A few weeks ago, I took a look back over 2015 and some of what stood out in the world of retail from last year. This week, join me for a look ahead at what we can expect in 2016.
EMV Chip Technology
2015 was supposed to be the year of EMV, yet more than half of merchants in the U.S. still have not upgraded their point of sale systems, and many of those who did, have not enabled them to process EMV chip cards. One factor was the October mandate falling close to the holiday season, with some fearing EMV would confuse customers and mean slower transactions, creating longer lines at check-outs and upsetting customers. Thus, many retailers were reluctant to risk implementing such a major change in their stores while some who were prepared actually disabled the EMV card reader in their upgraded terminals for the holiday season. With the start of the New Year however, merchants are showing signs that they are ready to move forward, and issuers are continuing to replace their mag stripe cards with EMV chip cards. By the end of 2016, I expect most consumers to have a new card in their hands and many more merchants ready for them to use it.
Real-Time Online Payment Processing
This year may not see the implementation of a ubiquitous “Real-Time Payments” network, but “Faster Payments” will be a reality in 2016. Same-day ACH will be rolled out in three-phases starting in September, the ACH Network will implement three settlement windows every day, starting with credits and then debits. The question remains, how fast is fast enough for most people? Do people need real-time (immediate) money movement, or is a faster ACH process (same day) good enough in most cases? There is no question that there are scenarios where being able to move money immediately would be extremely useful, and many would pay a higher fee just for this enhanced capability of faster online payment processing. However, while I am confident that a universal real-time money movement network is coming soon, I don’t expect it to happen in 2016.
The Connected Consumer
We have known Siri for years. In 2015, we were introduced to Cortana and Alexa, and Amazon Echo made “connected homes” a reality. The ability for anyone to be connected anywhere at anytime simply by asking a question has some great benefits – and convenience has always been a driver of innovation. In 2016 we will see rapid growth in technology to connect consumers in an array of different ways. Right now, initiatives by all of the leading auto manufacturers (and a promising initiative by FIS and SAP), are making the “connected car” a much closer reality. The good news for us is that integrating payments into these solutions is not only natural, but is a requirement to ensure the experience is complete.
Customer Loyalty and Customer Reward programs such as MCX and Plenti will continue to create headlines. MCX will either thrive, or die in 2016, and we will see Plenti continue to add merchants to their program, while competing programs will be introduced.
Biometric Authentication will expand, and take a bigger role in payments this year and beyond. As Apple has shown through the success of its TouchID, consumers are comfortable with biometric identification; expect to see further use of such sensors in 2016 due to their enhanced ability to authenticate an individual and verify that the person making a purchase is the owner of that mobile device. In most cases, this results in greater security and lower risk during a transaction, especially for e-commerce.
2015 was an exciting year for payments advances, and I believe 2016 will be even better. What are your predictions?