Credit cards and cash have been common forms of payment in the last 20 years without much disruption. However, with the explosion in use of the Internet of Things (IoT) and the introduction of digital wallets, the industry has realized that disruption is here. IoT has broken into numerous industries and changed how things are done. Various ecosystem vendors, service providers, payment processors, and regulators anticipate the wave of changes on the horizon. So how do we bring all these disparate companies together to build a new payments infrastructure?
To answer this question, Frost & Sullivan spoke with Ketal Gandhi, Senior Director in Business Development at Qualcomm Technologies, Inc. to learn more about our efforts in leading the industry to embrace frictionless payments where they recently showcased numerous frictionless payment demonstrations at the National Retail Federation 2023 : Retail’s Big Show.
Why are frictionless payments so important to retailers?
In the past few years, numerous new shopping modalities have emerged in physical stores as consumers expect experiences that are comparable to or better than online. Challenges that arose since the start of the pandemic accelerated retailers’ use of technology to implement frictionless shopping modalities such as scan and go, self-checkout, endless aisle, as well as buy online and pick up in store.
Advances in shopping modalities go hand in hand with payment modalities whose security, privacy, and smooth user experience are key attributes. Frictionless payments offer that to retailers. I would also add that supporting frictionless payments can speed up the checkout process and make it more convenient for consumers. Improving the overall customer experience can foster loyalty and repeat purchases.
How does the internet of things eliminate friction in payments?
New shopping modalities have resulted in exponential growth in the number of IoT devices in stores. One retailer mentioned to us recently that the number of IoT devices — including cameras, kiosks, routers, edge servers, and mobile computers — has doubled in each company store in the last year alone. The number of personal devices that consumers own is also going up. For example, a typical consumer will carry a phone, wear a smart watch, and drive a connected car. With the proliferation of intelligent edge devices, more financial transactions with sensitive data will flow through networks.
If we make this flow secure enough, the devices themselves can eliminate friction. For example, biometrics used for automatic verification and authentication would improve the customer experience and speed up the transaction. IoT devices in the store could be used to connect automatically with personal devices as consumers walk through the stores, in effect becoming a trusted network of payment receivers for secure transactions. IoT-based payment infrastructure also would allow retailers to gather and analyze data in real time to improve the customer experience and optimize operations. Retailers also can use IoT devices to track customers and products throughout the store to personalize the shopping experience and improve inventory management.
Why is Qualcomm taking the lead in developing frictionless payment infrastructure?
We are rapidly moving toward a world in which everyone and everything can be intelligently connected. According to International Data Corporation, 64% of all data will be created outside of traditional data centers by 2025. This means that more intelligent processing will be done on the device — at the edge. 5G will allow this contextually rich data to be shared with other devices and the cloud in near-real time.
As omnichannel commerce becomes reality, retailers will depend on this data to improve shopping experiences, enable frictionless payments, and enhance security. Qualcomm’s role is simple: bringing advanced connectivity, data processing, and intelligence to the edge, enabling a secure cloud-edge convergence. And we sit at the center of this opportunity — be it through mobile, automotive, wearable, compute, camera, or any other IoT device. This makes us the natural candidate for becoming the industry leader in frictionless payments.
What else needs to happen in the industry to enable frictionless payments and improve customer experience?
Standardization and interoperability are imperative for proliferation of any payment modality, as well as accessibility to the consumer. This means considering the needs of different consumer bases and providing access to alternative payment methods. While we are leading the way, we are also inviting other industry leaders to join us on this journey of enabling frictionless payments through IoT technologies.
We have already made progress and have been working with multiple companies that are thought leaders in this space. Standards organizations also will have a significant role to play here. And finally, merchants and consumers will have to feel comfortable using this, which will happen through the right security and privacy implementations. While user journeys are tracked granularly online, it is still a new concept in physical environments. We must work together to gain trust, while showing and sharing enough value with merchants and consumers.
