As new digitalized use cases seem to just “happen” in our daily lives, with the so called Big Techs driving many of these initiatives, what if the act of payment also would disappear completely? Jukka Yliuntinen, VP at Giesecke+Devrient (G+D), gives his views on frictionless payment, and discuss the fact that there will come a time when we won’t consciously need to pay at all.
The age of digital transformation has great opportunities at hand for Banks. Clever identity verification systems such as biometrics allow customers to skip remembering clumsy password combinations for online platforms, and numerous PINs for cards and services. New technologies allow the act of payment itself to slip into the background, unnoticed. But the question is: do we want this? And how safe it is?
As more banks embrace the opportunities enabled with digitalizing their banking infrastructure, securing the same will also come under even more scrutiny. And although the race to meet PSD2’s September 2019 cut-off for technical implementation is now in the past, the Europe-wide delays to the implementation to Strong Customer Authentication (SCA) mean there is an ongoing lack of clarity around how secure payments that incorporate SCA will marry up with fast, frictionless payment in different channels.
Jukka says, “Some of the Banks introduced SCA in a way that, yes, complies with PSD2 requirements for strong authentication and gives me as the customer a certain reassurance that, OK, something must now be secure because you need to have, for example, a secondary password. But if you need to start introducing that at point of sale...forget it. People start looking for something else.”
With Big Techs betting heavily on digital payments, some degree of digital wallet consolidation seems likely in 2020, along with a push to get more merchants and consumers on-board. Big Techs are in a strong position because they get to say how their devices and services are designed to make and protect a payment, Jukka explains. “They can impact the user experience much better than anyone else.” In addition, they also have access to a vast amount of data on their customers’ desires, preferences and spending habits, giving them further opportunity to deliver finely-tuned customer experiences.
Think of Uber, for example, which has built its business model around effortless forms of payment, charging customers automatically after every ride. Or Amazon’s headline-grabbing Amazon Go stores, which allow customers to walk in, pluck items off the shelves, and walk out again without ever coming into contact with a POS terminal.
“Payment is simply a means of acquiring something, and if consumers can carry out the process in a frictionless way that is invisible to them, that is where we will go,” says Jukka.
In payment terms this is invisible. In practice, that means that instead of customers having to input their information to pay online or in-store, it is automatically loaded from their digital wallet to deliver a truly frictionless experience. And here G+D plays a big role in the industry.
“Our aim is to look beyond our customers, to understand what our customers’ customers need. We can provide our client with the user interface, such as an app on a mobile device with a wallet, then the server infrastructure, the management of the credentials on those wallets and lifecycle management. An example of considering the consumer would be providing a feature so that a wallet can be locked if a phone goes missing, then unlocked when it is found,” says Jukka.
He continues: “One of the solutions we offer is a seamless payment experience, which could be a payment wallet, including secure customer authentication with the convenience of biometrics. In times when the way we interact with each other changes, how we shop, how we pay, like where we are today, enabling these solutions can be of great benefit for both retailers and customers, without disrupting the act of payment. https://www.gi-de.com/en/de/mobile-security/industries/financial-institutions/biometrics
Beneath that is a strong cryptography system – invisible to the user – that‘s connected to our systems, the Bank‘s systems and the networks, so that payment can be made with digital credentials.” Never the less, some friction is also good in order to provide assurance of being in control, and it is important that the customer can choose how much friction they want to apply when it comes to pay.
This is where we are now. In future, embedded AI features in a variety of other devices could also be used to execute pre-authorised payments on our behalf. But as with many other forms of invisible payment, these kinds of cutting-edge services will need to prove they’re secure and reliable to achieve widespread adoption.
Jukka sums up: “High on the agenda in 2020 will be biometric security, as more Banks and FinTechs roll-out technologies that use a customer’s biological characteristics to verify payments. In fact, we launched a very successful pilot with Crédit Agricole https://www.gi-de.com/en/de/g-d-group/press/press-releases/detail/press-detail/g-d-mobile-security-and-credit-agricole-launch-pilot-project-with-biometric-payment-cards/ last year with a biometric fingerprint payment card – an example of the kind of innovation that is becoming more commonplace as biometrics becomes an ingrained part of the payments space.”
“We can have cash, take notes from a wallet, hand it over, get coins in change and a physical receipt. Or we can use a card or mobile, but with this there‘s no longer anything physical being exchanged, and the receipt could be sent electronically. The next step is the consumer walks into a shop, they are identified and payment happens in the background.”
Did you know?
G+D technology is unconsciously used by billions of people every day! With more than 700 global banks putting their trust in G+D and our offerings, we enable secure and convenient transactions for everyday usage. https://mobile-security.gi-de.com/futurebanking
Founded in 1852 in Leipzig as a printer of Bank notes, now with HQ in Munich, G+D is a global powerhouse in payments - be via cash, card or digital services. Our safe payments technology, elegantly combined with smooth customer experiences throughout the whole customer journey, secures the daily life use of financial services. And also creates customer obsession for our clients!
We are: pioneers in payments, industry leader and innovating partner for the financial sector.