forecourttech February 20

forecourttech
Predicting the future
of payments
By Andreas Strobel
President, Smart Payment Association
pagetwelve
Five years ago the Smart Payment Association (SPA)
made 12 payment predictions for 2020. So how did we get
on?
Since the establishment of the SPA on 01 January 2005,
the retail payments market has been in a continual state of
evolution. We’ve seen the emergence of digital currencies,
digital wallets, the entrance and growing influence of nonbank
players across the ecosystem and much more.
As the trade body of the smart payments ecosystem, SPA
and its members have played an important role – as technology
innovators, regulatory influencers and, of course,
as the publishers of the annual analysis of payment card
trends.
In our fifteen years, we have also prided ourselves on our
ability to identify emerging trends. As we enter this new
decade, we thought we’d put that confidence to the test!
Five years ago this month we published a 12-point article
predicting how we’ll be paying in 2020. Let’s pick up on
some of the points to see how we did.
Prediction 1. Card-based technology will still be the
dominant form factor for both fixed and mobile retail
payment instruments.
Even before 2015, many industry figures were predicting
the dramatic decline of the physical payment card. We
didn’t agree. While many regions of the world are heading
towards a cashless future, this evolution seems to be driven
by the card. The latest figures based on actual manufacturer
sales data show continued year-on-year growth
and record shipment numbers of smart payment cards.
While Apple, Google and other device-based payment services
are certainly popular, it appears the security, speed
and convenience of contactless cards is keeping consumers
reaching for their wallets before their phones.
Prediction 4. Non-bank entrants in the retail payments
market will stay and consolidate, provided that access
to payment infrastructures is enabled.
In Europe especially, the evolution of the Payment Services
Directive (PSD2) has done much to open the market to
non-bank payment service providers since 2015, and
indeed has enabled the expansion of payment instruments
to include loyalty cards, mobile phone numbers and more.
This is all about striking the right balance to deliver a
secure, interoperable and convenient payment experience
for consumers. While this may be the ultimate goal of PSD2
over RTS initiative, this experience already exists in the
shape of the smart payment card.
Prediction 10. Interoperable real-time payment infrastructures
will be the rule, not the exception.
While we recognised the appetite for instant payment,
we also highlighted the considerable technical, financial
and adoption barriers. In Europe at least, the market has
certainly moved forward in the intervening years. We’ve
seen the launch of the Euro Banking Association’s (EBA)
real-time payment processing facility RT1, and more recently
the TARGET Instant Payment Settlement (TIPS) from
the European Central Bank. In the United States, instant
payment-based apps such as Pay by Bank and Vipps are
available, and instant payment services are a key part of
the Federal Reserve’s strategy.
Back in 2015, we also touched on developing form factors
and the potential of contactless payment in the wearable
world. Certainly, NFC payment-enabled smart watches
have been with us for some time. If the latest news coming
out of CES 2020 is anything to go by, payment-ready
wearables will be a major and growing strategic focus for
customer and technology brands as we move forward.
Just as on the smart card, biometrics continues to play a
powerful enabling role in the future of contactless payment
security. This has always been a key area of study for SPA,
having pioneered biometrics with EMVCo since the mid-
2010s. We’re pleased that EMVCo is now actively promoting
the use of on-card biometrics to authenticate payment,
while the EBA is recommending its inclusion into PSD2.
So, looking back, how did we do? We think…ok! Most
of our predictions have come (or are coming) to fruition.
There’s still work to do, of course. SPA will continue to
collaborate with partners across the ecosystem to help it
transform to address the needs of today’s stakeholders,
regulators and consumers.
And what are our predications for next five years? You’ll
have to wait a little while we consult our crystal ball!
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