We need to consider how payments in the world of connected everything will work.
As devices become smarter, we need to establish how we can help people pay for things via any number of devices in a safe, secure way whether at home, on the move or in-store, while minimizing any risks, but maintaining an excellent user experience.
It’s a common refrain echoed in houses across the land each morning: “can you remember to replace the milk, please?” Soon, we won’t be shouting this at our nearest and dearest though, instead we’ll be asking the refrigerator to place the order for us. It’s already possible to press a ‘button’ stuck on your washing machine to instantly order detergent from an online store account, for example, and we’re already used to ‘one-click’ purchases from our favorite ecommerce sites that mean shopping on the go is easier than ever. Increasingly, devices capable of ‘listening’ to and then placing orders according to what they hear are being introduced to market, and over the coming years these will be able to act autonomously to make purchases without any human intervention.
However, if you have a fridge, a washing machine, a bathroom cabinet and a television all made by different manufacturers in your home, is it really going to be easier to store your bank account or card details separately for each device? Or are you likely to take shortcuts and use the same security methods for each? That’s if your connected kitchen devices will allow you to replicate your passwords – they might all have different levels of required security, which could just make automated payments so complicated that they never actually get used.
One recent survey found that 72% of consumers believe wearable technologies are the future of in-store shopping, and we can already see traditional payment methods changing as mobile payment ecosystems such as Apple Pay, which according to a new Accenture study accounts for more than two-thirds (68%) of all mobile payments in U.S. stores, start to take hold.
The increase in mobile payments and the rise in IoT commerce is leading to a decline in cash payments. Accenture Interactive has found that more than two thirds of consumers plan to buy connected technology for their homes by 2019, and nearly half say the same about wearable technology. According to another piece of recent research, one in five North American consumers have already used a wearable device to make a payment at least once, so based on this and our experience in both the IoT and commerce, we expect device-initiated payments from smartphones and wearables will grow to represent a much greater market share of overall commerce transactions. Simultaneously, cash payments will noticeably decline over the coming years in developed markets.
Devices all around us such as wearables, appliances, TVs and buildings themselves have started to gain network connectivity over recent years as the Internet of Things begins to become reality. With estimates ranging between 30 and 50 billion devices being connected to the Internet by 2020, we already know that many will be capable of autonomously making purchases. Connected devices will have other useful functions such as monitoring their own performance to enable predictive and preventative maintenance, or measuring product levels in real-time, but ultimately, they will eliminate the need for human intervention in purchasing and operational decisions in order to make our new, connected lives easier.
There are a number of considerations and possibilities regarding the future of payments in a connected world that we need to be discussing as an ecosystem, including:
Data Security and Privacy: Personal and payment data will not only need to be stored, but it will also need to ‘travel’ for payments to be issued and completed. Security – alongside the user experience – is going to be a key driver of the evolved payments ecosystem, and it’s also going to be a key differentiator in terms of which devices and services people choose to buy. The more devices that are capable of holding and transmitting your data there are, the more potential points of risk. We are already seeing encryption and multi-layer security offering potential solutions, but the balance with user-experience must be maintained, if we are to ensure a seamless or autonomous purchase is possible.
Cryptocurrencies: We’ve already established that storing traditional credit card details in every device might not be an easy or secure way to manage payments in the home, but what if cryptocurrencies were developed for secure transactions for everyone? We could see a payments ecosystem where manufacturers each develop their own cryptocurrency, for example, to allow them to avoid having to program each device according to regional currencies, and enable international transactions.
Smart Device Credential Management: As our homes get full of connected devices, the last thing we will want is a separate app or remote control for each one, it would just get too tough to manage. Instead, there are already many bodies looking to create standards for the IoT to enable interoperability, and companies looking to offer a central ‘hub’ that would allow for the control of devices through a single interface. If a ‘home wallet’ could be controlled through a single interface, perhaps with the ability to issue tokens to appliances rather than having each store payment details, an additional layer of security could be integrated to safely allow autonomous payments to go ahead.
The possibilities for enterprises, start-ups and individuals to benefit from the IoT is enormous, and in the home, the intention is that it makes life easier for everyone, with devices learning preferences, making decisions based on analytics at the edge, and enabling autonomous actions. But until the issues of security and privacy are addressed head on, we will not be able to identify the best way to encourage the payments ecosystem to evolve, in order to ensure the safe, secure adoption of IoT in the consumer world.
Tim Summers is global connected commerce lead at Accenture Digital – Mobility.