Frictionless payment shopping experiences are expected to account for tens of billions of dollars of payments over the next five years.
Smarter Payments
A new study recently released by Juniper Research has revealed some profound findings in terms of how people are processing their payments. In short, frictionless – or “smart” checkout technology systems are expected to process over $45 billion in payments by 2023. This translates to a compound annual growth rate of over 180%, with $253 million predicted to be processed by the end of 2018. Juniper is forecasting that the average customer transaction value per shopping experience will hover at around $30.
Smart checkouts are considered to be any kind of payment technology that automates the scanning and transaction process. This can range from services such as Amazon Go, to biometric payment methods like facial recognition or optical sensors.
A Slow Start
While it would certainly seem like it is a steep climb to get from $253 million to over $45 billion in only five years, the study goes on to state that the growth will likely start slow, picking up drastically in two to three more years.
This is due to the fact that smart payments as a whole are currently in their infancy, with time needing to be taken to ensure that reliability is consistent and that shoppers aren’t being faced with unnecessary purchasing friction. Combining this with the reality that businesses will need to take additional time to onboard these new types of technology makes it seem quite probable that its growth will gain momentum well after we reach 2020. After all, few business will be able to launch as swiftly and as credibility as Amazon Go.
It’s also interesting to note that North America falls behind both China (perhaps unsurprisingly) and Western Europe when it comes to adopting this technology and getting its customers comfortable with embracing the smart payment format.
Image Source: Juniper Research
An Answer to Ecommerce
The growth of these new payment technologies draws parallels with the surge of ecommerce growth, which has shown absolutely no signs whatsoever of slowing down. As more brick-and-mortar locations are feeling the impact of customers preferring to do their shopping online, the innovation of new payment methods that can compete with ecommerce and bring shoppers back to their physical locations were inevitably expected to occur.
Just last year, Deloitte released a study stating that shoppers were allocating more than half of their holiday budget online as opposed to in-stores. Following that trend, accounting firm PwC has also released some findings revealing that millennials – which are starting to take center stage in terms of a lucrative consumer demographic – plan on embracing mobile commerce more than ever before.
A Future of Disruption
It would seem that we’re quickly approaching a period of rapid payment innovation and disruption. As ecommerce, mobile commerce, social commerce and even voice commerce all continue to increase – both in revenue and consumer adoption - so too are the forms of commerce that could be considered competing contenders, like smart payments.
Even though this potential competition could be considered worrisome, at the end of the day – innovation always breeds opportunity regardless of what type of product you’re selling. If you’re a digital business who benefits from ecommerce purchases, take assurance in the fact that there are now more ways than ever for customers to transact with your products and services from the comfort of their living room. Not the mention the fact that there is more trust and credibility being associated with those forms of payments.
If you’re anyone else – buckle up and enjoy the show for the next few years, because we’re bound to see a lot of new advancements when it comes to payment technology.
Recommendation to link this to “Mobile Ecommerce to Increase This Holiday Season” post when it’s live