Ideas from the team


What's the Future of Payments?

When it comes to payments, convenience is everything. The payments industry has recently made great leaps to provide ways of paying that are a lot more convenient, and they’re already changing how consumers are buying things. But how are they impacting retailers and what do you in the arts sector need to know?

Contactless mobile payments: the future of payments in the arts? Image credit.

Current trends

For many, credit and debit cards are the most convenient method for paying in shops, online and for setting up recurring payments for things like on-demand TV and music services or memberships. Then there are contactless cards and wearable devices like the Barclaycard bPay wristband which make lower value transactions quick and easy. Finally there are mobile services like M-Pesa that are fast-becoming the preferred way of transferring money and paying bills, especially in emerging economies like Kenya. 

The number one thing that connects all these trends is a definite move away from cash and cheque. But as we all move away from paying with cash, what’s the impact and what does it mean for the future of payments? 

How retailers are responding
Operating retail systems with card payment processing is a complicated business which can place significant cost and security burdens on retailers. Smaller operations like independent local coffee shops are looking for a more agile approach better suited to their business. This means no more cash registers and Chip & PIN terminals, and instead iPads and small mobile card readers which are quick to set up, easy to use and employ devices and applications that people are familiar with. Going mobile gives these businesses the flexibility to start trading wherever they need to be with minimum fuss and maximum convenience for their customers.

Many larger, established retailers are looking to the market to see how best to approach updating or changing their existing retail and card payment systems, especially in the US. The US is moving away from the traditional swipe and sign card payments towards Chip and PIN authentication. The process is accelerating in the wake of some high profile data breaches, including hacking of systems at Target and Home Depot, resulting in millions of card numbers being stolen. 

While US retailers are preparing to update existing systems and replace hardware, they’re giving serious thought to not only upgrading to Chip & PIN, but using it as an opportunity to get ahead of the curve. Some have already started offering alternative shopping experiences and payment options for their customers, with mobile being an obvious one to try. The Starbucks app, for example, allows customers to pay in-store using their phone. In Apple stores, iPhone users can scan product barcodes with their phone, pay with the card linked to their iTunes account and walk out the door with a shiny new item in hand without going to the desk. 

What card payment suppliers are doing
With the continuing shift away from cash and cheque payments, existing providers of card processing services have been working hard to keep up, facilitating traditional card payments as well as faster, more convenient contactless and mobile transactions.

They must invest heavily to meet the growing demands from consumers and the major card brands to make card transactions easier and more secure. The payment card industry also works hard to make us aware of the need to keep our card details safe, particularly online. So how will technology companies and retailers convince us to move to using our own mobile devices instead of a plastic card when we pay?

Some of the larger players may have an advantage here. We have been trusting recognisable customer facing brands like Amazon with our card details for years. Similarly, Apple have allowed users to store their card details in iTunes for some time, and at the launch of their new payment service Apple Pay, 1 million cards were registered within 72 hours. With the latest iPhones also offering card data encryption and fingerprint recognition technology, it seems we might be reaching a point where this all comes together.

What does it mean for the future? 
We are already seeing the trend for online shopping move towards mobile, so why not in-store payments too? Retailers are likely to seek out payment methods that offer them the most convenient ways of accepting payments and will remove any bottlenecks from the customer journey. They will also look to reduce administration, cost and security burdens wherever possible. Consumers will be always drawn to convenient payment methods that offer a familiar experience, have proven security and integrate with other services they already use.

For many arts organisations, the focus has been on a move towards self service, lowering the cost of sale by encouraging audiences to book online and in advance. However there will always be transactions taking place at the venue and new ways of paying may offer some significant benefits. Perhaps we could allow audiences to order and pay for interval drinks at their seat? Or maybe one day we could replace that slightly scruffy donation box in the foyer with some tap-to-donate contactless readers? Just as in retail, the movement away from cash could eventually result in the use of mobile phones for payments becoming much more commonplace in the arts… that is, until the battery runs out.