This story is part of “Follow the Money,” a look at how digital cash is changing the way we save, shop and work.
Think about every little thing you do when you walk into a store and pay for something.
You stand in line, pull out your wallet and withdraw your credit card. You chat to the cashier as you use the card reader, then enter your PIN or sign your name before cramming away your card and paper receipt.
Depending on how much of a rush you’re in and how many packages you have, these can all be seen as pain points in the payment process. But one by one, tech is knocking them down.
A primary example is the ever-increasing number of ways to pay using alternatives to cash and cards. If you believe the hype, payments will soon be made with anything and everything, from our phones and watches toand even the veins of our hands
The benefit of this is twofold: You’ll have more payment choices, and the act of paying will at times become so seamless it will fade into the background. Using new connected devices, biometrics and store formats such as Amazon Go, your devices and even the environment around you will handle payments for you. It should make shopping faster, more convenient and more secure.
A downside? It may become so easy to spend money that you’ll fritter away that paycheck without realizing it. (And that may be what retailers are hoping you do.)
This brave new world of frictionless payments won’t arrive overnight. Due to the rigid regulatory structure of the financial industry, we’ll see our payment rituals change incrementally as rules evolve to keep up with technology improvements. The availability of mobile payment networks like Apple Pay and Samsung Pay are just the beginning.
New tech, new options
At this year’s Mobile World Congress in Barcelona, Mastercard showed off its vision for shopping in augmented reality, which lays digital images over what we see in the real world.
“The most exciting technologies emerging are the ones that not only remove those little speed bumps we encounter when making payments, but the ones that change the shopping experience altogether,” said Elliott Goldenberg, Mastercard’s UK head of digital payments.
Shopping for furniture in augmented reality, as you can do with, can be especially useful. You can nail a chair’s exact dimensions and look in your living room. Once you’ve picked the item you want, you can just tap to pay there with funds drawn from your digital wallet. That’s not only good for the buyer, it helps retailers avoid return-shipping costs.
For Jacob Morgan, senior analyst at Forrester, the real excitement lies in the convergence of artificial intelligence and voice. He envisions a world where virtual assistants like Siri or Alexa remind us a payment is due while we’re driving, and we tell them to pay the bill.
Using Apple Pay or PayPalis something that Jaguar Land Rover and Shell have already been experimenting with. This feature doesn’t yet use voice recognition, but as that technology improves, this option should get more secure.
“It will be a logical step for them to add voice biometrics,” Morgan said. “You can see that using the most natural interface that we have as humans … will be a really exciting step.”
Voice biometrics aren’t far off, and have even been tested with the public, but they don’t appear to be totally secure just yet. Last year, a BBC reporter fooled HSBCbank’s supposedly secure voice recognition system by getting his twin brother to mimic his voice.
Beyond voice, we could see internet of things systems — such as Wi-Fi-connected security systems, refrigerators or smart TVs — automatically pay our bills. “You will need to give it permission, but it will make payments on your behalf,” Morgan said.
Giving permission to make a payment has always slowed the purchase process. It’s getting quicker, thanks to more accurate biometrics and new body-mapping technologies.
If you’ve ever used the fingerprint scanner with Apple Pay or Samsung Pay, or dabbled with Mastercard’s “selfie pay” or Apple’s Face ID, you’re already familiar with the basics of biometric payments. They’re still new, but gaining followers.
“We are seeing a future where authentication could move from PIN numbers to facial, voice and hand-movement recognition on your phone,” said Sulabh Agarwal, Accenture’s UK Payments lead. The tech is already secure and advanced enough right now, he added.
n January, Mastercard committed to making biometric identification available to all of its users by April 2019. This means banks issuing Mastercard-branded cards will also offer biometric authentication — either fingerprints or facial recognition — for remote transactions as well as for in-person payments made with mobile systems such as Apple Pay. The company also testedlast year in South Africa.
It’s primarily a matter of security but also of convenience and customer preference. According to research conducted last year by Mastercard with the University of Oxford, 93 percent of consumers prefer using biometrics to traditional passwords or PINs.
Customers will get to choose which biometrics they use depending on the situation, according to Goldenberg. “Authenticating with your voice won’t work if you’re on a train, or paying through facial recognition is less appealing if you’re in a dark room,” he said. “That’s why we don’t want to push one particular biometric over another.”
British tech authentication company Sthaler is testing a biometric authentication option called “Fingopay” at a university campus in London. A Fingopay reader builds a 3D map of veins in a finger, creating a personal key that’s stored in the cloud and can be used to authenticate payments anywhere you go. The company claims it’s more secure than just using a fingerprint, as each finger vein is unique, and the odds that two people would have the same vein structure are 3.4 billion to one.
Biometrics are considered secure because, unlike PINs or passwords, they are totally unique to you. That doesn’t mean they’ve been totally foolproof: Both fingerprints and facial recognition have been spoofed in the past. But that’s likely to become harder to do as the technology gets more accurate and better refined, as with Sthaler’s vein-scanning system.
We’re already well on our way to integrating biometrics into payments, and eventually we’ll be using them everywhere, said Agarwal. Expect to see them in bank branches, at ATMs, with mobile banking and of course inside stores — something we’ve already glimpsed ourselves.
Bypassing the checkout
Back in January,— a concept shop that allowed customers to check in using a QR code at a turnstile, take what they wanted and walk out without having to stop at the checkout. We found the experience to be quick and seamless. It left us wondering whether this was the future of shopping.
Amazon’s experiments with physical stores are worth keeping an eye on, Morgan said, although it might not become commonplace beyond Seattle just yet. “How it will work at scale is another question because it’s quite complex technology,” he said, referring to the store’s array of cameras and software that track dozens of customers in real time.
Even so, Amazon isn’t the only company experimenting with the tech to make it happen. British supermarket Co-op is beta-testing an app, built with Mastercard, that allows you to scan and pay for items with your phone as you walk around the store.
Payment-processing company Worldpay surveyed 2,500 shoppers in the UK last September and discovered that waiting in line for more than five minutes was too much for three-quarters of those people to bear.
“Those that have grown up with the internet at their fingertips increasingly expect the same frictionless service they experience online in the physical world,” Steve Newton, executive vice president of Worldpay for the UK and Europe, said in an email. “The key to success in retail is speed married with convenience.”
Mastercard also created an app in conjunction with pan-Asian restaurant chain Wagamama that lets customers order and pay from their phones. Diners can just get up and leave when they’re done.
“We know waiting for the bill is frustrating,” said Richard Tallboy, Wagamama’s chief information officer, in a press release. “Why shouldn’t you be able to get up and go when you are ready?”