The Path to Increased Consumer Uptake of Digital Payments in 2015

We live in an increasingly connected world.

Cisco has estimated that by 2020 there will be 50 billion Internet-connected devices globally. Some will take the form of screens we see every day like tablets, smartphones and watches; others will be items like vehicles, clothing or household appliances. Even more exciting are the form factors that we haven’t even been exposed to yet.

All of these devices have the potential to integrate payments. But consumers will demand a payments experience that is seamless, convenient and secure.

Below are some key trends and opportunities that will allow Canadians to make digital payments more often and more easily.

Increasing uptake of NFC mobile payments

In Canada we are very bullish about NFC and its ability to provide an interoperable, scalable and secure mobile payment experience for Canadians. According to Visa Canada’s recent quarterly report, the Visa Canada Digital Commerce Index, 68 per cent of smartphone owners are aware of Near Field Communication (NFC) or Quick Response (QR) Codes, with 65 per cent likely to make NFC or QR payments over the next six months.

RELATED: The Future of Mobile Payments in Canada is Already Here

NFC is now being deployed in virtually every smartphone and is supported by the largest mobile operating systems (iOS, Android and BlackBerry). Canadian banks have embraced NFC more than any other market. Desjardins, CIBC, RBC, Scotiabank and TD have all successfully developed and deployed NFC payments to their customers. 

This market momentum bodes well for the adoption of HCE, or Host Card Emulation, which effectively allows NFC payments with Android devices by reducing commercial and technical complexities. With more smartphones per capita than most other countries and high levels of contactless card bank issuance and merchant acceptance, Canada is poised to lead the world in NFC payments and HCE adoption bringing our consumers more choice than ever.


Smooth shopping in an “omni-channel” world

The overlap of face-to-face and remote commerce means physical retailers can collect payment through eCommerce, and eCommerce retailers can collect payment on delivery through a mobile device. Consumers want to be able to purchase products and services anywhere at anytime or “omni-channel”, so online, via mobile, and in-store at point-of-sale.

As a result, progressive retailers will provide shopping experiences that consistently inform and deliver value at both physical and online shopping sites.

Consider how style icon Burberry is using its flagship store in London to bring the best of online shopping to the brick and mortar experience: interactive mirrors transform into personalized screens so that when a customer brings an item close to a screen or a dressing room mirror, embedded RFID tags activate specific content related to that item. These mirrors literally reflect the information consumers are accustomed to seeing when they shop online.

Still, though, online shopping cart abandonment remains a real issue for both online retailers and consumers. The Visa Canada Digital Commerce Index showed 47 per cent of online shoppers abandoned a purchase prior to completing payment within the past three months. And security is still a top consideration – only 65 per cent of PC users and 55 per cent of smartphone users trust the security on their devices when making an online purchase.

Addressing both issues is paramount. We are helping spearhead “tokenization” technology that replaces your 16-digit credit card numbers with a digital proxy or “token” identifying who you are without exposing any of your account details. Tokenization generates a unique digital account number that is a proxy for the primary card number and is used to facilitate the payment. Digital account numbers are device-specific, meaning they are designed to make purchases with a specific mobile device. In the event that the device is lost or stolen, the digital account number can be disabled without the need to reissue the primary payment card.

Completely eliminating friction in the online checkout process is a key goal for Canadian retailers who are keen to facilitate more online payments, and for consumers, who don’t want the tedious process of entering their card number and shipping information. We launched Visa Checkout to enable consumers to store and use any major credit or debit card and securely speed through an online checkout with just a username and password.

We also plan to make our products, services and payment capabilities easier to access. We will provide APIs, SDKs and reference apps via a simple and intuitive developer center to allow clients, partners and developers direct access to our network to rapidly iterate new, safe, frictionless payment products and experiences that leverage Visa’s global network.

Clearly, momentum around mobile payments is building. Next month I’ll pack my bags and head to Mobile World Congress/MWC where I am looking forward to great discussions about developments around the world. Stay tuned for news from MWC and definitely more exciting innovation.