As the first wave of Covid-19 accelerated across Europe and the United States in March 2020, e-commerce transactions across the EU climbed 30 per cent higher than in the previous year, while in the US they saw a 15 per cent rise. In-store purchasing has changed too, with the proportion of payments completed via contactless surging to two thirds of all transactions.
But while Covid-19 has accelerated our transition to a cashless and contactless society, the winds of change were already blowing. And, as Mastercard’s chief digital officer Jorn Lambert points out, there are bigger forces shaping the future of payments than the need for good hygiene practices.
“The face of commerce as we know it is changing,” he says. “Emerging tech adoption is driving an explosion in retail touchpoints and the convergence of the physical and digital worlds, while new interfaces are changing the way we make payments, from voice to facial recognition and beyond.”
Lambert points to four interrelated trends that he identifies as the main drivers of this digital transformation: the introduction of 5G networks, the Internet of Things (IoT), cloud and edge computing, and AI.
“People tend to think of 5G as just meaning they can download movies faster,” he says. “And it’s true there will be much, much faster speeds. But it will also mean a tenfold reduction in latency, and probably most importantly, the ability to connect 300 times as many devices as compared to 4G networks.”
Add to that a proliferation of cheap, low-powered processors, alongside the ability to send vast data streams to the cloud in order to extract AI-driven insights, and the introduction of 5G is set to trigger an IoT boom.
“IoT devices will soon pervade every aspect of human life,” Lambert says. And as these devices learn about their owner’s needs, whether through passive monitoring or voice communication, he expects that consumers will increasingly default to allowing them to make purchases on their behalf.
“One overall consumer trend I think we all recognise is that the least effort always wins,” he says. “Now it’s unlikely that people are going to start letting digital assistants buy their shoes, because that’s an emotional purchase. But if you run out of ink, you’re probably quite happy for your printer to handle ordering the replacement itself.”
In stores, the introduction of cheap sensors and cameras could dramatically reduce friction by automatically tracking what a customer places in their basket, charging their account on file and allowing them to skip the checkout line altogether.
“Contactless payments are just stepping stones, allowing you to shave a few seconds off the queueing time,” says Andrew Radlow, chief business officer at Berkeley-based startup Grabango. Grabango’s solution uses machine-vision-enabled cameras to facilitate checkout-less payments at grocery stores in the US. “When you look at the overall process, the scanning of items, the standing in line, you can eliminate 80 per cent of that by going fully checkout-free.”
Other ways consumer-initiated payments might be transformed by 5G and other enabling technologies include the growth of voice interfaces and biometric authentication. Business models are, meanwhile, trending toward a “subscription economy”, where people pay to access rather than own certain goods, and stream their TV and music services.
But, amid the excitement of new ways to make payments technology easier, for Lambert, it’s crucial not to lose sight of the fundamental imperative of keeping it accessible.
“With this tsunami of innovation, there’s a real danger of people getting left behind,” he says. “So, for us, the most important thing is making sure that we’re there, wherever the consumer wants us to be. We very much view our role as democratisers, working with our partners to ensure these solutions are available to all.”