Digital payments should be mobile
The industry has two big canaries in the coal mine on the digital payments front. In 2014, Starbucks announced that more than 14 percent of its in store transactions were processed over its mobile apps on the iOS and Android platforms based on its stored value gift cards. In 2015 Starbucks launched mobile ordering and expects that percentage of mobile based transactions to increase to 20 percent.
This is a phenomenon that will not go away – witness Apple Pay, the mobile wallet service that works with iPhones (and to some extent iPads as well), which is beginning to gain some traction. Mobile payments are here to stay and in 2016 and beyond, we’ll see consumers increasingly eschew traditional card payments and use their mobile devices for quick transactions because of convenience. After all, the phone is something most people always have with them – during a workout, on the way out the door, in the car. This is less important for business-to-business enterprises, of course. But if the consumer is in any way involved, accepting mobile payments should be a part of your plan.
Digital payments should be secure
The huge losses of the Home Depot and Target payment breaches have highlighted the need for both better fraud protection as well as better accountability when fraud takes place. Who eats the loss? Who is left holding the bag at the end of the day? Increasingly, merchants and cardholders are being asked to be responsible for fraud losses, at least to a certain extent. This is manifesting in two different ways. From the merchant’s perspective, Payment Card Industry (PCI) compliance audits are on the rise, and more scrutiny is being given toward secure, segregated and separate networks for point of sale and card data (i.e., separate from production networks). The compliance expense for this is borne largely by the merchant, both initially and on an ongoing basis.
From the cardholder’s perspective, the switch to chip and PIN or chip and signature cards away from the old magnetic stripe swipe cards means that the cardholder bears the brunt of the responsibility in proving that he or she did not make fraudulent charges. CIOs should be looking to find solutions to keep the integrity of money movement high – whether that means scoring transactions in real time, allowing data marts and machine learning to provide some gatekeeping function for the parties in a transaction, or coming up with increasingly secure but convenient ways to exchange payment information.
Digital payments should support micro-transactions
Micro-transactions typically are payments for amounts less than, say, 10 cents. Applied to just one industry – media outlets, for instance – small digital payments could be transformative, if not the only way to survive. Mid- or lower-tier content publishers and websites that may have small but dedicated audiences struggle to survive (let alone expand) because they can’t offer the minimum thresholds that major advertisers demand.
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