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One wallet for all. With the spread of digital payments, some payment methods, such as contactless, have been elected as the standard of this market: tap&go has conquered instore transactions, even for micropayments, with card and wallet on smartphones and wearables, thanks to successful use cases touching the TPL and utility worlds.
Meanwhile, the evolution of the POS from an acceptance tool to a merchant services ecosystem continues. But the real killer application, in the world of payments, is yet to come and will require systemic action on the part of players in the financial world, who could finally become key players in this market through the creation of a common, systemic-use wallet, as moreover already hypothesized by the European Union in the context of Digital Identity.
Equipped with AI to personalize services and raise security safeguards, and capable of integrating multiple payment methods and value-added services.
"In the current market scenario, banks have little room: in fact, it is the BigTechs that are driving the advance of mobile proximity payments, along with the international circuits that promote the various acquiring models," says Paolo Gatelli, Senior Research Manager Cetif, Università Cattolica del Sacro Cuore. This is not to say that banks are left out of this business, but that the market has simply dictated the rules of the game: users, for speed, immediacy and security have become familiar with c-less and NFC payments in general, which today present an irrepressible growth curve. Leaving in the shadows other innovations, such as the payment card equipped with biometric authentication, which allows each transaction to be authorized by resting the finger on the card, for example."
In particular, two types of payment wallets have emerged today: "the pass-through ones, i.e., the various Amazon Pay, Apple Pay, Samsung Pay, and Google Wallet, which take care of initiating the payment and charge fees to the bank; and the staged wallets, such as PayPal or Satispay, which are linked to a payment card or fed with recurring credits, but which only allow transactions between users of the same service. It is precisely this last model that is the starting idea with which banks initially approached the world of wallets, but without finding a concrete application, due to difficulties in working with each other and integrating the systems, Gatelli notes. However, a second chance is on the way: the digital Euro, which will require banks to work as a system, to define the players and their roles within a new payments ecosystem."
But wallet is not necessarily synonymous with mobile proximity payments. "Actually on a system wallet you can enable numerous payment methods, primarily Account to Account transactions, even in multiple currencies, or instant payments, with the same experience users are already used to. But by disintermediating the various players and circuits present today," Gatelli adds. Cost savings for banks, which will, however, have to work on devising new software-based authentication methods integrated into mobile applications."
The system wallet can thus be transformed into a single point of access to evolve the payment-related service offerings of businesses as well.
"Thanks to a platform logic, in addition to enabling various types of payments, including B2B, it can become a tool for managing daily operations: stock inventory, payment of suppliers, electronic invoicing of SME customers from banks. In addition, it can be connected to the softPOS app on the smartphone via API, which in turn is integrated with the cash system, so that business transactions are also recorded," Gatelli points out. A set of data that allows for the expansion of services that have cognitive value for the merchant, with the possibility of conducting comparisons at the local level, based on various criteria, such as the average receipt in a defined commercial area, as well as with direct benefits on the daily operations of the enterprise."
Natural the use of AI in data analytics, with the already common goal of personalizing services, in this case in the area of payments. Even on the security front, integrated into the customer journey.
"Thanks to artificial intelligence, it is possible to detect possible levels of anomalies during a transaction, which trigger alerts and additional authentication steps for payment authorization," Gatelli points out. The payments market has always struggled with fraud, and tools such as instant payment have both benefits and risks: the ability to transact sums of money in 10 seconds, irrevocably, is attracting financial criminals and phishing attacks."
It is today that we need to start thinking about the future, about "a wallet that does not just manage payment technology, but opens up to an integrated ecosystem that is functional to the customer's needs and goals, to manage their finances," Gatelli concludes. Banks will be the main player but they need to start now to invest on integration and abandon the imitative approach, that is, not competing with already established models such as contactless or staged wallet, to collaborate from a system perspective, enriching the experience, services and security in managing payments thanks to AI. The market says it: the wallet will be the new killer application."
The arrival of the new Consumer Credit Directive (CCD II) will change the balance of a market that is growing today, that of Buy Now Pay Later.
"The regulation will have no impact on banks that already apply credit analysis to BNPL applications, but it certainly will not push new institutions to have a dedicated compliance department for credit risk management," Gatelli premised. The possible scenario is that we will see more open innovation collaborations between the digital capabilities of fintech and the scoring skills of the bank."