The payment industry is fast-moving, and thanks to innovation and technology, developments are speeding up and changing the way we send and receive payments. Who could have imagined 50 years ago that you could wake up to an alarm clock, take pictures, and make payments with a single tap, all with a mobile phone? Or that you could walk into a retail store, take what you like and walk right out without waiting in line and paying at a cash register? Quick, convenient, contactless payment solutions are driving our financial services future, and with so many options and advancements out there, you need to stay informed of the latest and greatest developments. The following are some of the most exciting technological advancements in the payment industry, and this seems to only be the tip of the iceberg.
Contactless Payments: Tap to Pay, with Anything!
Contactless payment, the ability to pay with just a simple tap, was first introduced back in 1997 by Mobil, who offered their “Speedpass” contactless payment system at participating Mobil gas stations. Mobil has since merged with Exxon, and the service is still offered at many ExxonMobil stations. Since then, many other gas stations have implemented a Speedpass-type of contactless payment system for payment of their gas. And why not? Contactless payments have proven to be faster, more convenient, and create an all-round better experience for both the merchant and the customer.
Contactless transactions are known to be much faster than purchases made with cash, or traditional methods of processing credit cards or debit cards. This is because no signature or PIN verification is required. While a lack of authentication may pose a risk of fraudulent purchases that can be made if the card is lost or stolen, chances are that both the merchant and customer will not assume any financial risk as long as everyone follows their credit card company’s policy; such as immediately reporting their lost or stolen credit card. In Canada, contactless tap limits are set at under $100 per purchase for security purposes, and this is perfect for smaller everyday purchases. Contactless payments work through Near-Field Communication (NFC) technology, which is similar to Radio-Frequency Identification (RFID). RFID uses radio waves to capture information stored on a tag attached to an object. Tags can be read from up to several feet away and do not need to be within direct line-of-sight of the reader to be tracked.
The difference between the two is that NFC is limited to communication within about four inches, which is why you have to tap your credit or debit card so close to the terminal or contactless reader. NFC can transfer data like videos, contact information, and photos between two NFC-enabled devices.
A debit or credit card is not the only thing you can tap. Forgot your wallet? Notto worry because now you can tap to pay with your smart phone! A simple tap ofyour phone on the payment terminal will have you in and out of the line-up inno time. MONEXgroup, an innovator in the contactless space, has taken thingsone step further with their unique PCI compliant and completely unattended ContactlessOnly payment solution; which is one of a kind in North America. This solution hasrevolutionized the multi-housing laundry, car wash, air pump and vacuum industriesacross Canada. These unattended payment terminals are built tough and come ruggedizedto withstand the harsh elements of the Canadian climate, such as humidity, wind,rain, snow, hail and ice. They are weatherproof and 100% waterproof, evenagainst a high pressure car wash water jet. In April 2018, MONEXgroup’s Tap& Wash unattended contactless payment processing car wash terminals went up against a major ice storm in Ontario without any issues.
More recently, MONEXgroup introduced Tap & Park for parking lots and Tap to Donate for charitable and not-for-profit organizations. Industry applications of their unattended solutions appear to be endless, especially with the advancement of their new fully integrated and customizable touch screen kiosks. Those businesses implementing the innovative solution have seen sizeable transaction volume increases as well as tremendous savings in operating costs by reducing the administrative burden of coin.
Customers love the contactless payment solution because it allows them the freedom to pay with virtually any modern payment methods, such as debit card, credit card, and mobile wallet (Apple, Android and Google Pay). Fumbling for change or standing there while your credit card PIN processes is now a thing of the past – all you have to do now is just tap to pay. Offering customers all-round convenience and a faster transaction experience is sure to bring them back for repeat business. The move towards contactless payment solutions is clearly logical given recent trends. We’ve seen a huge increase in contactless payments in Canada over the last several years. Canadians spent $6 billion in 2011 with contactless payments, and that number ballooned to $67B in 2016 [1] . It seems that contactless payments are continually on the rise and aren’t showing any signs of slowing down.
Just-Walk-Out Shopping
We have all heard of Amazon, the online retail giant who started from humble beginnings as an online bookstore in 1994. Today, it is the e-retailer of choice for consumers in Canada and beyond. With sales of $177.9 billion in 2017, and over 200 million products for sale, Amazon is the largest online retailer in the world [3] . Amazon sure has come a long way. And it continues to evolve, adding original television programming and extensive mobile capabilities [4] .
One of their newest developments is Amazon Go, a new surveillance-powered store concept with no checkout required – you can just grab and go – hence the term “just-walk-out shopping”. What this means is that when you shop at Amazon Go, you don’t have to wait in line or go through the whole checkout process. You download the app, walk into the store, take what you want, and leave. After you leave the store premises, your Amazon account is charged and you are sent a digital receipt. It’s that simple!
All of this is possible with the use of the same types of technologies found in self-driving cars, such as computer vision, sensor fusion and deep learning. This technology can detect when products are taken or returned to shelves and keeps track of them in your virtual cart. You can only currently purchase ready-to-eat meals and groceries at Amazon Go, but don’t be surprised if it branches off into other product categories as well. Just think about the potential, being recommended a specific sale item on your phone as you walk in, based on your past behaviour or current interests. Amazon Go is currently only available in the US, but we can’t wait to see just-walk-out stores begin to pop up here in Canada soon.
Biometric Security: Facial Recognition for Payment
Security has always been a top concern for banks. Recently, banks have begun looking into the use of biometrics to secure clients’ accounts. This is especially true for people who use their smartphones to access their banking information. Biometric security, such as scanning thumbprints, retinas, and faces, as authentication methods, is quickly gaining traction in the payments industry. Biometric security will make financial transactions more secure for consumers and merchants alike, not to mention reduce stress and hassle by eliminating passwords and security checks, because remembering every password you need in society today is enough to drive someone mad! Biometric security can also be cost-effective for merchants, as it reduces financial and administrative costs associated with fraud and password resets.
Facial recognition payment technology has been at the top of the hype list recently, and for good reason. We’ve likely all heard that phrase, “million dollar smile”, well now you can pay for your purchases with that beautiful smile when you shop at a store. At a KFC in China, you can forget both your wallet and your phone, because all you need to do is smile to pay! Ant Group, an affiliate of multinational conglomerate Alibaba, is the company behind this development. Although you are not yet able to pay using only your face in Canada, facial recognition payments are considered to be a promising future payment development, offering a high degree of accuracy and an added level of security to the shopping experience.
Face ++ , a biotechnology company out of China, has found great success with their facial recognition software. Technology from Face++ is already being used in several popular apps. For example, it is now possible to transfer money through Alipay, a mobile payment app used by more than 120 million people in China, using only a scan of your face. In addition, Didi, China’s dominant ride-share company, uses the Face++ software to let passengers confirm that the person behind the wheel is a legitimate Didi driver and exactly who they say they are.
Further security measures have been put in place to mitigate the risk of fraud, such as a “liveness” test. This was designed to prevent anyone from duping the system with a photo, and requires those being scanned to move their head or speak while the app scans them.
Facial recognition technology has been around for decades, but has only recently become accurate enough to be used in secure financial transactions. Deep Learning and Artificial Intelligence (AI) techniques that are especially effective for image recognition are now used to make a computer zero in on the facial features that will most reliably identify an individual.
Deep Learning and Artificial Intelligence (AI)
Deep Learning and Artificial Intelligence (AI) could be one of the most exciting technological advancements of our time! Driverless cars, as well as facial and voice recognition are all products of Deep Learning and Artificial Intelligence. Now, we can use this “magic” to help us with our financial convenience and security.
AI is able to personalize customer experiences. For example, automated chat bots can answer your questions, help you find your online purchases and complete your order. This allows businesses to communicate with their customers in a more personal way. Digital assistants allow users to order items by voice command! Companies have only really begun diving into conversational commerce, and the integration of AI will mean that our ability to make financial transactions via voice commands will inherently get better, with expanding capabilities and increased automation.
Fraud detection will also hit new heights with this technology, as revolutionary breakthroughs continue in automation of a wide range of tasks, including understanding images, text and speech, as well as identifying user patterns and anomalies in behaviour to flag potential risks.
Increased Digital ID and Security
All of the new payment technologies we have been developing have attracted a whole new wave of security threats. Between breaches, spamming and the rise in cyber-crime, increased security has been one of the main concerns within the financial services industry. Businesses are increasingly looking for payment processing providers to offer stable and secure payment processing systems for easy transactions that are secure for both the merchant themselves and their customers.
PCI is the commonly used acronym for the Payment Card Industry Data Security Standard (PCI DS) , which is a set of requirements designed to ensure that companies that process, store or transmit credit card information, maintain a secure environment. PCI was launched on September 7, 2006, to manage the ongoing evolution of the Payment Card Industry (PCI) security standards, with a focus on improving payment account security throughout the transaction process. By choosing a payment processor which is PCI and EMV compliant, merchants ensure their payment accounts and their customers’ financial information are protected. MONEXgroup provides merchant processor solution with the latest PCI compliant and EMV technology so merchants can focus on building their business rather than worry about the security of their payment processing system. Keep in mind other type of data security is also very important. That’s why you need to properly degauss hard drives for insure properly disposal of your data.
VISA and MasterCard: New and Important Mandates
In 2016, Canadians spent $19.2 billion online, and that number is expected to reach $39 billion by 2019 [5]. More money spent online means more opportunity for cyber crime. Card Not Present (CNP) fraud equaled $537.2 million in Canada in 2015, and that number has been climbing steadily since [6]. CNP fraud typically occurs when a purchase is made fraudulently from a business selling goods or services on the Internet, by phone, or by mail, and represents a significant portion of issuer-reported fraud in Canada. This impacts everyone in the payments system, from issuers and acquirers, to merchants, to consumers and law enforcement.
Visa CVV2 Mandate
Effective October 13, 2018, all e‐commerce and telephone order merchants must capture the CVV2 code from the back of consumer cards and include it in the authorization request for Visa transactions. If there is a missed match, the transaction should be declined. In the event that the merchant fails to comply with this new mandate, they will be on the hook for any chargebacks stemming from that transaction.
MasterCard Contactless 3.0 Mandate
By January 19, 2019, all Canadian businesses are required to have carried out a systems upgrade to support MasterCard’s Contactless 3.0 payment standards. Ensuring compliance is imperative as the older system will expose the merchant to security risks.
Innovative Payment Technologies: Important for Merchants
Payment technology has come a long way. From RFID to NFC technologies, and from biometrics and AI, to MONEXgroup’s unattended Contactless Only solution. Merchants should keep informed on emerging payment processing innovation to stay ahead of the curve and ensure they keep up with societal demands. And those demands are predominantly focused on living a more efficient life – whether it’s by allowing us to pick up a salad and just leave the grocery store, like with Amazon Go, or by allowing us to just Tap & Park, like with MONEXgroup’s unattended solution – these advancements are the way of the future. Ultimately, customers will do more business with merchants that can provide an efficient experience. By adopting new payment technologies, merchants can ensure they are delivering on the experience customers expect; this is exceedingly more important as customers become more tech-savvy. It will be very exciting to see what new advancements there will be in the future – who knew spending money could be so much fun!
[1] https://www.payments.ca/sites/default/files/14-Dec-17/paymentscanada_trendsreport2017_final.pdf
[2] https://www.worldatlas.com/articles/the-25-largest-internet-companies-in-the-world.html
[3] https://www.digitalcommerce360.com/2018/02/01/amazon-grows-revenue-31-2017-profit-tops-3-billion/
[6] https://www.uspaymentsforum.org/wp-content/uploads/sites/5/2017/03/CNP-Fraud-Around-the-World-WP-FINAL-Mar-2017.pdf
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