By Ravi Battula, Vice President of Merchant Acquiring Business, Wibmo, A PayU Company
Transactions and payments are fundamental components of a thriving economy. Both play a crucial role in facilitating the exchange of goods, services, and resources between individuals, businesses, and governments. With digitization foraying into each industry, the realm of online transactions has also undergone tectonic shifts. In today’s digital age, customers are increasingly embracing online payments due to the convenience they offer. Gone are the days of fretting over exact change or realising you’ve left your wallet behind while dining out. With online payment systems, individuals can effortlessly settle their bills with a few taps on their smartphones or clicks on their computers. This shift in consumer behaviour has transformed the way we navigate transactions, saving us precious time and the stress associated with physical currency. As per a report, the global transaction value in the digital payments market is projected to reach US$9.46 trillion in 2023.
As we embrace the ease of online payments, businesses are constantly exploring new and innovative ways to add value to their online payment systems. From cutting-edge security measures to personalised transaction experiences, a range of innovative features are being introduced to elevate customer satisfaction and break barriers across online and offline channels. E.g., Buying online and picking up in store (BOPIS) is a truly physical model. This offers a true hybrid experience for consumers while enabling merchants to have greater customer connection, reduce their operational costs for shipping and returns, and most importantly, increase loyalty.
Recent innovations in payments are addressing fundamental issues of security and customer convenience, unlocking frictionless payment flows in the future. Online Card on File Tokenization, or COFT as it is popularly known, is a massive step in the direction of frictionless embedded payments, paving the way for subscription payments at your favourite OTT providers, billers, and e-commerce merchants. This foundational technology of tokenization is also the core powering contactless tap-and-pay payments like Apple Pay, Google Pay, etc. and extending to the Internet of Things (IoT), wherein your payment credential can be embedded in your car for a smooth check-out experience at a gas station, your refrigerator to order groceries automatically, or your watch, ring, or any other wearable you can think of.
The key here is to understand that while customers can continue to enjoy a seamless, frictionless journey, the safety increases manifold with a highly secure tokenization mechanism wherein payment credentials are impossible to crack due to their irreversible nature, providing peace of mind for consumers and low chargebacks for merchants.
A completely different, low-cost technology powering contactless Tap n Pay with which we are all very familiar is UPI scan and pay through QR. QR is truly ubiquitous and fully interoperable across channels—from offline to online and vice versa—which provides a true omnichannel customer payment experience. For example, a physical QR code at a merchant location can enable online payment through a payment page that you would experience during online shopping. This will offer the customer the same flexibility of online payment using multiple payment modes at an offline channel with the added advantage of earning and burning loyalty points at checkout. QR also enables an online-to-offline journey by generating an online QR, say, for a gift card to your friend that can be redeemed at a physical store of a brand. QR is truly a massive innovation in payments, which India has embraced thoroughly with new use cases that it can support in the future without any additional cost for the ecosystem players. Continuing on QR Paytm’s sound box is a novel, pathbreaking innovation for a simple problem of payment confirmation and reconciliation for merchants, which again paves the way for conversational commerce through voice commands in the future.
Another key area for payment innovation is Loyalty and rewards, which truly leverage the power of AI and ML to understand customer behaviour and push relevant personalised offers to customers for higher brand loyalty. This enables customers to pay through loyalty points at check-out while instantly earning on the same transaction for instant gratification.
Buy Now, Pay Later (BNPL) is another emerging payment option for consumers, providing convenience to convert their spends into fixed instalments, giving them more flexibility and taking the pay later to the next level. For example, while credit cards were always a pay later solution, now even credit card spends can also be converted into further instalments over a period of time, truly blurring the lines between payment and credit.
Facilitating cross-border transactions is vital
Cross-border payments play a pivotal role in facilitating global trade and commerce. They enable individuals and businesses to securely transfer funds across international borders. With the advent of digitalization, cross-border payments have become more efficient, cost-effective, and accessible. Technology, such as blockchain and digital wallets, has streamlined the process, reduced transaction times and eliminating intermediaries. Collaboration between financial institutions, regulatory bodies, and technology providers is crucial to ensuring seamless cross-border payments.
To conclude
As innovation continues to shape the landscape of online payments, businesses constantly strive to add value and improve the customer experience. As the digital realm evolves, it is vital for leading players to stay ahead of the curve, anticipate customer expectations, and leverage advanced technology like artificial intelligence (AI) and machine learning (ML).
