You walk into a store, pick up a drink, walk out and get on with the rest of your day.
The police don’t get called and you haven’t stolen anything.
No, this is not the beginning to a riddle, but rather the beginning of the future.
In recent times payments have been getting reviewed at all levels: the likes of Wirecard are treating payments not as processes but as stories, Amazon knuckling down to emphasise the ‘Trust’ factor, but a fast-rising school of thought is whether payments need to be not reviewed but actually removed.
Last summer, I saw Steffan Aquarone, the founder and CEO of mobile payments and reward app Droplet, speak to potential investors about his idea for removing the act of paying altogether. He later said, at an event in November, that “Innovation is about taking steps away” and making payments more human.
This idea became the core feature of the app called ‘Zero Touch’ and by using geo-location technology and Bluetooth low energy it allows customers to purchase things at frequently-visited locations without reaching for their wallet (or mobile phone). The merchant recognises the customer, inputs what the customer wants to buy and the money is automatically taken out of the user’s account.
“This is how you pay hands-free, right?”
Seeing the likes of Droplet working on technology that could essentially strip away payments friction like it was the back of a Panini sticker, it reminds one of Uber and the subsequent introduction of “Uber moment” into fintech argot. The amusing thing about the phrase ‘Uber moment’ is that it has different meanings. The first ‘Uber moment’ was when everything for the taxi industry changed. One sleek app is introduced and suddenly taxis began to be viewed by the consumer as a too expensive, technologically backwards way of getting around. But since then, there have been many more smaller, but culturally significant Uber moments. People have become so used to Uber taking payment from them automatically that when they use a normal taxi they automatically get out of the cab without reaching for their wallet to pay.
When I mentioned this to Steffan at this month’s Money20/20 event in Copenhagen, he excitedly replies,“Thank God for Uber!” before going to elaborate that the company almost single-handedly got consumers used to the idea of companies automatically taking payment from them being an acceptable thing to do. “It would be a lot harder if Uber hadn’t done this,” Steffan added.
Does the innovation have legs?
The foundations of success are there. The technology looks like it almost certainly fits Steffan’s criteria for a successful product: “What’s going to make life easier for the customer.” Completely frictionless payments seems to tick that box. But convenience can only take you so far. There has to be traction and awareness. That also looks to be positive. Droplet is no longer the only fish in the aquarium. Big sharks like Google, Amazon and Santander have all also seen the potential of removing payments from the equation altogether. Google revealed it is piloting a scheme in San Francisco that allows people to pay simply by saying “Pay with Google”, whilst Amazon has upgraded its digital voice-activated assistant, Echo, to authorise payments. It was already able to order pizza and book Ubers. Santander went down a similar path by working on its banking app so that it can now read back transactions and make payments upon voice commands.
These are huge companies and that will undoubtedly give the innovation a big boost. For any new technology it is important that the infrastructure is there: people must be able to easily work out where they can use it. Just take Apple and Apple Pay as a warning. The biggest company in the world could only do so much to educate people. Participating retailers, adverts etc were all crucial in the US and not enough groundwork was done.
Hands-free payments may inherently be convenient but people have to know where they can pay that way. The same approach has to be taken as when the UK first started pushing Chip-and-PIN tech ten years ago or even contactless cards last year.
What will this future look like?
What will this future, one where the consumer doesn’t have to worry about fumbling for the wallet or ensuring his NFC-enabled smartphone is sufficiently charged, look like? Wirecard’s SVP, Christian von Hammel-Bonten posited the example of an interactive bathroom mirror. It tracks your toiletry stock and automatically schedules a delivery when supplies are running low, a more evolved and intuitive idea behind the Amazon Dash. But that idea was presented in the context of the Home being the next great hub of commerce.
What about when you go outside and make everyday payments?
“It’s like having a tab in every business” – suggests Steffan. A simple and very human concept, especially when one thinks the inherent trust that must be there.
But, with the likes of Google and Amazon muscling in on Droplet’s frictionless territory, is Steffan worried? He doesn’t appear to be because he believes Droplet can be different from the big boys.
“Loyalty is a good angle,” Steffan said. Although it may not necessarily be the traditional view of loyalty and the rewards it implies.
“Customer discounts are right at the bottom. People don’t care about that,” he said about what interests Droplet customers about loyalty schemes. Talking to customers and getting their feedback, Steffan ranks ‘product’ offers as being the most popular and welcome.
In a way that make sense, because loyalty is moving away from being something extra to paying at frequently-visited locations to being a key appeal. That all came about with the rise of digital platforms that mean it’s a lot easier to rack up rewards than trying to find the crumpled paper loyalty card. And because it’s easier, it’s also easier to care and get more into it. So discounts become less interesting, people want to feel valued and feel like they are actually getting something valuable for their loyalty.
Just as the big companies saw the potential of hands-free payments, so do they now see the vast potential of rewards platforms. Starbucks already has its impressive mobile payments and rewards app and at the beginning of April, both MasterCard and Samsung Pay both expressed strong interest in loyalty schemes and rewards – the latter has actually created its own Giftcards Mall.
It’s still early days and the competition is only getting tougher, but who knows, if Steffan’s company manages to hit the sweetspot of customer convenience, brand awareness and education, then maybe one day people will be having ‘Droplet moments’ as they walk out of shops that haven’t yet got frictionless payments.
Loot, the smartphone banking app aimed at helping millennials stay on top of their finances, has finally launched this week and started to open accounts of the 25,000 people on its waiting list.
Amazon have recently launched their new in-store innovation service, Amazon Go.