Disappearing Act: Payments Get More Powerful by Being Less Visible

Increasingly, the goal of more payments providers — from megabanks like Wells Fargo to startups like YoYo — is to hide the fact that they are payments providers.

Wells Fargo, for example, is investing in all sorts of biometrics technology to possibly one day enable consumers to initiate and complete a transaction by speaking a passphrase instead of swiping a card or opening a bank-branded app.

“Mobile is going to take payments on a ride,” said Bipin Sahni, head of innovation and R&D at Wells Fargo, at Finextra’s Future Money conference in London this week.

YoYo, a U.K.-based mobile wallet startup, is attempting this transformation on a smaller scale. It  is pushing its application in closed environments, such as university campuses, where it can gradually build new habits among a young, digital-native consumer base.

YoYo's cautious approach stems from its belief that many providers are taking giant steps too quickly, said Michael Rolph, co-founder and CEO of JustYoYo, during the panel. Rolph wants to avoid the perception that his company's technology is like the scifi vision of the film Minority Report. In the film, characters are immediately identified and greeted by name after a device at a store's entrance scans their biometric traits.

Not only are merchants wary of consumer's perception about these tracking models, but most aren’t cash rich, which means they won’t invest in a technology without being positive it will provide return on investment, he said.

“Merchants' biggest fear is lock-in,” Rolph said. “Merchants need to try before they buy.”

Amazon has applied for patents in this area, with a vision of using facial recognition and RFID, mixed with data on consumer shopping patterns, to identify and sell any item a consumer picks up from a store shelf. And incumbents and startups alike, including Cisco, Scandit and Shelfbucks are building products that make this frictionless vision where payments are invisible more tangible.

While Starbucks has long been the reigning champion of mobile payments, the ride-sharing provider Uber may soon steal the coffee shop's trophy. Payment companies can’t stop talking about the San Francisco-based startup that’s heavily disrupted the taxi industry by making the process of ordering a car and paying the fare seamless, said Zil Bareisis, a senior analyst at Celent and moderator of the panel.

And if Uber tells us anything, it’s that commerce should be mobile, connected to a community of reviewers and payments should be imperceptible.  “It’s not about payments, it’s about the commerce experience,” Bareisis said.

The idea of masking the payment process is why many merchants are looking at Bluetooth beacons, which can be placed around a store to communicate with shoppers' smartphones. The merchant could push targeted offers based on a customer's purchase history or change any time the recipient walks to a new department.

Customers might also scan items with their smartphone as they shop, starting a digital checkout. And a linked payment card could be charged when the customer leaves, greatly reducing the bottleneck at the cash register.

That commerce vision is slowly making its way to more locales. The point of sale can now be anything, from a billboard to a living room couch, said Matt Deacon, co-founder of Ensygnia, a transaction and identity management platform provider, during the panel. 

But security and privacy in this highly connected world is lacking. Deacon said that businesses that deploy these types of system will have to be wary about how consumers perceive them. The best course would be to let consumers have the ability to opt in and opt out at any time, he said.

The sci-fi retail vision “will happen, but it will take time,” said Wells Fargo's Sahni.