At RFI’s Canadian Payments Innovation conference the C-Suite and top payment execs from Interac, Visa, Mastercard, Square, PayPal, TD, Scotiabank, and others shared their views on top market trends and the future for our industry. Here were the top 5 themes and insights:
1: Small business & transit to be key drivers of payments evolution
Fintech innovation is underrepresented among small businesses in Canada vs many other places in the world. Paul Parisi, President of Paypal Canada emphasized that small businesses need the most support integrating associated services to help them run their businesses more efficiently, such as inventory management and accounting.
Although a small percentage of overall payments volume, integration between open transit and payments systems has proven a major driver of mobile wallet adoption. According to Stacey Madge, President, Visa Canada, this has driven a significant lift in cities like London and Hong Kong where it was implemented.
2: Collaboration is the key to success
Cooperation between existing incumbents with their scale, consumer trust, and resources with fintechs and regulators drives major wins for all parties. Regulators get safe, effective market evolution, fintechs get rapid scale that they could not achieve on their own, and incumbents get market-leading innovation at far lower risk and time-to-market than in-house development.
“We’re working to think about how we make our assets and capabilities available to the community at large like APIs and SDKs. What we’re particularly proud of is how we partner with not just the global brands, but some of the new startup communities. This is key to us and the success of our community.” – Debbie Gamble, VP Digital Payments, Interac
3: Contactless card adoption in Canada slows mobile adoption
Interestingly, Canada’s existing high adoption rate of contactless cards is creating a dampening effect on mobile wallet adoption. Since consumers already have a “good enough” contactless solution, the incremental benefit of switching is minor. This is partly why we see such exceptional adoption growth in countries like China where many consumers and businesses skipped several generations of payment tech and transitioned from cash all the way to mobile wallets.
4: Digitization to drastically alter payment economics
Cost of acceptance hardware has dropped 65% with the introduction of mobile point of sale (mPOS) and may reduce to near-zero in the future with connected devices and No-POS. Visa also estimates that reduced friction from payments digitization could add 3% to a city’s gross domestic product.
5: There were several major themes on the horizon beyond mobile
Although mobile continues to dominate the stage as a central theme in payments and the evolution of commerce in general, several other themes are beginning to emerge as candidates to supersede it.
“A lot of that technological change is being driven by our love affair with our mobile device and all the things that device is allowing us to do.” – Debbie Gamble, VP Digital Payments, Interac
The first is the internet of things (IOT) and artificial intelligence (AI), with their potential to drive more invisible, predictive, and automated commerce. However doing so will involve a shift to a more distributed model of payment permissioning, where devices can initiate payments on the user’s behalf and all the security implications thereof.
The second is the greater use of data to reduce friction, enable value adds, and create entirely new products and services from what has historically been simply a by-product of the payment transaction.
The third: secure digital identity and authentication is becoming a major discussion point not only for its critical role in secure payments but also for its ability to remove considerable friction and vulnerability from the internet which today is largely anonymous.
The fourth is blockchain and how distributed ledger technology (DLT) might enable improvements to the payment experience either for infrastructure providers (like networks and their members) or for consumers and businesses.
What do you think? Are you surprised by any of these themes? Let us know in the comments.
Photo by Mike Kononov on Unsplash