2015: A New Year for Retail Payments

By Mark Ranta

There’s been no shortage of developments in retail payments this past year. From high-profile data breaches forcing retailers to reconsider their security strategy, to the launch of Apple Pay bringing mobile to the forefront, both retailers and consumers have been paying unprecedented attention to their transactions.



With innovative players entering the fold and the U.S. payments infrastructure upgrade well under way, the industry is poised for a shift over the next several years. As such, I expect the following trends will dominate the retail payments industry in 2015:



Mobile Wallets



Even as 2015 is poised to be “The Year of Mobile,” the mobile channel will neither replace “leather” in the consumer payments space nor will it replace desktops in the corporate space (try doing a complex transaction on a mobile device). Mobile will continue to be a very important extension and a channel of enhancement, but consumers shouldn’t ditch their wallets just yet! There are not yet enough POS terminals that are NFC-enabled (to accept ApplePay, Softcard and MCX), so some sizable retailers cannot accept any mobile payment type, while many mom and pop shops not only cannot, but will not. In 2015, mobile will be an enhancement channel, but not a replacement for traditional payment types.



Plus, once the highly anticipated Apple Watch is launched in spring 2015, Apple Pay will be better. It’s becoming more appealing for consumers to eliminate the need to pull something out of their wallets and/or pockets to make a purchase, so wearables will come into the spotlight in the second quarter.



Virtual Payments



Led by Bitcoin and all of its (positive and negative) buzz, virtual currencies are a concept with which an increasing number of people are familiar, and a concept that will soon approach a tipping point in terms of wider use and acceptance. With an increasingly connected world and a generation raised on using the Internet for all manner of things (hello millennials, it’s great to welcome you to the conversation), it would be hard to argue this is going to be another flash in the pan, doomed to exit. Case in point: We are seeing brick-and-mortar organizations — worldwide — accepting Bitcoins.



Additionally, major players and innovators will begin to wonder: Could the technology behind Bitcoin be leveraged in other ways? Could something be built using the public ledger technology to provide a more secure, less complex payment system? What would the transaction cost be? What are the risks? What are the benefits? These are all great questions that are eagerly awaiting answers, perhaps in 2015.



EMV Race Against the Clock



The clock is ticking for the first EMV deadline, and soon we’ll be saying, “hasta la vista” to the magnetic stripe. October 2015 is looming large, and yet the education process hasn’t really begun. Despite the 100 million cards being issued, how many people know how to use the technology? How many merchants have trained their employees on their updated POS terminals? Retailers that are quick to adopt and take the time to inform their employees and shoppers about the upgrade will earn trust — and cut down on confusion at the point of sale.



The integration of EMV also means that liability will shift from the card issuer to the merchant in the case of fraud. Retailers should expect fraudsters to move to the online channel, as fraud will get harder to commit once merchants begin accepting chip and signature/pin and mobile payments (thank you, tokenization). That said, when one door closes, another one opens — so retailers should be mindful of the expected uptick of fraud in the Card Not Present space.



This year is guaranteed to be chock full of payments innovation, so keep a close eye on these trends as the shift to a more digital, mobile and secure payments scheme unfolds.



Mark Ranta is senior solutions consultant, ACI Worldwide.