In the World of Invisible Payments

January 14, 2017     By : Elena Mesropyan

The invisibility of certain financial services is a cornerstone of a seamless experience, contributing to the usage growth and expanded opportunities for businesses. Invisible and uninterrupted payments experience, in particular, can have a dramatic impact on any type of service adoption and drive never seen before growth in sales across industries, especially retail and commerce.

“In a way, invisible payments can make payments a more integrated, intuitive part of the user experience. The best user experience removes as many pain points as possible no matter the location of the user or the brand they’re interacting with,” Chris Francis, Vice President of Market Development at WorldPay suggests.

Today, however, the opportunity with invisible payments services is yet to be explored as existing widely adopted security solutions and payment technologies do not allow a completely non-interactive experience authorizing a transaction. Nonetheless, given that today’s consumer doesn’t want to wait for anything, the introduction of invisible, instant payments are a natural course of action for businesses and financial institutions to keep up with market demands.

In the world of invisible payments, the friction and necessity for a human intervention are removed from everyday activities involving any financial transaction. So far, Amazon has come the closest to bringing the idea into reality with its concept of Amazon Go store, eliminating the whole part of standing in lines to make a payment as the payment experience itself is removed from the most payment-centered activity – shopping. Amazon Go’s Just Walk Out Technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When the customer is done shopping, he/she can just leave the store. Shortly after, Amazon charges person’s Amazon account and sends a receipt.

Google has also been working in the same direction with its Hands Free App that allows users to make in-store payments without ever reaching for the phone or wallet. The app is currently running a limited public pilot in a small number of Silicon Valley stores. The Hands Free app uses Bluetooth low energy, Wi-Fi, location settings, and other sensors on customers’ phone to detect whether the person is near a participating store. This enables users to pay hands-free, without fumbling with the phone or even opening the Hands Free app.

The search company, however, did not completely remove the payment moment from the shopping experience – a person still needs to go through the cashier and indicate a desire to pay with Google. After that, the cashier confirms customer’s identity, using initials and the photo that the customer added to Hands Free profile. At some stores, Google is also running very early experiments using visual identification to further simplify the checkout process. All images and data from the Hands Free in-store camera are used only to confirm person’s identity for each Hands Free purchase. Images and data from the Hands Free in-store camera are deleted immediately; however, they can’t be accessed by the store, and are not sent to or saved to Google servers.

The development of IoT technology will play an imperative role in advancing invisible payments solutions running on the connectivity of personal devices, including vehicles, homes, laptops, wearables, etc. The need for carrying a particular device (not speaking of wallets) will be eliminated as any tech carried by a person will be able to carry the same function. Equipped POS terminals then can interact with any personal devices with payment functionality to perform a transaction without the need for a person to interfere at all.

The seamless, invisible payment experience comes with certain possible drawbacks for the customer. With invisible payments, the  traditional part of any service consumption – the payment for that service – is completely removed, thus, taking away a feeling of spending, which is a positive side for businesses, but removes the sense of reasonable spending behavior. Automatically deducted payment with no feeling and experience of making a payment at all allows customers to experience the product/service without the need to evaluate the deduction because the payment becomes literally invisible in the whole process. PFM platforms will ‘have a blast’ offering sophisticated strategies to save money when the numbed feeling of spending money will hit pockets.

At the moment, there is not much on financial institutions expressing interest in taking payments to the next level. Technology companies are more likely to beat banks in regard to invisible payments because for banks, the technology will eliminate the part of the business revolving around credit/debit cards and proprietary payments apps loaded with those cards. Therefore, financial institutions may take some time to catch up or miss out on the opportunity at all in their attempt to keep banking apps relevant. With invisible payments, financial institutions will have to forsake cards and invest significantly in the development of features allowing a hands-free payment. At the end, while technology companies can focus on providing the best possible payments experience, banks are the ones moving money and risking own capital in case the security is compromised in favor of that experience.

Invisible payments can change the experience beyond shopping. Professionals from ToneTag bring examples of toll plazas and metro turnstiles – invisible payments would allow people to drive or walk across without stopping to pay every morning.

In the restaurant business, certain startups are already appropriating the dine-and-dash culture. As reported by Upnext, using beacons with Bluetooth Low Energy (BLE) technology, companies like Dash, Reserve, and Tab allow diners to pay quickly and easily by just saying their name to the waiter or barman. All these apps turn dining out into an experience that’s only about the food, the people and the atmosphere – and not about the bill anymore. The app automatically bills the cost to the user’s card, which is stored securely in the cloud so there’s no need to call over a waiter or think about whether you have enough cash. Payment has become an automatic process that takes place in the background, the edition notes.

Elena Mesropyan
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Elena Mesropyan

Elena is a Market Research Analyst at LTP. She is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.
Elena Mesropyan
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