Andre Stoorvogel, Director, Product Marketing, Rambus Payments
For anyone attending Mobile World Congress last week, they have no doubt gone to bed dreaming of 5G networks and foldable smartphones. But dig a little deeper, and there was a lot more up for discussion (honestly). As always, the show offered insight into the big trends that really matter across payments and commerce.
Securing IoT commerce
Following MWC last year, it was clear that the rapid growth of online and IoT payments was hugely exciting, but potentially an open goal for hackers. This has proved to be the case, with retailers expected to lose $130 billion through card-not-present fraud over the next five years.
Payment tokenization has already been hugely successful in securing in-store mobile payments. But with in-store just one piece of an ever-expanding payments puzzle, there was a clear need to move towards a fully tokenized digital payments ecosystem.
It has been a long-time coming, but it feels like momentum is now building. Players recognize the critical importance of bolstering the security of online commerce and enabling popular payment methods such as one-click ordering and recurring payments, without adding any additional friction into the buying experience. This is what tokenization delivers.
Importantly, tokenization technology is resonating with consumers who are increasingly focused on security and privacy. A Mastercard study found social conversations on tokenization, and the foundational role it plays in securing payments, reached a potential audience of over 11 million people. Could we be moving towards an end-game where consumers demand tokenization? Let’s hope so.
But as connected commerce becomes ever more complex, ecosystem participants need to work closely to effectively deliver the trust and convenience that consumers demand.
Strategies that enable merchants and payment service providers to streamline their tokenization initiatives to reap the benefits of advanced security and an enhanced customer experience were up for discussion on the show floor.
Partnerships are key to these strategies. Mastercard, for example, spoke of the power of partnerships and trusted relationships. Visa also discussed the importance of collaboration as we enter a ‘new era in money’.
This ability to come together is more important and valuable than ever, particularly as the power of tokenization technology moves beyond card-based payments and into new areas such as account-based transactions, cryptocurrencies and digital identity.
Living in a material world
Despite the buzz surrounding online commerce, it was clear that physical payments are not going anywhere.
The headline grabbing news came from Spain’s Banco Sabadell, who demonstrated a live payment using an NFC chip embedded in the finger of a (lucky?) volunteer. Will biohacking prove to be the next big thing in payments? Stranger things have happened in the world of tech, but growing demand for wearable payments suggest that consumers are opting for slightly less extreme measures. For now.
More broadly, it was clear that the industry is thinking bigger when it comes to the in-store journey.
In-store commerce is not about a single form factor. Whether it be through a smartphone or a wearable (or yes, an implantable chip), what really matters in the omnichannel era is delivering added-value and convenience to consumers as part of an enhanced experience. Platforms like mobile wallets, which help deliver this flexibility, should be a strategic focus.
Is trust coming back to crypto?
In other emerging payments news, Samsung launched the Galaxy S10 with a pre-loaded cold-storage wallet to enable users to store cryptocurrencies including bitcoin and Ethereum. After a rocky ride in 2018 (during which $1 billion was stolen from exchanges) , this could well prove a much-needed step in the right direction in ‘normalizing’ the storage and use of cryptocurrencies to build consumer confidence and familiarity.
Of course, there is still much work to be done. Solutions that enable the secure storage and transfer of crypto assets, while democratizing access and improving the user experience, have the power to enable cryptocurrencies and other blockchain solutions to realize their enormous potential.
From imagination to implementation
MWC is a show traditionally defined by devices. And this year, they all seemed to be 5G-enabled and fold in half.
For the payments industry, the aim is to keep pace with this innovation and deliver simple, secure and seamless payments across all devices and channels. The implementation strategies, ecosystem participation and partnership models required to do so are complex, but it was clear to see that we are moving firmly in the right direction.