3 Critical Payment Trends to Watch This Year

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The past few years have brought rapid evolution and change to the payments industry, with the same growth expected in 2017. Retailers must remain aware of these developments to properly compete with other operations in their vertical market. Here is a close look at three critical payment trends that will prevail this year.

Mobile Wallet Growth

Statistics make a strong case for including increased momentum for mobile wallets on the list of significant payment trends to watch in 2017. This is especially true of mobile wallets that incorporate near field communication (NFC) technology.

  • According to a report by research firm Research and Markets, the global mobile wallet market will experience a compound annual growth rate (CAGR) of 35.5% between 2017 and 2021.
  • Technavio, another research firm, has predicted a similar CAGR (more than 35%) for mobile wallets through 2021.
  • A Capital One Wallet Survey conducted by Capital One late last year shows that nearly one-quarter (24%) of U.S. consumers use mobile wallets in some capacity.
  • More proof that the use of mobile wallet technology among consumers is trending up: Of 24% of Capital One survey respondents who claimed to utilize mobile wallet technology, more than 63% have been doing so for less than a year. This demonstrates rapid adoption and use of the technology in 2016, according to Capital One, with a similar pattern expected throughout 2017.

Ongoing technological advanced in NFC devices and heightened security of payment portals rank among catalysts for the consistent growth of mobile payments and its high rank among key payment trends, according to Research and Markets and Technavio. Mobile wallet options such as integration with coupons and tickets are fueling the fire as well.

Payment Security Push

With perpetrators’ attempts as and methods for transaction fraud growing more sophisticated, increased and varied attempts to shore up payment security is one of the hottest payment trends. There is now a major move among U.S. merchants to migrate to point of sale (POS) equipment that accommodates microprocessor chip-enabled credit and debit cars (“chip cards”) under the umbrella of the Europay/Mastercard/Visa (EMV) liability shift that took effect in October of 2015.

  • The Payments Security Task Force, a consortium of payment networks, backs, credit unions, acquirers, retailers, POS device manufacturers, and industry trade groups, estimates that the shift to EMV will “reach 98%” by the end of this year.
  • According to Mastercard, 9 in 10 Americans now user chips cards, a 38 point year-over-year increase from 49% in 2015 to 87% in 2016. Payment trends cited in a recent Mastercard report includes additional increased in chip card usage in 2017.

More mPOS

Mobile point of sale (mPOS) and tablet POS devices are becoming a staple as merchants adopt mobile technology to assist with line-busting and speeding up transactions during peak traffic periods. What’s more, with innovations like Star Micronics’ new mPOP™ accessories, tablet POS devices can be used as a cost effective, fully functioning point of sale system. This versatility makes mPOS a hot ticket item in 2017.

  • According to a study conducted by Boston Retail Partners, almost half (49%) of retailers are using mobile solutions for sales staff. That’s up from less than a third (31%) from last year.

Payment trends other than those discussed here may also take hold in 2017. However, the rise of mobile wallets and mPOS, coupled with a greater emphasis on payment security, merit special attention in the coming months.

Learn more about the mPOP™, Mobile Point of Purchase, here.

Electronic NFC Payments Continually Increase in Popularity

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Who is using it?

Millennials are embracing the use of their phones and mobile near field communication (NFC) technology at the checkout lane. Now is the time for small business owners to accept that reality and harvest the benefits by adapting their point of sale system.

Picture this. A consumer is in a hurry to grab a quick bite to eat on their way to a meeting. While driving through town, the consumer sees a local restaurant and decides it would be a good place to pick up lunch. Getting back on the road with as little time disruption as possible is important. After a quick meal prepared by the merchant, the consumer soon realizes he left his wallet in the car, but notices that the restaurant accepts mobile payments. Without hesitating, the consumer pulls out his phone at the point of sale and uses it to pay for his meal. After a speedy meal and transaction, both the merchant and consumer are happy with the exchange.

Consumers and shoppers are always looking for the smallest queue. NFC technology effectively cuts back the wait time since people with smaller purchases can complete their purchase faster. There’s no more waiting a half an hour just to buy a single item. Thankfully, there’s also no more searching through purses (or man purses because… it’s 2016) for oversized wallets filled with tons of credit cards or cash. With the advent of technologies like Apple Pay, Samsung Pay, Google Pay, and Android Pay, wallets are succumbing to the Internet of Thing (IoT), a past time that consumers are likely not to miss.

Where are they being used?

contactless-lead-1355413251According to a Business Insider article, there are approximately 2.5 million point of sale systems equipped with NFC readers that are being used in the United States alone and Apple Pay is looking at a lot of growth. Mobile payment systems are being used in local retail stores, restaurants, for public transportation, and inside convenience stores when consumers are making a quick or small purchase. As long as the point of sale hardware or credit card reader displays an NFC logo, that means Apple Pay and other mobile payments are compatible at that retail location.

 

Barclays is now leading the finance industry with newly announced ATMs. The new machines offer cardholders contactless access to their accounts via mobile key points at the ATM, according to multiple news sources. These new machines utilize the same kind of near field communication technology, and prompts user authorization to allow the debit card stored on their device to be used for banking.

Why are they using it?

In 2014, PayPal disrupted the payments industry where users could pay across platforms with a single touch, without the hassle of entering usernames and passwords. A year earlier, companies like Venmo began the downplay of entering credit card numbers on small screens. Innovative technology continually changes our world, and millennials are adapting by using these services to help create a smooth initial transaction at checkout. PayPal and Venmo revolutionized the way younger consumers interact with their finances, and larger tech companies notice the switch in consumer behavior and react by scaling use of mobile payments.

In addition to the mobile payment phenomenon, millennials are now using more coupons than previous generations and they are accessing these on their mobile device. Imagine allowing customers to not only use their phone for coupons at the point of sale, but for payment as well. The two go hand-and-hand because with every mobile payment, there is an opportunity for the merchant to access the customer digital world by offering digital receipts and coupons, ultimately driving more return customers.

Small businesses can believe in the post-cash payment era because it all comes down to speed, ease, and simplicity. Using a phone to pay for goods provides a better solution for consumers who don’t like to carry cash or consistently forget their wallet, and it provides a faster and easier workflow for the retailer who wants to keep their lines moving.

Learn more about Star’s digital receipts and coupon solutions at www.starcloudservices.com.

Rob Hom

Marketing Intern

The Benefits of EMV

Following the October 1, 2015 deadline created by U.S. credit card issuers MasterCard, Visa, Discover, and American Express, the liability of EMV compliant payment processing systems has shifted in the U.S. Prior to this shift, one of two parties would be held responsible in the case of fraudulent credit card transactions – the payment processor or the issuing bank. Now, whichever party is the least EMV compliant in a fraudulent credit card transaction  – the merchant or the card issuing bank – will be liable for the consumer losses.

While business owners and shoppers tend to see the shift as a negative, it turns out that there are many overlooked benefits to the EMV shift for both businesses and consumers.

As mentioned, the Oct. 1, 2015 deadline is strongly encouraging businesses to switch to EMV compliant payment processing systems in order to avoid being held liable for fraudulent credit card transactions. While switching to a new EMV compliant POS system may be expensive, it can potentially save businesses from losing hundreds to thousands of dollars in credit card fraud. What’s more, this switch gives business owners the opportunity to not only become EMV compliant but to consider switching to a more modern and mobile POS system.

Tablet-based POS is becoming more prevalent in businesses, especially small businesses. The reason being is that tablet-based POS is usually inexpensive and can scale or expand your business. Tablet POS is also a sleek and attractive option for small business owners, allowing them to keep a modern check-out and save precious counter space at the point of transaction. The benefit of upgrading your traditional cash register or POS to a mobile or tablet POS system, is that most mPOS systems are already EMV compliant, making the shift to EMV as smooth and inexpensive as possible.

Now, let’s talk about some of the benefits of EMV for shoppers.

Since the shift to EMV compliant payment processing, there has been an obvious push-back from shoppers all over the U.S. This is mostly due to the fact that dipping the EMV chip of your credit card takes significantly longer than the simple swipe of a magnetic stripe reader. While this can be a nuisance, the EMV chip is a major benefit for consumer shoppers as well.

The reason you have to wait an extra 5 to 10 seconds for the chip reader to process your payment is because each transaction with your EMV card is a unique one. When dipping your card into the chip reader, the terminal performs many stages of complex processing to create a unique transaction each time your EMV card is used for payments. This requires dozens of pieces of data to be read in order to create this unique transaction, resulting in a slightly longer wait time. But the benefit is, that if the card information gets copied and attempted to be used for another transaction, the information would not be usable, and the card would just be denied.

To learn more about the EMV shift and mobile payment solutions, check out Star Micronics eBook – mPOS: How its Revolutionizing Payments.