Soon there will be no difference between in-person and digital commerce, but first there are a number of infrastructure challenges to overcome
The payments landscape has evolved significantly in recent years, driven by the demanding expectations of younger consumers, increased competition and advances in technology. The Covid-19 pandemic has only served to amplify the impact of all three of these crucial areas.
Millennial and Gen Z consumers instinctively look for convenient, digital-first payment services activated through their phones. Regulation, as well as innovative technologies such as AI that automate processes and enable more seamless authentication, have reduced the barriers to entry for new payments players, which include big tech companies, fintechs and neo banks.
“Consumers expect omnichannel treatment and for companies to recognise them across channels,” says Martin Herlinghaus, senior manager market insights at AEVI, offering a cloud-based payments platform. “Merchants have increasingly sought new partners on this journey to broaden their mindset and learn how to operate in a digital way. Smaller merchants especially want business enablement as a complete package, and they need someone to help them.”
Cloud technology has also been a powerful enabler and while banks, fintech firms, acquirers and payment companies have been on a journey of acceptance around areas including security and compliance, there is now a high degree of confidence in such platforms. This has enabled organisations to take advantage of the speed, elasticity and resilience of the cloud, which accelerates the rate at which payment products and services can be brought to market and scaled globally.
“In the old days, if I had to bring a new product to market I would have to ensure I had adequate infrastructure, developers to code on the infrastructure and testers to test on the infrastructure,” says Mark Westbrook, senior vice-president of technology and general manager UK at AEVI. “If you now build and run your applications cloud native, you can have a minimum viable product operational in a very short period of time. With that, you can then see whether it is a viable market proposition and very quickly scale globally.”
The pace of innovation on the digital side has not been mirrored on the in-person payments side, however, which is plagued by systemic challenges. In-person payments infrastructure was effectively developed back in the 1950s when the first credit card was launched and then electrified in the 1980s, but since then little has happened by way of innovation.
Payment terminals designed as analogue data fortresses now face challenges in a digital-first world, exacerbated by interdependencies between players in the payments ecosystem. The payment terminal is shipped by the acquirer. The payment terminal provider has its own payment app. A service provider then needs to integrate into that. It’s an inflexible process, especially when it comes to checkout and introducing new payment flows and mechanisms.
“There are two ways to approach the challenge,” says Herlinghaus. “Either, like companies such as Square, you develop your own terminals, services and service environment, and create a closed ecosystem, which is costly. Or you open up and invite all parts of the ecosystem to cooperate in a solution that benefits everybody, playing to their strengths and promoting better collaboration.”
AEVI facilitates that collaboration via cloud orchestration. Through open standards and an open system, the cloud-based platform makes it far easier for all payments players, regardless of whether they compete, to cooperate in a positive way and ultimately create great digital experiences for merchants and consumers alike. Putting AEVI into the payment flow and joining data and security across all channels, helps to create a single unified commerce environment.
“Digitisation and the increasing flexibility of processes, as well as the growing value of data, are the future of payments,” Herlinghaus says. “We already have far more digitally savvy consumers, while merchants are increasingly engaged with digital technology - you will see them embracing data and playing with new channels. Digital payment methods will come to the physical point-of-sale with no differentiation between in-person and digital commerce. It’s all just commerce going forward.”
For more information visit AEVI.com
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