The payments space is becoming increasingly crowded. From Apple Pay and bitcoin, to more established methods like PayPal, there is no shortage of payments options that merchants can choose from to make their customers’ shopping experiences more convenient.
With new, integrated and more personalized payment options available at their fingertips, consumers will be in charge. In 2015, more than ever before, merchants will have to be nimble and adapt quickly to changing trends and consumer preferences. The merchants who prove they can do this will be the merchants who close out 2015 on top.
To help sort through the changes taking place in the payments landscape, here are a few trends to watch for in the year ahead:
Plan for the Virtual Wallet
In 2015, we will see more widespread adoption of the virtual wallet. Apple Pay has popularized this concept and more people are starting to opt for their phones over their credit cards. One of the reasons for the virtual wallet’s emerging popularity is the natural link it offers between the payment device and coupons, frequent flier programs, loyalty points, discounts and other special offers.
By bringing these forms of interaction together and placing them at the consumers’ fingertips, merchants can further simplify the transaction process and make it even more rewarding and convenient for consumers to buy. This year, loyalty and rewards programs will persuade people to reach for their phones at the point of sale. And once people start using virtual wallets, they won’t go back.
The Commerce of Things
Along with the growing adoption of the mobile wallet, we can expect to see the commerce experience become increasingly connected. The Internet of Things is expanding, allowing us to link more computers, smartphones, wearables and sensors together, share data between them, and extrapolate information from them.
The resulting web of connectivity has the potential to transform how people shop and make payments. We can expect to see payments made with more devices – smart watches, and perhaps even a quick nod using wearable technologies.
The net result is that the Internet of Things is evolving into the Commerce of Things and it is unlocking new opportunities for merchants. While there are still some barriers to overcome in the form of data security, these new forms of payment will enable increasingly frictionless transactions, making the shopping experience even more convenient for consumers.
Unlocking New Value
Along with the growing adoption of the mobile wallet, the Commerce of Things will unlock new revenue streams for merchants and generate added value for consumers. This happens by turning a single payment transaction into opportunities for additional interactions with the consumer. As merchants gain access to more consumer data through the interconnectivity of devices, they will also gain deeper insights into their buyers – insights that they can use to provide more relevant and personalized offers.
For example, if a consumer pays for new sneakers with a smartwatch, the merchant can offer him a discounted membership at a local gym where he can use his smartwatch to track his physical activity and progress. After certain periods of time, the merchant can also send promotional offers for new purchases of replacement sneakers.
Just by buying that initial pair of sneakers, the customer has received added benefits and savings and is more likely to remain loyal to the merchant. The ongoing interactions enable the merchant to build long-term customer relationships and create additional revenue streams over time.
Souheil Badran is senior vice president and general manager of Digital River World Payments, Digital River.