Paying with a credit card

The future of payments: less cash, less contact

We are living in exciting times. The availability of technology is changing the way we work, the way we connect with family and friends, the way we consume media, and the way we pay for everyday items.

For retailers this means some exciting opportunities to do business in different ways. Picture the payments system of the future: consumers are browsing your store, they receive a special offer on their smartphone, then they use their phone to access their digital wallet to redeem the offer and pay with a single click. The same customer is later travelling home on the train and sends a birthday present to a friend interstate by accessing their digital wallet on their iPad.

Sounds futuristic? The reality is a digital wallet is not far away and paying by phone is already becoming a reality in many countries. But what this innovation also means is new opportunities and new ways of doing business for merchants, unimaginable until now.

History shows how far the payments system has already evolved in a short period of time. It was only around 50 years ago, that the Visa card was invented. At the time, cash and cheques ruled the payment world. Today there are 1.9 billion Visa cards in use around the world and 130 million transactions flow through its network every day.

Technology is everywhere. It is changing the way we do everything and importantly, the way we shop. Today you will see consumers in stores stop and check prices on their phones before making a purchasing decision. Consumers expect to access nearly everything, anytime, anywhere.

These trends clearly have implications for the way retailers will do business in the future and the same new technology is also driving changes in consumer payment behaviour.

Less cash in the future

Cash is diminishing in importance. Consumers are shifting from the use of cash to electronic payments. According to research conducted for Visa by UMR Research and released in July, more than a third of Australians (36 percent) say they now carry less cash in their wallets than they did five years ago.

One in four carry only $20 or less in their wallets. One in five say they would like to eliminate cash from their wallet altogether if it was practical to do so.

At the same time, more than a third of Australians are carrying more payment cards than they did five years ago, with almost half now having three or more payment cards in their wallets.

A key trend has been the rise of debit cards, with spend moving away from cash. Data from the Reserve Bank of Australia shows debit (including scheme debit and eftpos) has jumped from a 31 percent share of payments in 2005, up to almost 38 percent over the last five years.

A big driver behind the popularity of Visa Debit is the ability for customers to use it online, over the phone and overseas. You can only use eftpos at the point of sale.

So the fact is customers like innovation and choice, whether it is cards, contactless payments or mobile payments. The Visa Easy Payment Service has been designed to make small value transactions faster, safer and more convenient than cash. For purchases under $35, customers no longer need to enter a PIN or sign a receipt at participating merchants, they simply swipe or dip their cards to pay for their purchase.

McDonalds was first to launch this service in Australia last year and it is being rolled out at a number of other merchants including Coles, Kmart and Woolworths. The key benefit for merchants is faster transactions and reduced queues.

In Australia we are also experiencing strong growth in the rollout of contactless payments because they meet the fundamental consumer and merchant need for speed in places such as convenience stores, sporting venues and fast food restaurants.

Visa payWave is our contactless payment technology based on secure EMV chip. With Visa payWave cardholders just wave and go; there is no need to sign or PIN for purchases under $100 and no need to swipe or dip either. A Visa payWave transaction including printing of the receipt can be up to three times faster than cash.

As merchants, this means you can serve more customers, process more transactions and reduce queues. This results in greater customer satisfaction and a better shopping experience all round.

As more stores, supermarkets, fast food outlets and cafes throughout Australia accept Visa payWave, it will eliminate the inconvenient step of lining up at an ATM to withdraw cash before you head into the store, particularly for small purchases when retailers often won’t accept eftpos.

This is just one example of how contactless payments satisfy a growing need for customers, particularly in the low dollar value transaction category in Australian shops. You may have seen Woolworths’ recent announcement that it will start accepting Visa payWave across all its brands from later this year.

Looking to the future

As we look to the future, payment products will continue to evolve. We are investing in the future of payments which will see contactless payment technology evolve from cards into other devices such as mobile phones and person-to-person payments where cardholders can send and receive funds from other cardholders anywhere in the world.

One of these next generation payment solutions is the Visa digital wallet which will store multiple payment cards and allow single click purchasing. The average person on the street may not yet know what a digital wallet is, but the chances are they will be using one in the not too distant future to make everyday purchases in your stores.

So the future is very exciting. New technology is opening up great new opportunities for merchants to work with Visa and engage with customers in new ways – increasing sales and efficiencies.

Things to consider about contactless payments:

  • Greater speed and convenience: With no more fumbling for cash and no customer signature or PIN required, you’ll see faster service at checkout and shorter queues.
  • Cost savings: Shorter queues translate into efficiency and cost savings, fewer cash transactions reduce cash handling costs and slippage and greater chargeback protection means reduced back office and dispute handling costs.
  • Providing choice for customers: Making a variety of payment options available means greater choice for customers, delivering increased customer satisfaction.
  • Greater opportunities: Technology is opening up new opportunities to engage with your customers – through new ways to pay like using phones or digital wallets.

By Vipin Kalra, Country Manager Australia, Visa

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