The imminent Internet of Things (IoT) world—where every watch, car, thermostat, refrigerator, shopping cart and television talk with each other, and everything else—could have a huge impact on PF payments. But, as Jonathan Vaux, Visa’s innovation director, recently said, it’s really all about context.
Current payment methods (payment cards, whether still in plastic or in a mobile device, cash and even checks) are all about paying for anything anywhere. That’s certainly fine and will always be needed—Vaux goes out of his way to defend cash, which he correctly argues isn’t going away anytime soon—but there is a huge allure for shoppers to make purchases they are in-context.
Consider: When driving into a gas station, what could feel more effortless than paying for fuel and oil by hitting a dashboard button with a picture of a gas pump on it? Or while watching a television commercial, being able to hit a button on the remote control to purchase the item being advertised? And if that show is being watched from a mobile device, it’s even easier and more digital to make the purchase from within the commercial. Then there’s being able to purchase apples and milk from the appropriately label icon on a refrigerator touchscreen. Or having a NEST thermostat sell you an insulation service—or, for that matter, sweaters and blankets–as you keep bumping up the temperature.
Most of the IoT payment issues debated thus far have involved security and ease-of-use. But the idea that consumers are more likely to buy things (and pay for them in a preferred manner) when they are presented the option immediately during a seeming need is relatively fresh.
The old retail argument has been about getting the consumer to make the purchase. In an IoT reality, we take this two levels up. First, is a shopper more likely to make that purchase when it’s presented in-context? Secondly, will this influence how that consumer pays for the item/service? Those are two very different objectives that involve very different marketing hurdles. In an IoT reality, it’s not merely that the answers are changing. The questions are changing, too.
Vaux also stressed the power of P2P transactions in an IoT reality, especially for its ability to replace the most easily displaced form of payment: cash. In a Techworld piece, Vaux said that “Visa is currently exploring whether it could use social networking to create private payment networks that allow you to make frequent, quick transactions to friends and family. ‘There is a big difference psychologically between paying someone you trust and know and paying someone a long distance away.'”
There is indeed a big difference, but it can cut both ways. One of the many benefits to a consumer of integrating a trusted PF company—or even a card brand like Visa or MasterCard—into the P2P process is that trust. When dealing with a close friend or relative, there is presumably a decent amount of existing trust between the parties, meaning that the fear of the transaction between fraudulent is minimal. That in turn would suggest that the need for having a trusted third-party is also lessened.
This is especially true when compared with a P2P transaction with a complete stranger, especially one from a foreign country. Therefore, while using social media to facilitate payments among friends/family is great, the trust built by a respected PF is even more critical in giving people comfort to give/receive money to/from strangers.