What payment technologies are in store for 2017?
By Benjamin Salisbury
The UK has always been on top of new payment technologies, such as EMV chip cards and contactless cards, often implementing them long before other countries. Our status as a payments trend setter is going to continue in 2017, as wearables, biometrics, mobile wallets and increased uses of contactless cards increase.
According to Payments UK statistics for December 2016, total "faster payments" were up 14% in 2016, with the use of cheques falling 15% in the year.
"We expect that proportion to continue rising," Giles Mason, spokesman for the UK Cards Association, said in an emailed response to questions. "By 2025, contactless debit card payments are forecast to account for 47% of all debit card payments."
Here's what to look for in payments in 2017:
As mobile payments become more accepted, Mason expects the ways we use them to increase.
"Whether it's a wearable contactless device, a ‘buy' button embedded on a website or a mobile phone used to scan and pay for your shopping, technology has changed the way we pay," he said. "The next generation is likely to embrace new card technologies such as contactless and mobile payments. They will have known both the internet and smartphones from an early age and will find it natural."
One example: Tesco's PayQwik mobile payment service. With PayQwik, you can pay for Tesco purchases up to £250, a much higher threshold than the current £30 for contactless cards. Tesco is working on rolling out the wallet nationwide, and it's likely other retailers and mobile wallets will follow suit.
battle for our digital wallets
On the topic of mobile wallets, Samsung Pay, Apple Pay, and Google's Android Pay are just some of the products that will vie to become our go-to digital wallet in 2017. All three allow users to make contactless payments with phones that have Near Field Communication (NFC) capability, and Samsung Pay and Android Pay also work without NFC.
Samsung Pay was launched in the US and South Korea in 2015, and was due to be released in the UK in 2016, but was held up. It is now expected to launch here this year.
Samsung's phones use the Android operating system, so owners can use Android Pay, but Samsung wants to establish its own payments system to lessen its reliance on Google.
Similarly, Google released its own smartphone in October so it doesn't have to rely so heavily on partners such as Samsung.
"Contactless technology has created more opportunities to pay using a card - particularly for lower-value payments that may previously have been made using cash," a spokesman for Payments UK said in an emailed response to questions. "Over the next decade, the number of contactless cards will continue to increase."
In its annual UK Cards Payments 2016 summary, the UK Cards Association reports 79 million contactless cards were in issue in 2015, up 37% on 2014, helped by the introduction of contactless payments on the London Underground, something Mason thinks will take contactless even more mainstream.
"As consumers use contactless payment for travel, they become more confident and comfortable using this technology, which leads them to use contactless cards for payments in other situations," Mason said.
Banks, fintech companies and card providers are all heavily involved in creating cloud-based payment systems to provide customers with faster and more cost-effective financial services.
One example is Virgin Money's link-up with 10x Future Technologies, a startup founded by former Barclays CEO Anthony Jenkins. The two are working together to build a secure cloud-based banking platform to provide financial services, such as mortgages and credit cards.
The cloud-based system uses advanced data modelling and complex software to help the bank understand its customers better and offer them tailored products. It is hoped a trial will begin by the end of 2017.
expansion of the Internet of Things
The Internet of Things (IoT) consists of internet-connected devices that talk to each other. Everyday items, including accessories, appliances and even clothes, are connected to the internet and - increasingly - to ways to pay.
With IoT, companies can move away from just supporting payments on phones and cards to a wider range of connected payment devices.
Although still a relatively immature market, the IoT Tech Expo Global in London in January 2017 showcased how leading global companies such as Verizon are linking payments with IoT.
Perhaps the biggest players in the IoT area are makers of wearable payment technologies. Android Pay is developing Android Wear, and Fitbit is developing NFC wearables. Samsung Pay is launching the Gear S3 smartwatch available to all users with an Android phone.
"Wearable devices create another way to make contactless transactions," said Mason. "While some devices enable contactless payments at all retailers, others are on a ‘closed loop' for a particular setting, such as a music festival, making it convenient for everyone at that location to pay."
Being able to pay with your fingerprint, iris or even your veins are other technologies expected to make further inroads in 2017.
For example, Sthaler, A UK company, has developed FingoPay, which uses biometrics to scan a buyer's veins on their finger to produce a unique profile that can be connected back to a bank account or credit card. Users just put their finger in a scanner. McDonald's is testing a pilot of the technology.
The evolving world of payment technologies guarantees that payments will be faster, easier and overall more convenient in 2017 and beyond. But you likely can't get rid of your physical wallet just yet - cash might not be as prominent as it once was, but cash is not going anywhere.See related: The voice command payment revolution, Calling all payment tech junkies: Emerging innovations gather steam, How safe is unverified, contactless card technology?
Published: 6 February 2017
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