There are three major trends in payment systems today: integrated retailer services, ‘free’ payment services, and payments that are channel-independent.
Integrated retailer services
When credit cards first came to UK in 1966, commentors observed, “It takes the payment out of buying.” And 50 years later that it is still what retailers are aiming for. Although, the technology and the processes have changed, their focus is still the same, but now they are aiming to integrate the payment process into the overall business transaction.
In the B2B & online space retailers are integrating many different pcoesses and systems as we showed yesterday in our writeup of DHGate’s new platform that lowers merchant logistics cost by 10%, and enables them to finish the entire customs clearance process in 7 minutes from a single location, rather than 7 days.
This is also happening in the consumer space. Retailers are setting up own-brand wallets so they can push the paying into the background. The idea is that the retailer will be able to identify (wirelessly) the customer as soon as they enter the store. And then be able to customise any offer before they reach the checkout (if there is one). In the trial in Amazon stores, the customer does not need to checkout.
Retailers are automating the whole buying process in which payment is only a small and mostly invisible part.
The payments services provider Circle is offering its customers in the US, UK and Europe the ability to send and receive money across borders with no fees and no mark-up on foreign exchange (FX) rates.
Accepting that there is no such thing as free lunch, i.e. you pay somewhere. This initiative by Circle shows how payment is just part of the overall business transaction. Indeed, one can imagine retailers making the payment free to encourage more spending.
Channel independent payments
Edgar, Dunn & Co. recent Advanced Payments Report 2017 concluded that the current payments ecosystem is going to change dramatically with payment applications ‘riding multiple rails’, as the figure below shows:
Source & Copyright©2017 - Edgar, Dunn & Co.
So the retailers card/wallet would be able to use any “payment rail” to pay the merchant.
CTMfile take: How will these developments change your business model?
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