Invisible Payments

Future of money

8 min readMay 3, 2015

Payments bind society and connect billions of people with millions of businesses. The transport of money is, in itself, a big business. How big, you ask? A Mastercard study of consumer spending identified roughly 63 trillion dollars of volume from 2.6 trillion transactions per year. This means that 83,000 transactions are occurring every second! With usage that extensive, global, and critical, user experience is extremely important.

History

The world has seen a handful of large, widespread changes in terms of user experience. Let’s go all the way back to the beginning.

Bartering: As early as 9000 BC, both grain and cattle were used as money or items for bartering. Users were able to exchange one valuable object for another, but it was hard to transport value over long distances due to both travel and time constraints.
Tokens: Society eventually introduced value as represented by tokens (metal coins, paper money, etc.). For users, this meant that there was now an easier way to exchange value that also allowed for value transportation over time and distance.
Pooling: Over time, people began to pool money into accounts (check, cards, etc.). For users, this means that there is no need to transport valuable items or tokens on one’s person, yet one can still access specific value tokens on the spot.

We now stand on the verge of the next big change in the user experience — moving payments to the background and entirely eliminating the need for that activity. So let’s make payments invisible.

My first priority

Although gradual, the transformation is already happening. For example, my Spotify subscription charge is taken from my card monthly, which means I don’t even think about those transactions anymore. In fact, I’m not even aware that they occur. That’s a transaction that occurs online.

In the physical world, we have become used to the idea that one needs to provide a form of value for something, and then you will receive goods or services for it. I challenge that idea since giving money away is rarely my first priority. My first priority is to get something that I want. However, in order to complete the exchange, I’m forced to give away money for it.

Why should we have to think about something that we don’t want to do in the first place? The simple answer is, we don’t have to. Allow me to explain.

When you order a ride with Uber, you get in the car, and once you have arrived at your destination, you step out and walk away without ever touching your wallet. You have fulfilled your priorities — going from one place to another — without swiping a credit card or handling any cash. It’s truly a magical user experience.

So why isn’t that possible in other parts of my life?

Why can’t I be charged automatically at the door when I go to watch a standup comedian? Why can’t I just go to a repair shop, get my car fixed, and then drive away without having to find my credit card? Why can’t I have a coffee at the trendiest new café in town and leave without awkwardly waving over a waiter to give me my bill?

We’re getting there…

As you have probably realised, the most convenient payment method is not actually a payment method at all. Instead, it uses the currently available payment networks and creates superior user experience on top of it.

We found that billion-dollar consumer companies generally reinvent existing behaviour with a superior consumer experience, rather than bringing something radical and novel to the market.
— Tod Francis

We already have a lot of networks (cards, local payment networks, etc.) and solutions (TransferWise, Stripe, Paypal etc.) available, and there are many companies who are trying to build on top of these existing platforms and networks.

Paype: Payments made with sound
PayTailor: Payments made through phone calls
LoopPay: Merging mobile phone and magnet stripe readers into one
The list goes on…

Apple has identified that value better than anyone else in the business. Apple is exceptional at building strong ecosystems, and they are doing it once again.

They have a strong distribution network: iPhones (and the software on them) are widespread.
They have experience, solutions, and card data to handle payments (iTunes, Apple Store).
They have the best skills in the world in terms of building impressive user experience.
They offer innovative payment solutions (NFC at iPhone and Apple Pay).
Apple Watch is introducing new customer behaviour where payments come out of the pocket (wallet) and go onto the wrist. The impact this will have on driving payment further into the background cannot be underestimated.

Apple is getting very close to changing consumers’ habits again with contactless payments. As it is, Apple has already made many game-changing moves in the past. For example, they single-handedly changed the music industry and stimulated massive music consumption.

Contactless payments are winning

Apple’s invisible payments are strongly based on contactless payment systems, but they are not the only ones trying to figure things out. Banks and big credit card companies are already adding contactless chips (NFC, EMV) to their cards and distributing them everywhere. Everything is pointing towards these solutions becoming the winners in the future. There will also probably be many companies who will use the same infrastructure to integrate contactless payment functionality into their phones, bracelets, watches, or any other popular “wearable” item. Contactless payments will take over the world.

It will be a big improvement from swiping or using chips/pins, but they’re not fully contactless. These solutions only work in close proximity to the transaction. In reality, you still press your card or phone against the machine to ensure that it will work on the first try. Making payments a secondary priority for you is still a far-off reality. Companies can’t all be like Uber overnight!

Your identity matters

In our constantly connected modern world, payment methods are basically a way to identify you. All these magnetic strips, chips, and contactless methods are tools to authorise you as the purchaser to use a given payment network. This lowers the importance of payment networks, eventually making the most valuable thing your identity.

[I] discovered in a taxi that I had left my wallet at home. [I] handed driver my business card and was trusted enough to pay later. — Andres Kitter @ LHV bank

How amazing is that? Ultimately, Mr. Kitter was able to pay simply with his identity. The keyword in this whole concept, of course, is trust.

A similar event happened a little over 60 years ago, when Frank McNamara forgot his wallet at dinner at Major’s Cabin Grill restaurant in New York. Luckily, Mr. McNamara’s credit and reputation were both well known at the restaurant, which enabled him to pay later. That moment in history led directly to the creation of the credit card, specifically, the Diner’s Club International card.

Mr. McNamara lived in the disconnected, pre-Internet world. However, today we have a high level of technology in our lives and tangible connections to the world in our hands every day through our phones. This gives us the opportunity to repeat history and once again modernize payment methods to improve the user experience.

Invisible payments

Imagine a world where you go to a cafe, sit down, and order your drinks and food with friends. After a delightful meal, you simply leave the cafe. You have fulfilled your priorities of eating and drinking with friends. No credit card was swiped, no cash was handled, and there was no need to ask for the bill. That would be a magical user experience right?

Let’s try to build a solution to meet these requirements. To do this, we can use our already available technology and simply improve some of the user experience elements.

First, we need to build your identity. Let’s create an Uber-like app that can store your card data for payment, including your name and picture for security purposes.
Now, you go to the café and we establish the fact that you have arrived. For that, we can use Bluetooth beacons in your phone and exchange your identity with the cafe.
Your phone is now connected to the café, and the waiter knows who you are.
Everything you order will be added to your personal bill and you are charged when you leave the café.

There is no reason why this approach couldn’t also work in our previously mentioned scenarios and payment situations (at the door before seeing a stand-up comedian in a club and at the repair shop to get my car fixed before driving away without taking out my card).

Magical, right?

Yes, there are some other more challenging situations and security issues to think about.

In case there is more than one person in close proximity to you, we can display your name and picture to the waiter so he/she can choose who you are.
Also, we will send users a notification whenever a transaction takes place.
We will add an “authorised places” list to your app that will only allow specific places on that list to charge you. Stores and companies that you visit regularly, such as restaurants, grocery stores, hairdressers etc., don’t change that often.
We can set a maximum limit on what is allowed to be charged from your card without further authorisation (like many contactless cards today).
If you are making purchases in a new place, or if your time/amount limits are broken, you have to enter a PIN or fingerprint identification with your phone.
There are myriad different ways to make it even more secure with algorithms, device fingerprinting, and other tools.

Not the end, just the beginning

We might have only just reached the tipping point between usable and invisible payments for the world. With a little bit of trust, an open mind, and a focus on the user experience, we can change the world as we know it. I remember when cards first started to gain traction and people were worried about lacking the visibility and control that cash provides. Instead, imagine a world where payments are a seamless background activity of our daily lives. Payments and money will be an out-of-sight commodity that enables people like you and me to pursue their needs and dreams.