Three innovations that have accelerated due to the rise in digital payments

By Radinck van Vollenhoven, Australian Country Manager, Stocard

COVID-19 has undoubtedly brought a lot of changes into our lives. One of these is the way we pay for services and products. There has been a consumer shift towards digital payment, so much so that according to FIS’ new research, Australia will be almost completely cashless within three years, with the COVID-19 pandemic speeding up the shift to digital payments. They predict that just 2.1 per cent of point-of-sale transactions in Australia will be in cash by 2024, down from 8.3 per cent in 2020. As a result in this consumer behaviour, there have been a number of innovations that have arisen or seen an acceleration in adoption as a knock-on effect. I have outlined three of these innovations below. 

Biometric authentication

Biometrics technology analyses the biological traits (physiological and behavioural) that are unique to an individual. These are the inherent characteristics that differentiate one individual from another like a fingerprint, facial features or DNA. Biometric authentication has been around for some years now, however the increased usage of digital payments has naturally seen a rise in the need for appropriate safety and security of authenticate payments, Biometric payment authentication have been a major innovation in mobile payments that have come to market some years ago and are gaining rapid adoption.

Biometric authentication has traditionally involved processes like fingerprint scanning, voice recognition and facial recognition, but there are new innovations exploding into the market such as FinGo which uses world-first vein mapping technology to better connect people, places and businesses. Recently FinGo, the biometric identity fintech announced that it had partnered with Mastercard.  As part of the partnership, FinGo will be integrating the MPGS tokenisation service to securely store personal data associated with any transactions, which allows registered users to make payments by scanning their unique finger vein pattern.

As digital payments become more and more popular so too will voice-controlled payments.  According to Juniper Research the number of users of software-based facial recognition to secure payments will exceed 1.4 billion AUD globally by 2025, from just 671 million AUD in 2020. Voice banking takes a lot of burdens away as consumers are not required to use a PINs, there are no passwords and security questions to validate identity in the customer service. It brings smooth and easy access to data and transactions without the need to type information manually.

In September 2017, ANZ was the first Australian bank to launch voice biometrics for mobile banking. Since then, the innovation has developed in order to better detect fraud. In April, Bank Australia deployed a new biometrics solution called The VoiceID designed to authenticate users and detect fraud.  The technology enables customers to authenticate themselves in seconds, simply by speaking. The technology analyses more than 1,000 characteristics of the user’s voice to verify their identity. Users can create their voiceprint through an encrypted phone conversation. Every time the user contacts the bank, the technology can analyse pronunciation, pitch and cadence to make sure callers are who they say they are. 

QR codes 

A Quick Response (QR) code is a two-dimensional code that can be scanned and read by a smartphone camera. The strongest adoption of QR codes for payments has been in Asia, with digital wallets like AliPay and WeChat Pay experiencing rapid growth. The 2020 WorldPay from FIS Global Payments Report found that in 2019, mobile payments using QR codes drove nearly half (48%) of point-of-sale payments in China.

However, the technology saw a resurgence in Australia during the COVID-19 pandemic as businesses and venues widely adopted QR codes to register their customers. In February Eftpos announced plans to roll out a QR payments network across Australia, in a move to help lower merchant costs and widen contactless payment options for consumers. The network will work by generating unique QR codes containing transaction details that customers can capture on their mobile phone to make a digital wallet payment. It’s technology designed to simplify the checkout process even further – debit card holders can make purchases online, via their mobile phone or in-store, without having to manually enter their card details.

Similarly, PayPal also rolled out QR code payments to 28 markets globally in May 2020, including Australia. This enables users to buy or sell in-person using QR codes in the PayPal app, and business customers can generate a unique QR code for in-store purchases.

As the use of digital wallets grows, the focus on using QR codes for payments is increasing. A recent whitepaper from Juniper Research: QR Code Payments: Beyond China and India predicts that the total number of QR code payment users globally will exceed 2.2 billion in 2025, which will equate to about 29% of all mobile phone users.

In the future there is the potential for mobile wallets to create QR codes for example, the QR code would be generated by an app such as the Stocard mobile wallet which is installed to pay for goods and services. Then the consumer would display the QR code at the point-of-purchase. 

Frictionless payment technology

Although payments have seen a great deal of innovation, the entire checkout process at an online and physical store is still complex and not very customer friendly. For consumers the check-out not only involves paying for the product it also involves scanning the products or scanning a loyalty card, using a coupon or a discount code for example. All of these steps mean that the process is often time consuming and stressful for both the consumer and sales staff. Which results in consumers abandoning their cart before they purchase the products. In theory integrating all these steps in the checkout process to make one frictionless experience shouldn’t be that hard, but the lack of retailers to attempt it has been very few. This is partly due to the need to share customer share customer data between tech companies, which can be problematic as well as the need to integrate legacy systems which is a complicated process.

However, a famous example of frictionless in-store grocery shopping experience comes from Amazon, whose Amazon Go store concept has a combination of computer vision, sensor fusion, and deep learning technologies. The mobile app allows consumers to grab items from the shelves and place them directly into their shopping bags without ever having to worry about lines, scanning the items, or checkout.

Mobile wallets are another innovation which encourages a seamless customer transaction experience.  The Stocard app allows online shoppers in Europe to perform one-click payments even without registering to the store in question, since their payment details are already saved in the wallet. Stocard hope to roll out the similar payments feature in ANZ later this year.

As the digital payments space continues to evolve become more and more popular amongst consumers so will the adoption of these innovations, I have just described that are part of the digital payments’ ecosystem.