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Consumer Payments: Trends and opportunities for payment providers

Consumer Payments: Trends and opportunities for payment providers

Summary

An overview of the current market dynamics of each of the key trends, and how they will likely develop in the near future. This will highlight key strategies and tactics that players in the payments ecosystem can look to employ to stay ahead of the curve, and explore how each key trend is likely to develop over the next 12 months.

Key Findings

Assessment of the key trends in consumer payments, including mobile wallets.

Analyzing security levels with different services and the threat of cyber-crime.

Identification of future developments within the consumer payment industry.

Reasons To Buy

What are payments services doing to combat cyber-security?
How are point of service terminals evolving?
How are mobile wallets trying to increase market share?

Key Highlights

The buzz surrounding mobile payments remains in full swing, with an ever-expanding array of brands (both established and emerging) competing within the space. However, no provider has so far managed to achieve widespread levels of consumer adoption (especially at the POS). Smartphone maker- and mobile operating system-driven services (such as Apple Pay, Samsung Pay, and Android Pay) are being widely pegged to lead the market ahead of other players given their global brand presence and extensive user bases. Strong emphasis will be placed on positioning mobile wallets as a mainstream alternative to cash and cards, with building merchant acceptance levels being a top priority in the near term. Yet, it will be those mobile wallets that seamlessly integrate into consumers’ everyday lives and facilitate a range of transactional possibilities that will gain the most traction. Mobile wallet registration incentives and usage rewards will be commonly used tactics to drive consumer uptake within the space.
There continues to be a great deal of disparity in the level of security employed by payment providers and merchants. Cyber-criminals are threatening the integrity of the payments system by exploiting those with weak and outdated security mechanisms in place. Additionally, the types of malware and phishing scams are evolving at a rapid pace. Regulators and industry standard-setting bodies will issue more explicit rules and guidelines for online and mobile payment security. Cross-industry information sharing initiatives (especially those that promote the sharing of cyber security threat data between government and businesses) will form a crucial part of fraud prevention strategies going forward.
Consumers continue to display increasingly lax attitudes towards information security. Many are either opting to use simple or no passwords, or are re-using strong passwords across multiple platforms for greater account accessibility and convenience. With the threats facing the payments ecosystem mounting, the reliability of static, knowledge-driven authentication inputs (mainly passwords) has been brought into question. Given the great demand for payment services to deliver faster and more convenient shopping experiences, there will be a greater reliance on security mechanisms that sit behind the scenes (such as risk-based analytics). Moreover, technological advancements (especially around mobile) will increasingly give rise to consumer-facing authentication tools that shift away from static passwords towards inherence and possession factors (such as biometrics and app-based dynamic verification codes).


>Overview
Catalyst
Summary
Mobile Wallet Wars
Mobile wallet providers will use incentives to lure consumers to mobile payments
A growing number of new providers will compete to build their user base over the next year
Mobile wallet providers that fail to enhance their offerings will struggle to achieve longevity
Samsung and Google are offering a number of rewards and incentives to drive Samsung Pay and Android Pay adopt
Cyber Security
Regulators will issue more explicit rules and guidelines for internet payments security
Reserve Bank of India mandated FA practices
South Africa introduces D secure to combat fraud
EU review of Payment Services Directive imminent
US introduces Cyber security Information Sharing Act
Cross-industry information sharing initiatives will prove essential in the fight against fraud
Private-public partnerships progressing in the US
Europol’s European Cybercrime Centre enforcing cyber security in EU
Password-less authentication
Consumers’ lax attitudes to information security will continue to be a major cause for concern
Static passwords will be phased out as providers deploy a host of new authentication mechanisms
POS terminal modernization
POS vendors will ramp up their efforts to provide merchants with more than just card acceptance
Worldpay trialing facial recognition technology in UK
Verifone Engage incorporates retail practices into payment system
Verifone Engage improved All recipes' customer engagement
Social Commerce
Social commerce will enter the proof-of-concept stage in , with Facebook leading the way in the West
Facebook has been improving its commercial capabilities
Social commerce won’t take off overnight, as consumers will need to be convinced of its benefits
Infant social commerce in the West could take lessons from Asia
Conclusions
Fast-paced innovation in a burgeoning market
Appendix
Sources
Further Reading
Ask the analyst
About MarketLine
Disclaimer
List of Tables
Table 1: Phishing incidents at major US companies
Table 2: Companies experimenting with new authentication methods
List of Figures
Figure 1: Verdict Financial Consumer Insight Infographic
Figure 2: Mobile Wallet Providers
Figure 3: Apple Wallet survey as of October 2015
Figure 4: Samsung promotional offer
Figure 5: European and US information sharing initiatives' logos
Figure 6: Mobile banking compromises victim attitudes and behavior
Figure 7: Companies modernizing POS terminals
Figure 8: Social media platforms consumers would most likely use that would lead to making a purchase

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