New-age Cashless Payment Technologies Improving Customer Experience in Real Life

A study on Cashless Payment Technology by Pratik R

Prior to the 21st century, cash and cash equivalents heavily dominated the world economy. Advancement in technology is pushing cash way behind in the 21st century. According to a study by Capgemini and BNP Paribas, digital payments are expected to cross a record level of 726 billion by 2020. In such a transformational phase for the world economy, tech giants and startups are collaborating and innovating to provide unique cashless payment solutions that are not only more secure than carrying cash but are also improving the customer experience for companies and business establishments. Let’s have a look at the hottest cashless payment technologies and how companies are using them:

• Distributed Ledger Technology

DLT or Blockchain is the hottest and probably the most innovative cashless payment technology, at present. A number of startups and companies have explored the possibilities of DLT-powered payment interfaces. As the payment processing in DLT is done over a distributed platform, DLT eliminates the requirement of owning high-cost data centers for processing financial transactions.

ABRA, a US-based P2P money transfer platform, and digital wallet works on DLT and lets a user store digital cash in multiple currencies in a single wallet. The cash can be transferred to anyone with a smartphone. ABRA uses blockchain technology as backend infrastructure but gives the users the ability to trade and withdraw in US dollars. Using a highly-distributed network, ABRA is facilitating P2P lending and money transfer without wanting users to involve any third-party in a transaction, improving customer delight and experience, at large.

• Non-physical Interface Technology

Invisible payment technology is fast catching up because of its potential of improving customer experience, significantly. Invisible payment technologies are offering companies a chance to offer an integrated experience and helping companies take care of multiple pain points of users in real time.

Amazon– the world’s leading e-commerce company is turning the idea of non-physical interface-based payment mechanism into a reality through Amazon Go stores. Amazon Go stores work on ‘Just Walk Out’ model that automatically detects what products have been picked up by a user through a virtual cart. A user just walks out of the store and Amazon automatically charges the payment from a user’s Amazon wallet and sends the receipt.

Google also tried its hands at building its own version of non-physical interface-based payment solution. Google’s Hands Free app allowed users to make payments at a store without even touching a wallet or mobile phone. Using a combination of WiFi, Bluetooth, GPS and other technologies, Google Hands-Free detected if a customer is at a store and the cashier there verified credentials through customer’s Hands-Free profile. However, multiple reasons forced Google to shut the platform and focus on building a much more promising non-physical interface based payments platform.

RFID or radio frequency identification tags are being used widely by multiple carriers, stores, payment facilitators, etc. to improve customer experience during the payment process. RFID-based payment solutions do not require a customer to pay manually but automatically deduct a pre-defined amount on the occurrence of a particular event.

The most significant use of RFID-based payment platform is seen in India where the Govt. launched RFID-based FAS Tags to pay toll-tax on national and state highways. A car equipped with an RFID tag is not required to stop at toll booths and pay manually and charged from the RFID tag linked account, directly.

NFC is the new hit in retail owing to its potential of facilitating payments. NFC works on a simple principle of contactless communication when two devices are in close proximity. A number of tech leaders such as Google & Paypal have created their NFC-based wallet systems already.

Google wallet- Google’s own NFC-based wallet allows users to pay for anything online or offline at merchant stores by tapping and paying directly. A P2P payments platform, Google Wallet also makes it easier to send and receive money from friends and family. Other players such as Paypal, Apple Pay, etc. are harnessing the powers of NFC to promise secure, fast and easy payment solutions to users, thus improving customer experience both at offline and online stores.

• Unified Payments Interface

The demonetization drive in India prompted users to adopt digital payments. Unified payments interface was thus launched as an open-source platform with easy integration to different banking apps and payment platforms such as VISA and Mastercard.

BHIM was the first UPI-based payments app that enabled users to send and receive money, pay at merchants accepting UPI payments with ease and transfer money to a bank account. Taking cues from BHIM app and leveraging the benefits of UPI platform, a number of apps sprung up in a short period giving users the chance to perform cashless transactions at practically every location in a densely-populated country such as India. UPI has thus shown the potential of technology in transforming a highly cash-based economy into an emerging digital currency-based economy.

IoT is deemed to be the future of anything and everything that we see around. According to an estimate, almost 24 billion IoT devices will be present on earth by 2020. Owing to such a great penetration and promise, IoT has significant implications in the payments landscape, too.

Visa has already developed an IoT-based payments platform- Visa Ready Program that introduced tokenized payments facility for wearable, homes and other IoT devices. Using visa ready, IoT manufacturers can embed secure payments capability into IoT devices. The IoT devices can initiate payments without even wanting the user to touch the wallet or entering a secure pin.

All these cashless payment technologies are not only improving security but are playing an important role in improving customer experience when it comes to shopping and payments. These technologies have significant implications in the financial landscape at present and will surely promise better user engagement for e-commerce apps, retail companies and payment platforms in the time to come. The cashless economy is the future and in such a scenario, innovative technology-based cashless payment solutions will dominate the world economy at large.

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Originally published at appedus.com on January 8, 2018.