What Are Invisible Payments and How Will They Impact Businesses?

If you were to characterise the modern consumer, it would be fair to say that now, more than perhaps at any point in history, they are time-hungry.

They value efficiency and look for convenience in almost everything they do. This is especially true of payments, with one study finding that 62.2% of global shoppers used self-service checkouts to avoid lines and save time. The same study found that 51.3% of shoppers left stores empty-handed because queues were too long.

With over half of shoppers prepared to walk away without buying due to the inconvenience of waiting to pay, you might wonder if there’s a better way. Could the idea of invisible payments be the answer? While it may seem a long way off for SMEs, these innovations are important for entrepreneurs to follow.

What Are Invisible Payments?

Invisible payments are precisely what they sound like. In contrast to visible payment methods such as physical cash, credit and debit cards, smartphones, and wearable devices, invisible payments are triggered in the background, automatically and without any customer intervention.

Perhaps the best example of an invisible payment in action is Uber. Once you’ve downloaded the app, signed up or logged in, and stored your payment details, you don’t have to worry about payment from that point forward. Simply hail a ride, hop in, and when you reach your destination, payment is taken “invisibly” — meaning you can just get out of the car without reaching for your wallet.

This invisible approach to payment aims to enhance the ease and timeliness of transactions. By removing the need to handle and count cash, enter credentials, or provide authentication, the entire process is streamlined.

Furthermore, the customer journey as we know it will experience a welcome dose of convenience as traditional pain-points are minimised and eradicated. Grocery store queues, for example, could be a thing of the past if Amazon Go’s invisible payment technology goes mainstream.

Challenges & Opportunities (Now & In the Future)

Invisible payments are expected to reach $78 billion in annual transactions by 2022. But tracking the path towards this number is as likely to be fraught with challenges as it is littered with opportunities.

First, the opportunities are largely clear:

  • Invisible payments allow consumers an unbridled, frictionless payment experience. This will make for more effective personalisation, helping businesses to better understand the shopping habits of their customers. And with their identity authorised before a purchase has been made, tailoring products and services to an individual buyer will ultimately become easier and more effective.
  • Rideshare and food delivery services are already using invisible payments to their advantage. The focus sits squarely on the customer’s experience of the service, while the payment is almost relegated to an afterthought.
  • And the 2020 COVID-19 pandemic offers a serious backdrop to the discussion surrounding invisible payments. With less time spent queuing or lingering in-store, and with less close interaction between individuals or the need to press buttons on a keypad to authorise payments, the less opportunity exists, in theory, for a virus to spread.
  • The challenges, meanwhile, are all too common when it comes to the widespread adoption of new technology:
  • Consumers need to be convinced of the security and reliability of invisible payments, first and foremost. Although removing the need for physical payment delivers the speed and convenience many consumers want, it also removes an element of control.
  • Then there’s the trust component to invisible payments. Consumers may worry about items being purchased by mistake, or transactions going through without their knowledge or consent.
  • Consumers must also overcome ingrained behaviours. Many first-time Amazon Go shoppers admitted to feeling like they were “stealing” when walking out without physically paying.
  • And by replacing the pause before purchase that currently exists thanks to payment authorisation, consumers may be concerned about their ability to stick to a budget.

Of course, these challenges are largely brought about by a lack of familiarity with the technology. Concerns over security, reliability and trust should decrease over time.

How Will Invisible Payments Impact Your Business?

If handled correctly, the implementation of invisible payments has the potential to deliver serious innovation, disrupting industries and transforming customer experiences. Take Barclaycard’s Dine & Dash app, for example.

Instead of waving down a server, waiting for the bill, waiting for the server to return with a POS, and then making the payment, you simply stand up and walk out. Your payment information is held in the app, and it’s all taken care of automatically.

Whether it’s at a restaurant table or a supermarket, the ability to skip the wait and pay “invisibly” will save both you and your customers time. And even the smallest amount of time saved is still time saved. It all adds up in the long run.

But that’s not all. According to PWC, the other key business benefits of invisible payments include:

  • Reduction in errors: Eliminating the manual intervention of a cashier typing the payment value into a POS should reduce the risk of human error by both the merchant and the customer.
  • Cost optimisation and enhanced value: The resources — both time and personnel — involved in payment processing can be diverted towards enhancing customer experience.
  • Large-scale applicability: Invisible payments can be enabled both online and off. This should contribute to the adoption of digital payments and nudge a cashless society that little bit closer.

Key Takeaways…

Over the next decade, your business will be expected to meet a surging demand for a wide array of payment options. Some will simply require that you make use of existing infrastructure. Others will need a far more strategic technological investment — but with that comes the opportunity to improve revenue streams and enhance the customer experience.

For many consumers, a payment could soon be nothing more than an afterthought. Ultimately, however, the feasibility of invisible payments will come down to a company’s ability to adapt to a shifting payment world. Contact CCV for more information.

For the very latest payment innovations, download our annual trend report the CCV Pulse 2020