How voice-based payments could steal mobile wallets' thunder

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As the reigning technology giants demand consumers do everything through voice-controlled smart speakers, they may inadvertently succeed where smartphone-based wallets stalled.

"In terms of payments, we talk about the invisibility of payments in the way Uber has made it where the payment just happens," said Mark Ranta, head of digital banking solutions at ACI Worldwide. "When you talk about voice (payments), that is the ultimate invisible payment. You ask the system to buy something for you and it knows you have to pay for it, and that is built into the process."

In its quest to advance digital payments and phase out cash and coins, ACI Worldwide doesn't particularly favor one form of digital payment over another. In any model, transactions will continue to move over existing card brand rails or new faster payments rails whether voice-generated or not.

But clearly, banks and merchant clients are more interested in talking about voice-controlled payments, Ranta said

Consumers are already purchasing products from Amazon via its Echo smart speaker. Amazon's third-party "skills" for Echo and the Alexa voice assistant already have a dedicated category for shopping, featuring retailers such as Best Buy and StubHub. As such, it is not a stretch to imagine this technology will continue to advance and become more common for payments of all types.

However, development of smart speakers and their use for payments is in the very early stages — the Google Home speaker has less focus on commerce (though Google does have a voice-ordering relationship with Target), and Apple's HomePod speaker was announced in June but still has not come to market.

Thus, it will take some time to work out the bugs that naturally come with advancing technology. In this case, it would be making sure a speaker accepting a payment request via voice can understand it and not get thrown off by background noise.

Plus, there can't be any confusion on the consumer end as to whether the payment went through or not.

"There is always a need to inform the user that a transaction is occurring or has occurred," said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group. "If you make a purchase on your smartphone, it will provide some feedback, or a tone, that the transaction is complete."

To that end, Sloane pointed to Visa's announcement that it is testing technology at next year's Winter Olympics in South Korea that likely will have a significant role in advancing voice-controlled payments.

Visa's emphasis is on sound, animation or vibration cues to signify a completed transaction in digital and physical retail settings.

"Visa may have a new set of tones or sounds or other feedback mechanisms that they are going to standardize to provide the type of authorization needed for users in all of these voice-controlled situations," Sloane said. "This is all important in assuring that a payment has been processed."

Apple's purchase of the music-identifying technology company Shazam can also advance this market by adapting Shazam's technology for payments and loyalty. Security is another factor in determining whether the person making a voice-assisted order is authorized to do so; Google has already demonstrated its abilities with less sensitive tasks, such as determining by voice whose calendar to access to update a schedule.

Currently, consumers are viewing voice-controlled smart speakers in the same lane as they do their smartphones, tablets or laptops — knowing that Apple, Google and Amazon are the key players, with others dabbling in the technology.

"The biggest thing now is that the multitude of paths to start this process toward voice-controlled payments is good for consumers," ACI's Ranta said. "Having all of these competing products at the moment will show us the 'how' for all of this."

As consumers more consistently engage with smart speakers to ask general questions, request a song to play or get a weather forecast, they will naturally seek expanded skill sets on their speakers, Ranta added.

"This could be the moment where we actually get away from the true digital interface, where you are seeing a payment happen," Ranta said. "This would be the truly invisible payment, that is just coming from your voice."

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