Brian M Ziff Levine, Senior Director-Cards & Payments, First Tech Federal Credit Union
The Future of the Payments Experience
The best payments experience you can have today is one where the payment itself is entirely invisible. We pay for our Uber simply by getting out of the car; we buy our groceries on Amazon by talking to a connected device or pushing a button. There was a time when paying with a fingerprint—or via iris recognition or specialized hardware like rings, bracelets, or the like—was considered cutting edge; but now, we are realizing that the next evolution of payments will be an invisible one.
Consumers will likely not coalesce around a single payment modality, nor will they tolerate a fractured experience or unfulfilled promises. As we can see from the failures of PLSTC, Coin, Stratos, Swyp, and the forthcoming FUZE— which is almost sure to go the same way for all the same reasons—consumers are looking for greater convenience and control. And while those one-card solutions held great promise, they left too many promises unfulfilled.
Those products failed because they were trying to solve a problem that almost nobody really had. The problem they solved was “I have too many cards in my wallet” and the solution was “one card that contains many cards.” The real problem is that point-of-sale payments are actually lagging in the market when it comes to the experience of in-app purchases or the card-on-file experience we get with Uber, Lyft, Amazon, or others. Those payment solutions do nothing to make the actual experience better, faster, cheaper, or more convenient for the user. You still have to pull out the card, swipe or insert it, and wait the exact same amount of time and take the exact same actions. The real problem is that the point-of-sale payment experience is already beginning to feel outdated.
Faster, Better and Easier
Financial institutions, payments networks, and technology companies need to come together around the new reality: customers want something better and easier than what they have today because it already exists in another form elsewhere.
In today’s ever-changing payments landscape, it’s key to know what your most savvy customers expect today in order to shape the features of the future
We pay for things by doing nothing and are becoming accustomed to doing just that. Our comfort level with granting a platform like Uber or Amazon the permission to charge us without taking any confirming action is now the expectation rather than the exception. Unless and until the brick-and-mortar experience can match that ease and convenience, these one-card solutions and even the “-Pays” (Android Pay, Samsung Pay, Apple Pay) will struggle to gain acceptance beyond initial curiosity.
The metric we must keep an eye on is not convenience, ease of doing business, or NPS scores, but the expectations our customers have when it comes to our products. If we’re not meeting those expectations now and in the future, how well or poorly we execute becomes a moot point. We’ve already lost. A good parallel is OAuth. We grant apps permission to log us in using Facebook, Google, or other credentials all the time. The convenience of just passing the user from your app to the OAuth flow, and back into the app is smooth and requires little of the user. In general, the mental lift is low as most users stay logged into those platforms and don’t need to enter any credentials at all. OAuth has become such a standard that now if an app asks for additional login credentials or is unable to use OAuth, users feel it is an exception to the norm. They will then often abandon whatever enrollment process they are attempting. It’s a natural response to any additional burden that consumers know can be better.
Delivering On Your Customers’ Expectations
When it comes to payments, we must continue to seek greater integration, speed, and invisibility in the payments flow. Banks and credit unions who believe their brand to be powerful enough to interrupt the payments process by, say, requiring that your customer pull out a piece of plastic with your institution’s name on it, have already committed a grave error. At First Tech, we’re exploring a new approach where we will be able to issue debit and credit cards to digital wallets at the same time as the account opening, and then enable those cardholders to use the card to check out at their favorite online merchants without ever having to enter more than their device PIN.
Our members, who come from some of the largest and most innovative tech companies in the world, won’t settle for an experience that hasn’t improved in over a decade. They expect their financial institution to find ways to make their lives easier and less burdensome by using innovative solutions that require less of their time and less of their attention. Paying for things should be as seamless as possible and financial institutions should enable, not hinder that seamlessness.
When it comes to speed, the biggest business challenge is always a risk so we must balance that risk with the consumer expectation of “faster is better”. The risk of sending hundreds of dollars to friends and family through the internet would have been seen as unthinkable 15 years ago; but now, we do it and expect that it be done faster and with even less information from the sender and recipient than ever before. Customers have grown accustomed to the risk, and they expect their institutions do the same.