4 minute read
2016 has been a newsworthy year so far. Between the presidential elections, Leicester City’s fairy-tale performance, SpaceX’s rocket landing, and introduction of chatbots and conversational commerce, there’s been no shortage of things to talk about.
And it’s been a big year for payments too. We’re covering everything you need to know about payments in the second half 2016.
Earlier in the year we wrote about how invisible payments would drive payment innovation and how companies would simply keep removing payment friction until it was virtually (or literally) invisible. Uber being the prime example.
The idea behind invisible payments was that buy buttons and back-end systems would make the payment process invisible to the end-user. But as Karen Webster points out, that was “contextual commerce 1.0.”
The new and improved 2.0 is about giving consumers the ability to pay for something as soon as they have an interest and intent to buy, enabling contextual purchases not just through ads but in any digital environment that provides users with useful information. It’s that second part that is particularly important. Users could be in a messaging app, blog, news site, social network, streaming service (Netflix), or search engine.
If you’re wondering what that might look like, you’re not alone. Consider WeChat, China’s leading app with around 700 million monthly users. WeChat is used for everything from messaging, to calling, to browsing, to gaming, to payments. Users can pay for parking tickets, pay for coffee, book a Didi ride (similar to our Uber), and even use the app to pay in-store. The Economist describes it as “not so much an app as an entire mobile operating system.”
If you read our post on why mobile wallets haven’t taken off you know that thus far they haven’t done enough to remove friction from the in-store checkout experience.
But that’s not to say mobile doesn’t have its place in-store. We know that mobile can blur the distinction between digital and physical channels as shoppers commonly do product research or even make purchases on their smartphone while standing in a store. And we can expect this distinction to become even less clear.
Shoppers don’t want to discover products online, research them online, and have a digital wallet just to stand in line with everyone else. Instead, mPOS devices and order ahead functionality will allow shoppers to make purchases on their mobile device while skipping the lineup altogether (and they are going to prefer retailers that can provide them with this experience).
It’s already starting to happen. Starbucks’ Mobile Order & Pay allows customers to order their beverage ahead of time and just simply pick it up when they get in the store. The app is already generating 9 million transactions per week and it has barely been out for a year.
Braving the Unknown
While contextual commerce and mobile payments are two gigantic commerce initiatives, there is still a lot that is still unknown when it comes to digital payments.
Apple Pay, Alexa, Amazon Dash, and the numerous other companies that make up the list of payment friction fighters have all made an attempt at becoming the next big thing in payments. However, no one has quite figured it out. Apple Pay thought that the shift to EMV cards in the US would push everyone to their mobile wallets, however 80% of US MasterCard users have an EMV card – and still Apple Pay hasn’t exactly taken off. But that all could still change.
Pinterest and the other social networks hoped that buy buttons would help them cut a piece of the commerce pie, and despite the number of buyable pins increasing they haven’t been able to drive much in the way of actual revenue. Pinterest isn’t alone either. Facebook’s buy buttons in the news feed have had a similarly difficult time driving a real impact on revenue.
Let’s not forget Amazon’s Dash button. Released in April 2015, the Dash buttons allow shoppers to buy specific branded products with the push of a button. Amazon started off by partnering with brands like Tide and Bounty, but have since expanded to include Doritos, Trojan, NERF, Orbit, V8, and a number of other big brands. That said, reports suggest the Dash button has been a bit of a flop – less than 50% of people that have a Dash button have actually pressed it. Perhaps you’re not shocked by that stat. Neither am I. Who really needs NERF guns on demand? My inner kid would love nothing more than daily impromptu NERF fights, but it isn’t exactly something that’s going to revolutionize shopping.
But if there is one thing all of they have in common, it’s that they haven’t quite nailed the formula yet.