Digitalisation drives the future of payments

By Albrecht Kiel, Regional Managing Director Central Europe • Visa Europe

July 18, 2016

Our Visa Futures event in Cannes experienced a high level of interest in digital topics, especially digital payments. In the past months and weeks, we already saw some significant initiatives in terms of digital payments in the Central Europe region. In Switzerland the Swatch Bellamy, a watch which allows contactless payments, launched as well as Apple Pay. We suspect that this is still just the beginning.

Soon a lot more wearables and other Internet of Things devices will become totally normal in our personal environments. And, this will enable many more new payment use cases. Consumers’ demands are rising and will lead to evolving new experiences focusing on real-time, convenience and personalization. The digital experiences from other fields – such messaging, transport and streaming, will transfer to payments.

This digitalization is happening now. We believe that all of us can continue to accelerate the growth of commerce through the digitalization of payments. But we need a plan to benefit from it as much as possible. To help our clients on their individual digitalization journeys Visa undertook a comprehensive study. The aim was to bring more transparency and structure into digital payments. We looked at fields of innovations and assigned them along the payment value chain to give banks an encompassing overview. The second stage was to provide guidance on key questions. Which fields of innovation are growing? How fast is that happening? And, which of them can have an essential impact on banks? The study also supports their decision making, taking into account where they are positioned on the axis between “the pragmatic adapter” and “digital forerunner”. Finally, as a third stage, we offer banks our Visa perspective and concrete support alongside with a market assessment and implementation offerings.

Mobile payments are combining digital innovations in a new way

Mobile Payment is a great and relevant example for the momentum that is being created when different innovations team-up. The combination is already an industry standard as all major platforms rely on it, whether it is Apple, Samsung or Google. In our study we looked at mobile payments as a combination of four main innovation topics:

New devices

The number of payment devices will grow to 30-50 billion in 2020, what means six devices per capita worldwide! This will broaden payment use case range and transform payment behavior.


Tokenisation is a key technology for offering enhanced customer convenience, while at the same time reducing fraud potential. It allows issuers to introduce innovative payment methods in a quick and efficient way. In February Visa Europe announced the expansion of its Tokenisation Service to support cloud-based payments, browser-based wallets as well as retailer-specific checkout offerings and card on file payment options. For banks implementing tokenisation is a no-regret move.

Contactless payments

With more than 3 billion contactless transactions having taken place in the last 12 months, contactless is fast becoming the ubiquitous way to pay across Europe, setting the stage for the next generation of payments. More and more retailers have started to invest in contactless infrastructure. In Germany amongst them are Aldi Nord, Aldi Süd, Netto, Kaufland, REWE and Lidl. That means more terminals to make mobile payments at.

Identity and authentication

Digitalization enables easier provision of third-party identification while new authentication technologies increase convenience and security. Banks have an ideal starting position for offering

3rd-party-identification and profit from it. Also biometrics offer significant opportunities to drive a more frictionless consumer experience and reduce operational costs by replacing physical customers’ signatures on paper by biometric authentication on digital media. With online transactions, for example, Visa is leading the way in risk-based authentication with Verified by Visa. By performing a series of automatic, instantaneous checks in these areas, the service allows the application of different levels of authentication depending on the level of risk involved in any given transaction.

API banking enables a global marketplace

Beyond mobile payments there is another fast moving and very disruptive field of innovation – API banking. This innovation is already reality and will become even more important as regulator frameworks enable it. Banks can choose from a variety of actions to stay in control depending on their own ambition and capabilities. Whether they are leveraging API’s to increase attractiveness of own-offerings or embracing their current accounts to become an ecosystem, APIs are part of digitalization. Visa’s announcement to build an enterprise class developer center is our response to the growth of connected devices. It will provide software developer kits (SDKs) and a set of industry-standard APIs that will allow all of our stakeholders, including new participants, to create programs and applications on top of our platform. These services will still be processed through our traditional four party model.

Collaboration is the key

So, what will the future bring for payments in terms of digitalization? Clearly payments will become more digital than they are today. This also affects retailing and the way people shop. Payments always have to be fast, secure and convenient. Visa wants to be the partner of the banks that issue cards, of retailers that accept cards and of all consumers who use cards in both the digital and the physical world of payments. This is because what really stands out in discussions around digital and innovation is cooperation. To develop and deliver innovative and attractive offers and services in the digital world, we need to work together closer than ever before.

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