Cash and credit cards are fast becoming quaint forms of paying. Nimble new digital players are nipping the process into a no-touch nanosecond.
Not so long ago the idea of paying for your morning coffee with a swipe on your phone or a flick of the wrist was the stuff of science fiction. Today, the mobile payments segment is one of the most mature in the fintech sector, with PayPal, Apple Pay and Android Pay dominating the market.
Mobile payment technology is already impacting the use of cash, with the Reserve Bank of Australia reporting
that the number of ATM withdrawals in January 2017 fell by 7.7 per cent compared with last year, and their total value decreased by 3.9 per cent. And soon it might completely change the way customers experience the checkout.
While the next generation of fintech innovators is transforming the way payments are made, this new landscape will be less about point-of-sale and more about “moment of sale”, says Danielle Szetho, chief executive of FinTech Australia, the national Fintech Industry Association.
“What I see is that we’re actually going to be doing much more of these transactions without a physical contact point,” Szetho says. “The transactions would be initiated but no actual contact necessarily needs to be made. It’s transacted and authenticated either on our mobile device or through some digital portal – but it’s initiated from platform to platform.”
In as little as two years’ time, Szetho predicts consumers will be able to shop in a bricks-and-mortar store, select several products and walk away without passing through a sales desk or self-checkout counter.
“When you’re putting the actual physical item into the trolley, the trolley is scanning the device, and you don’t actually have a physical moment where you say ‘I’m going to go up to a point-of-sale terminal and tap on something to execute a payment’,” she says. “You’re going to just walk out the door and the trolley is going to know that you’ve got X number of items in there and it’s going to automatically debit your account.”
Start-ups and big players
Powering the payments process will be fintechs such as Australian start-up Assembly Payments
, which provides a single payment platform that is compatible with various disbursement channels, with clients so far including Gumtree, Airtasker and carsales.com.au.
Online innovations such as Amazon’s digital assistant Alexa are already enabling customers to shop via voice-activated transactions, while messenger apps and social media heavyweights such as Facebook are making forays into the banking and payments space.
World of opportunity
Fintech digital payments are forecast to be worth $1.8 billion by 2020
in Australia alone, and are proving to be a major disruptor of the banking sector. With increased convenience, flexibility and low-to-zero fees, could traditional banking be on the slide?
Cameron Dart, founder and chief executive of Australian FinTech, which provides news and networking for the sector, says mobile payments present the greatest opportunity for innovation, predicting that only a minority will use credit cards within a few years. “The people who don’t use internet banking today will be the people who don’t use mobile payments tomorrow,” he says.
While ApplePay and Android Pay are the market leaders, smaller players are starting to claim a share.
“For instance, zipPay
allows you to purchase products now but pay for them later – there’s no establishment fees and no interest charged. Afterpay
works in a similar fashion,” Dart says.
“Both these companies are listed on the ASX, so they’re certainly not minnows or new start-ups, they’re well-established and growing rapidly. There are various other payments and payment gateway companies operating here in Australia, both home-grown, like Tyro, Openpay and Touch Payments, and those born overseas, like Stripe and Paypal’s Braintree.”
Before long, payment options at your local café could be more extensive than the menu.
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