The advancement in digital technology has welcomed many new trends over the last couple of years, leading increasingly to a cashless society, and I believe this will continue in 2015, with a further decline in conventional retail banking. Digital services such as e-money accounts with linked debit and prepaid cards are quickly emerging as popular alternatives to traditional banking, not just in the UK, but around Europe and the rest of the world.
This will result in a major shift in 2015 from current favoured online payment methods like debit / credit cards and PayPal, to a broader set of online and mobile payment options. These will not only accommodate changes in the UK banking market, but also accommodate payment preferences from consumers beyond UK shores.
Though biometric adoption has been slow, this gradual evolution will continue further than just authentication for payments. A WorldPay survey indicated that 49 per cent of European consumers would most like to see biometric payments emerge as a payment technology alternative . In a new effort to move away from the use of passwords, Barclays is to introduce voice recognition for select users of its telephone banking service as well as finger vein biometric scanners. With fraud losses on UK cards totalled £247.6 million between January and June 2014, an increase of 15 per cent from £216.1 million during the same period in 2013 , the addition of biometric data as part of an identity verification process would no doubt be welcomed by banks and improve user experience.
RBS and NatWest have also announced that they are soon to allow customers to access accounts on their smartphones using fingerprint recognition technology, which is an interesting, yet exciting step for the financial and banking sector. With more and more consumers turning to online banking, we have seen an increased move into a cashless society, which is becoming more apparent with the closure of many bank branches.
Whilst this announcement may be welcomed by some, many may still be concerned with the possibility of security breaches and fraud. It should be remembered that fingerprints are publicly available and could be cloned, with different levels of effort. Therefore deploying biometric technology should be considered as part of a multi-factor authentication strategy by industry.
Mobile payments are also set to develop in 2015. Whilst mobile payments aren’t new – PayPal is already in existence – the introduction of Apple Pay to the iPhone 6 and new iPads in 2014 was set to position Apple as the most powerful force in mobile payments, however with Samsung’s acquisition of US start up LoopPay, we can expect an interesting year for the mobile payment market.
With both payment methods NFC compatible, it will be interesting to see how Samsung rivals Apple, both of which use fingerprint sensor for authorisation, but currently only Samsung is able to offer retailers the chance to convert their existing magnetic stripe readers into contactless payment receivers. Whilst it may be assumed that Samsung will triumph with this additional feature, Apple has been accepted by leading banks and credit cards across the world, leaving Samsung with a challenge to gain the same level of acceptance. With only VISA agreeing to work with LoopPay to date it is yet to be seen who will consolidate the market. As we see these payment options enter the UK market, we can expect to see this encourage the whole industry to adapt at a faster rate.
E-money / Prepaid cards
Consumers will gradually turn to e-money accounts, which offer increased privacy, reduced charges, faster responses and improved consumer interfaces.
E-money accounts with linked prepaid cards have evolved and I predict prepaid cards will become an important asset to the average consumer, proving to be a useful alternative to traditional credit / debit cards. For some, they can ensure their money is budgeted more wisely and can offer businesses a secure alternative for making wage transfers and for allocating employees with company cards.
With consumers increasingly moving to online funds management, the need for personal interaction has been removed thus inciting the decline in bank branches. Conventional banking methods will become redundant, with e-money accounts and prepaid cards shaping the payment market place of the future.
Payment trends as a whole are constantly evolving in line with developments in technology with those mentioned above, as well as payments via social media and bitcoin. Businesses need to ensure they can offer the widest range of options and keep up with the market trends to ensure they’re meeting consumers’ needs, which will have a positive impact on their business.
By Tobias Schreyer, co-founder of PPRO Group