After attending Card Forum 2017 in Austin, Texas earlier this month, Euromonitor spotted several trends developing across the consumer finance industry. There is significant opportunity for card payments as retail continues to shift online; security is likely to remain a key concern for consumers despite the decline in card fraud; and payment players need to recognise that simplicity and convenience are essential to encouraging card payments.
Shifting retail frontiers present opportunity for card payments
The broad shift of retail to online channels has always favoured card payments over cash, but the potential presented by VR/AR technology could further accelerate the retail transition. The ability of consumers to interact with card products presents greater potential for online purchases. Although the technology is still in the early stages of development, the companies that create a platform accessible to broad consumer segments will benefit going forward. Because the complex nature of VR/AR technology, it will unlikely be a single merchant, technology company or payment player that will win outright but rather a combination or coalition of partners.
Increasing consumer focus on payment security
In a more connected world, consumers are more aware of card payment data breaches than ever before. This has increased the importance of security for consumers specifically in the digital payment arena. Despite increased investment by both payment players and others in security measures that have actually driven down the rate of the value lost to fraud over the past five years, the issue is more important to consumers than ever. In a panel discussion, Stephanie Ericksen, Visa VP of global risk products, stated, “It’s true that fraud dollars from CNP are growing, but it’s not increasing as a percent of total sales.” This will make the communication of security investments made by leading payment players a priority in the coming years.
Simplicity is key
The three major benefits for consumers to pay with cards over cash are convenience, security and rewards. In the US, the leading payment players have lost sight of the first benefit by increasing the time a card transaction takes at the register. The EMV rollout in the US resulted in the time a card transaction took at the register to triple and has angered consumers in the process. As new technology players enter the payment space, additional layers are added to the payment process which could further increase the length of a transaction, increasing friction. Refocusing is going to be required in the payment landscape to restore the primary card payment benefit to consumers in the US.