OPINION: Wallets in the cloud

Mastercard's Matt Barr writes on the next generation of seamless payment solutions in the continuation of his series

As electronic payment platforms continue to develop, the cloud offers a paradigm shift in how businesses and consumers interact and pay for goods and services.

It is acknowledged by many that traditional plastic payment cards are a poor form factor to enable streamlined digital experiences, so having somewhere to store payment details and other information value added services such as loyalty cards over time will eliminate these repetitive steps.

A cloud wallet is a digital wallet that can be accessed and used through a smartphone, tablet, laptop or desktop computer. The idea is that users register for the service, and then use it as a one-click check-out experience for e-commerce transactions.

For many years now consumers – with smartphone in-hand – have been demanding better shopping experiences. To date, however, the main problem with m-commerce experiences has been that consumers have to set up a profile, enter their 16-digit card number, their billing and delivery addresses, and any other membership or loyalty details with every retailer they buy from. This is often done onto a small screen, which can be a frustrating experience for the shopper.

In response to this, retailers have been building their own bespoke services to house customer information, including payments details, in order to streamline their customers’ experience. The growing problem is that consumers are storing their information across the Internet with multiple retailers and in multiple locations, and it is becoming increasingly difficult to monitor where information is being held and if it’s up to date. This is frustrating for both consumers and retailers.

This is where the power and convenience of digital wallets really shine. Purchasing online goods and services with cloud wallets makes life just that little bit simpler. Using their digital wallet, consumers only have to head to the checkout, log-in with a simple email and password, and all their details are quickly and securely shared with the retailer to complete the transaction.

There are four basic characteristics of digital wallets that should really be seen as table stakes.

These include:

1. Providing a safe and trusted service to merchants and consumers
2. Offering mainstream acceptance across New Zealand businesses
3. The ability to deliver the best customer experience
4. Accepting all of the major global payment card brands.

However, a successful digital wallet must offer more than this, if the provider truly wants to offer peace of mind to merchants and consumers – as well as value.

A digital wallet should offer cross-border capability so that it can be used around the world, providing a universal solution that turns a smartphone or tablet into a mobile payment device. It means that no matter where the customer is based, they’ll be able to shop safely and conveniently.

Additionally, a digital wallet should enable merchants to easily add services beyond payments, such as membership details, e-receipts and loyalty programs. These will provide value-adds for the consumer and enable the merchant to create a truly enhanced customer shopping experience.

For merchants, a digital wallet must be able to be easily integrated into their current system, without the need to change or complicate their back-end payment processes. This will mean fewer disruptions for merchants and consumers, and will reduce the hassle of upgrading to newer technologies as frequently.

Moving into the digital space can raise questions of security and privacy risks, but digital wallets have the capability to provide online equivalent of the EMV levels of protection, which is the global standard of protection for authenticating card transactions. By providing this same gold-standard of protection for consumers and merchants, all parties can be reassured that their data is processed and stored securely.

Finally, digital wallets should also provide merchants with the ability to support an omni-channel retailing ecosystem, and create a seamless customer experience – wherever they are, and however they want to pay.

As consumers increasingly move to omni-channel purchasing, they will want a digital wallet that provides the flexibility to move from the high street to online. The good news is that the technology exists today to provide these services and New Zealand will soon see this technology move from pilot stage, to being widely accessible. With smartphones having such widespread penetration across our population, it’s possible that one day we will do without physical wallets and plastic cards all together and rely solely on these devices when it comes to any payment related activity.

Next week’s article will look to the future and the vast array of opportunities and benefits created by digital wallet technology, and how they will enhance the consumer experience.

Matthew Barr is head of market development, Australasia for MasterCard Worldwide. Based in Sydney, he is responsible for the development of emerging payment services, including both mobile and e-commerce payments, in the Australasian markets.

Read: OPINION: Digital wallets and mobile payments.

Read: OPINION: The next-gen in payments and digital convergence.

Read: OPINION: Digital convergence and omni-channel retailing.

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Tags omin channel retailingwalletonline retailerscredit cardsmastercarddigital walletopinionElectronic paymentPayment Card Industry

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