The COVID-19 pandemic led many locked-down consumers to stream or download more movies and video games, and this trend is leading to a rise in demand for faster data services such as 5G — a potential driver of payments innovation.
One of the major impacts of 5G will be reduced latency, or the time it takes for a device to send a command to a remote server and illicit a reply. This will both eliminate potential errors in the transaction process, and decrease the time between payment and transaction confirmation.
“In the same way that broadband internet access spurred the creation of entire new industries, 5G in conjunction with more powerful mobile devices and edge computing, will forever alter commerce, gaming, and streaming,” said Daniel Kornitzer, the chief business development officer at U.K.-based online payments provider Paysafe. “It will make it possible to have an almost in-store experience from a mobile, through virtual or augmented reality.”
2021 is widely predicted to be the year of 5G. By early January, the faster mobile data technology had already rolled out to around 200 cities across the U.K., while globally, Gartner predicts that the number of 5G phones sold will reach 489 million by the end of the year.
Because of this, online gaming and streaming platforms like Amazon.com's Twitch are likely to be some of the first major beneficiaries of 5G. Paysafe has already partnered with a number of in-game sports betting and video gaming streaming platforms. Industry figures predict that 5G will make it far easier to facilitate instantaneous in-game or in-stream purchases through mobile apps, wallets, and even newer payment methods.
“5G infrastructure is likely to proliferate different ways of transacting, whether through beacons, augmented reality and other emerging technologies which are going to be the next generation of drivers of payment activity,” said Blair Walker, a spokesperson for Edinburgh-based consultancy Waracle, which advising various companies on how to make the most of the commerce opportunities offered by 5G.
With the U.K. lockdown now set to ease in phases over the coming months, 5G will also begin to reduce friction around transactions in various face-to-face retail environments over the course of 2021.
“At well-attended events like music festivals and sporting events, mobile connectivity has always previously been an issue,” said Walker. “In the past, you had to preload cards at festivals and deal with cash only outlets, but the mobile will become the wallet even in these densely populated in-person events.”
Looking further forwards over the coming years, Kornitzer also predicts major shifts in payments authentication, as a direct consequence of 5G. To date, the dominant biometric technologies in development have focused on fingerprints, but 5G will allow increased scope for both voice and facial recognition.
“Using more 5G technology also means cutting down the amount of data sent to the cloud when a payment is made and more of it is kept on a consumer’s device instead,” Kornitzer said. “This will naturally increase the use of biometrics such as voice, fingerprint or facial recognition, because phones and wearables have biometric authentication technology built into them. With less information being aggregated, in theory there’s less risk of it being stolen.”
One of the major consequences of the pandemic has been shifting consumer attitudes towards e-commerce, a behavioural trend which is widely predicted to become permanent. 5G will allow for increased innovation in the e-commerce space in the coming years, invoking technologies like augmented reality, to create completely novel shopping and transacting experiences.
“The overall increase in bandwidth should also open up potential new avenues for e-commerce shopping and mobile commerce, enabling retailers to offer a physical experience digitally, such as projecting furniture into a room or trying on clothes or sampling grooming products virtually,” said Kornitzer. “But as well, there will be benefits for brick-and-mortar retailers. Many stores believe that 5G will mean the end of the traditional checkout, and Amazon Go- style frictionless checkouts are the future of retail. There’s also omnichannel experiences, where consumers shop in a store and then pay via a digital checkout on a smartphone app, where we will see the positive impact of 5G.”
