FX International Payments
By Megan Doyle
And the journey has only just begun. Virtual payment solutions technologies are expected to spread to retail outlets worldwide and generate over $78 billion in annual transaction revenue by 2022, compared to the estimated $9.8 billion in 2017.1
While checkout-free "smart" stores like Amazon Go in Seattle are drawing attention to the prospects of these futuristic digital payment solutions, the cost and complexity of integrating such structures could hold back the short-term adoption of similar advanced payments solutions.2 In the meantime, the following technologies and initiatives are cropping up worldwide to start streamlining payments.
Optical reader technologies like QR codes have largely been driven by China through payment platforms such as Alibaba's AliPay and Tencent's WeChat. These QR payment solutions have emerged as a "cultural phenomena" in the region and have accounted for nearly $5.5 trillion in transactions in 2016 – making cash practically obsolescent in China's urban areas.3
But QR-based digital payments extend beyond Asia. Walmart's Walmart Pay, for example, allows U.S. customers to scan a unique QR code at the register and instantly pay with their smart phone.4
Similarly, "smart" payment terminals that coalesce a wide variety of cashless payment options are creeping their way into brick-and-mortar stores. David's Bridal and Sleepy's mattress, for example, recently partnered with payment solution provider Ingenico Group to roll-out "smart" POS systems. By accepting cashless payments ranging anywhere from credit card to mobile payment apps, these two companies expect the integrated POS system to simplify transactions, thereby reducing the stress of major purchase decisions like wedding gowns or mattresses.5,6
Mobile payment apps, meanwhile, let customers bypass payment terminals. Instead, users can order and pay for goods and services through their smart phones without waiting in line, or even waiting for a server at a restaurant. Such streamlined digital payment platforms are expanding around the world, including in Brazil, Canada, Singapore, Ireland, and South Africa.7
Built into nearly all modern smart devices, NFC is a form of radio frequency identification that uses close-proximity wireless technology so payments can be made with merely a tap of a device.8 Digital interfaces like Apple Pay use NFC to provide instant smartphone-based payments and credit card authentication, greatly reducing transaction times. The ubiquity of NFC and the "significant increase in the deployment and adoption of wearable payment solutions" like smart watches means this technology could lead the way while more advanced payment solutions mature.9 But while NFC might make payments instantaneous, it's still time- and labor-intensive as all items need to be individually scanned.
On the other hand, RFID can scan multiple items simultaneously, allowing customers to ring up everything in their shopping cart at once.10 A Shell gas station/convenience store in London recently tested the technology and found the process to be 15 times faster than a standard self-service checkout station. Customers placed their basket of goods on a scanning platform that immediately listed each item and paid using their mobile wallet of choice.11 But despite the increase in transaction speed, RFID chips would need to be embedded in all packaging – a potential barrier to widespread adoption.
Invisible payments go a step beyond smart POS systems and radio technology, using scan-and-go apps, mobile wallets, and Bluetooth technology to perform virtual payments that "require no conscious interaction between the consumer and the retailer."12 For example, instead of taking any conscious action (i.e., entering a PIN or swiping a card, as in the scenario described above in the "Smartphone Payment Terminals and Mobile Apps" section), customers can sit down to eat at a restaurant then walk away while their smartphone does the "work." In one recent trial of such a service, customers used their smartphone as a mini-checkout station, reducing average wait time from five minutes to 27 seconds.13
The prevalence of Bluetooth could make BLE another promising form of invisible payments. Potentially easier to integrate due to Bluetooth's ubiquity,14 BLE could eliminate the need for POS systems altogether. BLE's "invisible" technology means consumers might not even need to take out their phone to pay. Start-up companies like Dash or Tab store customer information in the cloud, allowing payments to be made in the background via Bluetooth.15
Many forms of digital payment solutions could change the relationship between retailer and consumer, making the actual commercial transaction secondary (or even tertiary) to the experience of enjoying a product or service. Integrating connected devices like smartphones and POS systems – or even turning smartphones into POS systems – could seamlessly implement purchase opportunities into everyday activities.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.
1. “Smart Store Technologies to Generate Over $78 Billion in Annual Transaction Revenue by 2022,” Juniper Research; https://www.juniperresearch.com/press/press-releases/smart-store-technologies-to-generate-over-$78-bn
3. “The many faces of mobile payments,” Mobile Payments Today; https://www.mobilepaymentstoday.com/blogs/the-many-faces-of-mobile-payments/
5. “Bridal retailer gets ‘smart’ about in-store checkout experience,” CSA; https://www.chainstoreage.com/technology/bridal-retailer-gets-smart-store-checkout-experience/
6. “Sleepy’s supports mobile sales with in-store contactless payment terminals,” Retail DIVE; https://www.retaildive.com/ex/mobilecommercedaily/sleepys-springs-up-mobile-sales-with-in-store-contactless-payment-terminals
7. “Oracle and Mastercard to Deliver Seamless Payments,” Business Wire; https://www.businesswire.com/news/home/20170226005187/en/Oracle-Mastercard-Deliver-Seamless-Payments
8. “The many faces of mobile payments,” Mobile Payments Today; https://www.mobilepaymentstoday.com/blogs/the-many-faces-of-mobile-payments/
10. Supply Chain Visibility Evolution: Barcodes, RFID, NFC, BLE Beacons,” Roam Bee; https://blog.roambee.com/supply-chain-technology/evolution-in-supply-chain-visibility-barcodes-to-rfid-to-ble-beacons
11. “Supermarket checkout designed to scan entire shopping basket trialled in London,” Evening Standard; https://www.standard.co.uk/tech/supermarket-checkout-designed-to-scan-entire-shopping-basket-trialled-in-london-a3747506.html
12. “The many faces of mobile payments,” Mobile Payments Today; https://www.mobilepaymentstoday.com/blogs/the-many-faces-of-mobile-payments/
13. “How invisible payments will revolutionize the restaurant experience,” Barclays; https://www.home.barclaycard/insights/payments/How-invisible-payments-will-revolutionise-the-restaurant-experience.html
14. Supply Chain Visibility Evolution: Barcodes, RFID, NFC, BLE Beacons,” Roam Bee; https://blog.roambee.com/supply-chain-technology/evolution-in-supply-chain-visibility-barcodes-to-rfid-to-ble-beacons
15. “How far away are we from the Invisible Payments?,” LinkedIn; https://www.linkedin.com/pulse/how-far-away-we-from-invisible-payments-linas-beliūnas