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The “Digit”-isation of Payments

By Jonathan Vaux, Executive Director of Innovation Partnerships • Visa Europe

November 12, 2015

Although the music industry is an easy “go-to” for digital case studies, it’s often the best way to bring concepts to life when painting a picture of the seismic shifts we’re currently seeing in payments and banking.

My first experience of listening to music was in my father’s car on his 8-track cassette (Google it if you’ve never seen one),where I developed an early love of Sinatra and Peggy Lee. By the time I was old enough to buy my own music (first album – Abba’s “Arrival”) I was buying vinyl played on a portable turntable, then cassettes on my Walkman. For me, the move from physical albums to digital music was a significant and emotional step as I still fondly remember cutting mix tapes and labelling them on a C-90 cassette.

Not only the medium, but also the commercial model, has changed with the advent of Spotify and Apple Music turning music from a commodity to a service. I’ve resisted music subscription services so far and I’ll still most frequently opt to own the album (itself a relative concept when it’s a digital file) whereas I’ll happily subscribe to a movie service, and buy DVDs far less frequently. The film and music industries demonstrate the impact technology is having on the way people buy and consume services – fundamentally changing distribution and commercial models.

What does this mean for Visa, an organisation inextricably linked in people’s associations to the words “plastic” and “card”? We can now see increasing numbers of uses where the card or plastic will not be physically presented at the time of purchase and payment is simply integrated as a feature within a wider user experience.

So at Visa, we’re focusing on the “digitisation” of plastic and ensuring we deliver on a value promise of “One Card, Everywhere” so that I can use my card for any type of transactions, safely and easily in any wallet, any app, any device.

Although payments are changing, the core needs remain the same. Acceptance has always been fundamental to the value promise Visa has delivered to our stakeholders. Now, the role of ensuring payments in any corner of the world has extended to “any channel” – whether that is in-store, online, in-app. The means of payments is changing exponentially, with the emergence of wearables technology and the Internet of Things, so that payment is connected and embedded in new propositions such as connected cars. Services such as Visa Checkout, providing stored card details that can be easily accessed and integrated into an ever-expanding number of use cases can help the developers of these new experiences access payment capability, historically a significant challenge, to make e-commerce fast and frictionless.

Security will be key to the future of these new payments. The means of making a transaction in a digital world will increasingly need to be seamless to the customer so we are examining new ways that customers can identify themselves to access and initiate the payments. Instead of entering complex passwords, technologies such as biometrics, geo-location, and others that allow pattern-based authentication can significantly improve the user experience. Using your fingerprint to help authenticate yourself represents true “digit”-isation of payments!

Trust is also central to the success of new payments. In a world of highly-publicised cyber-attacks and data breaches, people need to feel safe providing their payment details. Consumers have embraced e-commerce, making card-not-present payments increasingly prevalent. With this, there is a corresponding risk of details being shared to fraudsters. While Visa has a strong history of managing risk through things like PCI-DSS compliance programmes, these can be relatively expensive to manage, so we are looking to tokenisation as a way of ensuring customers details are managed securely throughout the increasingly complex and fragmented payment ecosystem.

Many ask me if digital represents the end of plastic or cards and I remain convinced that, like the music or film industry, it will simply offer more choices for customers to consume the services we offer. By adapting the way we offer the same fundamental customer promise that has been so successful for years we think we can deliver the connected payment solutions that offer the ability to use “One Card, Anywhere”.

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