future of payments the emerging view - 12 11 15
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The Future of Payments| The Emerging View Insights from Mul0ple Expert Discussions Around the World
Context Payments is one of the key themes being addressed in the Future Agenda
programme. Payments is undergoing a period of significant change, enabled by an increasingly digital and connected world.
Future Agenda The Future Agenda is the world’s largest open foresight program
that accesses mul0ple views of the next decade so all can be beGer informed and s0mulate innova0on.
Looking Forwards Organisa0ons increasingly want to iden0fy and understand
both the an0cipated and unexpected changes so that they can be beGer prepared for the future.
Future Agenda 1.0 Top Insights for 2020 From the 2010 program, 52 key insights on the next decade were shared widely and have been extensively used by organisa0ons around the world. And Future Agenda became the world’s largest open foresight plaMorm.
Future Agenda in Numbers The first Future Agenda programme engaged a wide range of views in
25 countries. Future Agenda 2.0 has doubled the face-‐to-‐face interac0on and significantly raised online sharing, debate and discussion.
Future Agenda 1.0 1 HOST 16 TOPICS 25 COUNTRIES 50 WORKSHOPS 1500 ORGANISATIONS
Future Agenda 2.0 50 HOSTS 25 TOPICS 38 COUNTRIES 115 WORKSHOPS 5000 ORGANISATIONS
Future Agenda 2.0 Topics The second version of the Future Agenda program is taking place during 2015 and has been addressing 20+ topics via 100+ events in 45 ci0es in 38 countries in partnership with around 50 core hosts.
Ageing
CiQes
Company
ConnecQvity
Data
EducaQon
Energy
Food
Government
Health
Learning
Loyalty
Payments
Privacy
Resources
Transport
Travel
Water
Wealth
Work
MasterCard Partnership The Future of Payments is undertaken in partnership with MasterCard. This emerging view reflects insights from UK, Hong Kong, Dubai and Johannesburg, together with insights from other topics (e.g. data, currency, privacy, trade).
Ini0al Perspec0ves Q4 2014
Global Discussions
2015
Insight Synthesis Q4 2015
Sharing Output Q1 2016
The Future of Payments | The Emerging View This document provides an overview of what we heard from mul0ple expert voices around the world – on the future of payments, how it is changing, what
is driving this change and how it may evolve over the next decade.
Five Key Themes Across the mul0ple discussions, issues related to payments
seem to be touching upon and connec0ng with five underlying, and interwoven, themes with different emphasis in different regions.
Disrup0on and Changing Nature of Payments
The Role of Data
System Security,
Stability and Standards
Consumer Centricity
New Markets, New
Organisa0ons
DISRUPTION AND CHANGING NATURE OF PAYMENTS
Digital Money Cash is gradually, but not completely, replaced by digital money providing consumers with more convenience / choice – and organisa0ons with lower cost transac0ons. More new offers emerge, including in the black economy.
Unbundling of Payments Value Chain Greater compe00on, new innova0ons and changing
regula0ons will mean that the current value chain will spread out, removing steps and so reducing costs for both consumers and suppliers.
Payment Systems Challenged Distributed ledger technology enables direct exchange to take place without recourse to a trusted third party and at a frac0on of the cost. Blockchain is to
payments, currency and trade what email was for the postal service.
A 3D View of Payments Technology will allow mul0ple variables to be compared in real-‐0me,
producing a 3D view allowing traders to consider what they are buying, why they are buying it and the impact that this may have instantaneously.
Currencies of Meaning New trusted currencies of exchange emerge to beGer facilitate transac0ons,
trade, authen0ca0on and valida0on. Money as a means of exchange is complemented by new systems to which we aGach increasing significance.
Seamless Ubiquitous Payments The ability to ‘transact anywhere’ with integrated, sophis0cated
authen0ca0on such as biometrics increases: More contactless technology and a convergence of standards, enable global informa0on exchanges.
Reduced Human Control We see a world where most connected devices can be used
for payments, more people will be financially included and there are more automated payment choices and channels.
Omnichannel Access Customers demand omnichannel access to goods and services. You can order online and pick up at the store, order at store and arrange delivery online, get similar offers across channels. Payment op0ons reflect this degree of flexibility.
Growth of Mobile Point of Sale In the next ten years there will be a global acceptance of electronic
payment products. We are nearly there with Square and iZeGle. Such is their success it is expected that by 2019 46% of POS terminals will be mPOS.
Low Value Payments One area that is likely to see significant transforma0on is low value payments -‐ everyday, high-‐frequency purchases for which cash is used (typically sub $10
transac0ons) and make-‐up the bulk of cash transac0ons today.
Sub $10 transac0ons will become increasingly fric0onless, 0ed into pay-‐as-‐you-‐go business models i.e. on-‐demand content.
Mobile Currency Convergence Ambi0ons for convergence of payment types is accelerated by the crea0on
of seamless mobile consumer experiences that unite mul0ple cash-‐less stores of value including a range of tradi0onal and alterna0ve currencies.
ProliferaQon of Currencies People will increasingly use mul0ple forms of currency in different contexts: alongside na0onal legal tender, we will see more local and crypto-‐currencies – many decoupled from exis0ng systems.
THE ROLE OF DATA
Data Darwinism Data is a new form of power: Corporate consolida0on places data in the hands of a few who are able to dictate terms above others. Governments correspondingly have less power as they have less access to key data.
The Increasing Value of Data As organisa0ons grab more data, it becomes a currency with a value and a
price: It therefore requires marketplaces – transparent ecosystems for trading data -‐ so anything that is informa0on is represented in data marketplaces.
Connected Data Data must be connected and mul0 layered to be relevant. It is not big data but rather connected data – the confluence
of big data and structured data that maGers.
Big Data OpportuniQes Most of the opportuni0es big data can offer have yet to be fully exploited. The reality is that there are different chunks of data that are collected, stored and managed in mul0ple ways.
Linkability of Open Data No data will be truly anonymous: Current open data prac0ce assumes that
technology will be not be able to relink it to its source. This is not the case and so, by 2025, we will see different levels of de-‐iden0fica0on.
The Personal Data Dilemma Lurking ominously in the background there is also the ques0on of to
what extent consumers will allow us to collect and use their personal informa0on, and what they will expect in return?
Personal Data Store Led by developments in authen0ca0on systems, new personal data plaMorms migrate into the world of marke0ng. These lead to seamless and universally accepted creden0als stores that share data with mul0ple brand partners.
Data Ownership Individuals recognize the value of their digital shadows, privacy agents curate clients’ data sets while personal data stores give us transparent control of our
informa0on: We retain more ownership of our data and opt to share it.
Seamless Data RepresentaQon Improvements in the way in which data is visualized and presented leads to rising consump0on and wider use. In turn, we see greater efficiencies and benefits for individuals, companies, governments and society as a whole.
SYSTEM SECURITY, STABILITY AND STANDARDS
Integrated Global Governance Regula0on to support global, regional and local transac0ons will increase. A set of global integrated standards for payments and services will emerge
to which key regulators and merchants all sign up to.
Digital Regulatory Regions With learnings from successes in East Africa, autonomous/sovereign regulatory authori0es come together to create con0guous digital regulatory regions that span geographic borders and boundaries and lead to payments convergence.
Tension with RegulaQon Some regional regulatory interven0ons protect consumers whilst others prevent innova0on by limi0ng use of new technologies. A power struggle
between brands and government emerges around wider data sharing and use.
RegulaQon of Services A new regula0on model will emerge in the payments world. Whereas
to date regulators have focused on “defini0ons of en00es” their role will shis to being more about “regula0on of services” and wider alignment.
Integrated Dollar ProtecQon As more disrup0ve technologies upset the status quo, interna0onal regulators collaborate to try to protect the US dollar as the global reserve currency and seek to enable an appropriate pace of change.
Rising Cyber Security Greater interconnec0vity and the Internet of Things creates new
vulnerabili0es for governments and corpora0ons -‐ as the unscrupulous and the criminal increasingly seek to exploit weakness and destroy systems.
MulQ-‐factor AuthenQcaQon Mul0-‐factor authen0ca0on will become the norm... authen0ca0on itself will become more secure as biometric technology from hand geometry, via face recogni0on and fingerprints to iris recogni0on become more mainstream.
There will be a range of appropriate ways of authen0ca0ng payments, generally changing from passive and complex (passwords) to ac0ve and simple (biometrics)
EvoluQon of Security The need for physical security reduces with demise of the use of cash. In its place, more secure digital solu0on plaMorms pervade with a consolida0on of iden0ty and payments into an ecosystem that includes crypto-‐currencies.
Universal IdenQty With increasing technology convergence, dependence on security is paramount as systems, customer data and trust can be compromised. A highly secure, but easy to use, universal iden0ty plaMorm emerges.
The Changing Nature of Privacy Interna0onal frameworks seek to govern the Internet, protect the vulnerable and secure personal data: The balance between government protec0on, security, personal privacy and public good is an increasingly poli0cal issue.
Trust and Integrity of the System As more individual control and simplicity is sought, how will the privacy
con0nuum evolve, will tokenisa0on diminish security concerns and do we know what trust will mean in the future?
CONSUMER CENTRICITY
The Composite Consumer Flexible digital iden00es allow consumers to connect with each other even as they connect with brands. Loyal rela0onships will be made not just with individual customers but also with families, couples, and groups of friends.
Changing Customer ExpectaQons Customers will expect different things from their payments experience: instead of just ‘security’, there will also be a need for greater individual control, flexibility, choice, efficiency, convenience and “good fric0on”.
Changing Dynamics of ConsumpQon A move to more conscious consump0on of experiences instead of the hyper-‐consump0on of stuff results in a shis in the u0lisa0on of assets and social view of status and hence associated anxiety around progress in a low-‐growth world.
TransacQonal vs. EmoQonal Seamless payments will distance consumers from understanding
monetary value. Brands will have to reconsider the way they connect to customers providing more holis0c and emo0onal value.
Personalised Shopping In ten years you can expect to walk past a shop and your mobile will receive meaningful and personal no0fica0ons on discounts or deals
in store that you are likely to buy based on your shopping preferences.
Paying for Privacy We do not currently understand the value of our data or how it is
being used and so are giving it away. In the future we might be willing to pay more for our privacy than the data we share.
Device is King, Consumer is Queen Whether on devices or in the cloud, our digital repositories will know who we are, where we are and what we redeem. Businesses need to understand these new intermediaries and how they define our rela0onships with their brands.
Empowering the Crowd In the future anyone will be able to trade, immediately knowing the
amount they are paying in the currency of their choice. The number of par0cipants will drive the market rather than single, large-‐scale investors.
NEW MARKETS, NEW ORGANISATIONS
Joining the Dots Increasing collabora0on drives companies to re-‐organise based on social
networks. The shared economy changes the shape of many organisa0ons, but a shis in the role of the company from employer to facilitator challenges many.
OrganisaQon 3.0 New forms of flaGer, project-‐based, collabora0ve, virtual, informal organisa0ons dominate -‐ enabled by technology and a global mobile
workforce. As such the nature of work and the role of organisa0on itself blurs.
CompeQtor CollaboraQon Wider collabora0ons change the payments landscape with credit card companies partnering with merchants, MNOs, and new entrants. These partnerships share infrastructure, increasing consumer u0lity and choice.
Free Banking from Non-‐tradiQonal Players Innova0ve business models -‐ underpinned by changing technology, consumer demand and governments pushing for cheaper or free banking -‐ open the doors to new entrants from outside the sector that break old monopolies.
Financial Inclusion Driven by Payments Companies Improvements in financial educa0on for the mass are driven by the payments
industry, not governments. Predica0ve algorithms protect consumers by reducing their ability to over-‐extend themselves with cheap credit.
Commercial Payments Commercial payments by businesses total over $100Tn globally. New
commercial payments solu0ons emerge, offering value from beGer working capital management as well as process improvements will emerge.
Personal Mobility Accounts Consumers have a single, digital mobility account that is recognisable and accepted by everyone in the eco-‐system. They also use / sell their mobility data to mul0ple service providers via local / regional data brokerages.
Privacy Agents The difficul0es in extrac0ng value from our data while protec0ng our privacy sees the emergence of new professions. Look out for ‘privacy agents’ and ‘data brokers’ ac0ng as intermediaries and managing the flow of our data.
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