. The introduction of invisible payments will strongly impact the payments value chain. Many activities will be moved to the back-end at the same time processes become even more automated. Invisible payments will mostly be processed in the cloud, with automation of identification and authentication phases. This automation means that stakeholders must introduce more flexibility at the front-end systems to create a more seamless payment experience.

Invisible payments innovation is expected to be more an “evolution than revolution.” Solutions will first build on existing technologies, such as Internet of Things (IoT) connected devices, APIs (Application program interfaces), beacons or geolocation, while moving transaction processing to the back-end system and automating processes. New solutions must integrate with existing infrastructures and be compatible with different systems.

Moreover, given the complexities of the payments industry, stakeholders must find ways to partner and break into the ecosystem rather than purchasing endless and nonsense fights over minor market shares. The future of payments will mandate scale, partnerships and speed-to-market.

The author forecasts payments mix of electronic transactions (billion transactions), retail sales (in-store, mCommerce and eCommerce) and retail sales’ payment mix (EUR trillion) from 2016 until 2021. Compounded Annual Growth Rates (CAGRs) are also calculated for the same period. Market segmentation is done in five regions: Asia, CEMEA ((Central Europe, Eastern Europe, Middle East and Africa)), Latin America, North America and Western Europe.

Total electronic transactions are forecasted to reach 721.3 billion by the end of the forecast period; invisible payments will account for 23% of all electronic transactions by 2021. Invisible payments’ adoption during the forecast period in each region is analyzed, such as drivers and constraints. Despite strong adoption, cards will still account for more than half of all electronic payments made worldwide at the end of the period. Looking at the retail sales’ payment mix, by 2021, EUR 5.49 trillion retail transactions are expected to be processed using invisible payment instruments, growing at a CAGR of 54% between 2016 and 2021.

Looking forward, a short discussion is conducted about a more far away future. The move through invisible payments will be further pushed by the upsurge of Internet of Everything (IoE). In the future payments will be integrated to our devices and we will not even think about them. The Internet of Everything (IoE) will see devices to act autonomously in order to offer the best living experiences to humans. When it comes to shopping, devices will be able to manage their own payment accounts.

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- ACI Worldwide
- ATAM
- Aevi
- Alibaba
- Amazon
- Apple
- Braintree
- CNRFID
- China UnionPay
- eBay
- E la Carte
- EyeVerify
- FIDO Alliance
- Fidesmo
- First Data
- FlyPay
- GSMA Mobile Connect
- Galitt
- Gemalto
- Giesecke & Devrient
- GlobalPlatform
- Ingenico Group
- Inside Secure
- Klarna
- Knowbile Consulting
- MasterCard
- MyCheck
- OmnyPay
- Orderella
- PayPal
- PayU
- Paym
- Paytm
- SecureKey
- SlimPay
- Spire Payments
- Stripe
- Trustly
- Uber
- Verifone
- Visa
- W3C
- WorldPay
- Zapp

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