Why Invisible Will Make 2020’s Payments Innovation Roar

The famous 17th-century political satirist and author, Jonathan Swift, wrote in 1745 that “vision is the art of seeing things invisible.” Two hundred and seventy-four years later, those words are the perfect framework for understanding what will define the next decade of innovation in payments and any ecosystem that touches it.

Which, increasingly, is just about every ecosystem.

Most of what drives the headlines and banter about the future of payments plays off what people can see right in front of their eyes – the devices and apps that people use or don’t use today, the products they buy or don’t buy today, the places where they shop or don’t shop today, the methods they use or don’t use to pay – and how all of that will or won’t change over time.

That’s an obvious, but very small, part of the story.

The most transformative innovations in payments and commerce over the last decade are mostly the result of innovators making what was once visible, invisible: payments, stores, merchants, brands, issuers, even card networks.

Those innovations did more than just leverage digital and connected devices to make it easier for consumers and businesses to interact and to effectively blend the online and offline worlds. They influenced those choices by changing the consumer’s path to purchase and payment. Sometimes those innovations disrupted old models and players; other times they made them better and more efficient. But they always ended up redrawing the boundaries that once neatly defined how people and businesses found each other and did business.

Making the visible invisible was the powerful source of those shifts.

But it’s only just begun. Invisible will likely define the next decade of payments innovations, the start of which is just four months away – and will shape the strategies of every player operating within it.

The Invisible Innovators 

Who doesn’t know the Uber story by now?

In 2009, the Uber app introduced consumers to a whole new way of getting transportation and a way for black-car drivers with the capacity to serve them. Uber removed the uncertainty of getting a taxi and the planning required to book a ride by making reliable, high-quality and trackable car service available on demand.

Yet, one of its most transformative innovations was making payment at the end of the ride a non-event.

In 2009, Uber made payments disappear.

Like many of Uber’s customers, I registered a card way back when – and probably, like most people, have never changed it since. Like most people, I don’t even think about the card, the card brand, the network or my issuer when I am getting out of the car at the end of my ride. I just take it for granted that it all works and am on to the next thing.

Making friction invisible by making payments invisible was one of the catalysts for Uber’s success, and it’s why payments remains one of its core competencies.

In 2009, Square introduced a white square dongle that turned a smartphone into a POS terminal, making it possible for consumers to pay micro-merchants using the cards consumers had in their wallets.

Yet Square’s real innovation was making payments invisible for micro-merchants, enabling them to grow their businesses and move away from cash-only purchases. Square did this by acting as the merchant of record and enabling payments acceptance – and, over time, scaling that model to larger and larger businesses.

Then there’s Starbucks.

The company made history in 2011 when it launched what is still the country’s most successful in-store mobile wallet. Then, Starbucks made the act of presenting physical payments credentials at the point of sale invisible – something that more than 25 million consumers have since made part of their regular coffee routine.

But in 2014, Starbucks piloted something that would change the in-store payments experience altogether. It was then that Starbucks piloted order-ahead, which was rolled out to all U.S. stores in 2015. Starbucks wasn’t the first to do this, but it was the first to do it at scale. Order ahead, suddenly, made two things invisible: payments credentials and the uncertainty of waiting in line to place an order. In doing so, Starbucks entirely changed the dynamic between the store and its customers.

Buy online pick up in-store, more broadly, is changing the nature of the consumer’s relationship with many retailers – from grocery stores to department stores to mass merchants. Stores don’t become invisible, but the consumers shopping inside them do – as apps and registered payments credentials give them different shopping options and force stores to rethink their models.

That same dynamic is the source of today’s love/hate relationship between restaurants and food delivery aggregators like Grubhub, Uber Eats and DoorDash, where the fear is that they will make – or have already made – individual restaurant brands invisible to the consumer. A service made popular by time-starved, hungry consumers with smartphones now enables people to order restaurant food from any participating restaurant for delivery, mostly to their homes.

What’s visible is the aggregator’s brand, as well as the promotions and rewards they offer to keep consumers sticky – to them – regardless of who they order from. What’s less visible is the restaurant brand and the loyalty that comes with a more traditional online or mobile ordering experience. And, over time for some, there is the risk that the in-restaurant experience, like the in-store shopping experience, will become less attractive – maybe even largely invisible – to the consumer.

Then there’s voice.

Voice as Disruptor

I wrote a piece several years ago about voice as the new payments and commerce intermediary. I remember being told then that my exuberance for voice was wildly off-base, that consumers would never take to the experience, and that as an enabler to payments and commerce, it was too friction-laden to be useful.

Yet, here we are.

Since then, we’ve seen the rapid adoption of voice-assisted speakers and the emergence of ecosystems and apps that have grown up to support both Alexa and Google Assistant. Tens of thousands of connected devices are now voice-enabled, and tens of thousands of skills foster a robust new ecosystem in which the enabler to any experience is just a voice command away.

This time last year, we released a study that showed the impact of voice-assisted devices on U.S. consumers’ connected device ownership and their usage of them to make purchases. At that time, more than a quarter of all U.S. consumers owned one, with more than a quarter of those consumers using them to make purchases.

Next week, we’ll release new research that will provide even more compelling evidence of the impact of voice – and voice assistants – on the consumer’s path to purchase today, and where it may be headed.

Needless to say, in a world in which the commerce journey starts with the sound of a person’s voice, payments are not only invisible, but will also be influenced by those new voice intermediaries: Amazon with Alexa, Google with Google Assistant, Samsung with Bixby and Apple with Siri.

Cards on file, credentials stored long before voice assistants became a thing, will likely remain just as they are. But unlike a world in which consumers pull out a plastic card with the name of their issuer and card brand, or see the last four digits and a little thumbnail of the card network associated with their payment choice when buying online, those visual cues become invisible.

Because just like Uber, the payments experience becomes invisible. But that’s not the only thing that also disappears.

Let me give you an example.

I have an Echo Show, Alexa’s voice-activated device with a screen. I wanted to experience a purchase for something other than groceries and something for which I had no brand preferences, just a product need.

So, I told Alexa I wanted to buy a pepper grinder.

A few seconds later, pictures, pricing, reviews and a small description of 10 pepper grinders were displayed on the screen. I quickly scrolled across the screen and picked the one I wanted to buy. I told Alexa to put it in my cart, she confirmed and then I told her to buy it. A second later, a thank-you and confirmation appeared on the screen, and an email confirmation was in my inbox.

Brands and store were invisible, too, in that purchase. Since I had no brand preference, it didn’t really matter to me what brand I bought or what seller had it in stock. My decision was influenced by ratings and reviews — and of course, price.

The pepper grinder arrived a day later.

For that product and that purchase, I found the experience to be far easier and much more efficient than shopping online. The payment and delivery were invisible – but it always is on Amazon. Voice-assisted shopping with Alexa worked because so much of what is required when purchasing online – login, passwords, shipping address, payments, delivery options and then the endless searching – were made largely invisible because of the purchasing experience that Amazon, now via Alexa, powers.

Yet it’s an experience that’s far from perfect – right now. Alexa first started to read all 10 options to me, which I found tedious and annoying until I asked her to stop. And subsequent searches for black shoes, foldable televisions or a raincoat with a hood were, shall I say, far less satisfying.

But that probably won’t be the case for very long.

Who Wins When Payments Become Invisible?

Making things that were once visible, invisible is about removing the frictions that get in the way of a consumer and a merchant doing business.

When payments are invisible, consumers are no longer forced to enter those credentials every time they want to buy something, increasing the odds that they’ll make a purchase. When orders are made ahead for pick up, consumers don’t have to wait in line at the store or risk not being able to get what they want when they show up. When aggregators and marketplaces make brands less visible, the odds increase that a consumer will buy something because they are presented with more choices.

All at their convenience – and on their time.

Invisible is about driving conversion, even if it changes the dynamics of who gets the sale.

Invisible is also about driving those conversions at scale, and securely, at any endpoint where the consumer wants to make a purchase. The emergence of 5G will bring even more connected devices online, enabling shoppers to buy and pay for things anywhere, anytime. Pundits who say the future of payments will connect consumer accounts directly to merchant accounts are underestimating the significance of payments acceptance, ubiquity and the role of tokenized payments credentials – in a world where payments become more and more invisible and connected commerce endpoints increase in supply.

It is really easy to reduce frictions by making payments invisible and incorporated in many more devices, using the existing rails that consumers and merchants rely on — in fact, it’s how all of these invisible innovations got their footing and will likely continue to do so. Efforts to get everyone on a whole new set of rails are unlikely to add enough value to get everyone to move. And certainly not at the pace that innovation will accelerate commerce moving online in the next several years.

Invisible as a Driver for Making the Right Things Visible

In some cases, invisible is a motivator for change.

The scourge of B2B payments is the lack of transparency into when payments will arrive. Many innovators are investing their time and resources into making them faster. Yet, by using technology to make flows more visible, using AI and machine learning to authorize transactions in real time to make availability of good funds more certain and using data and new tech to unlock new working capital options, innovators can create the biggest bang for the buck for trading partners today – as many already are.

In other ways, invisible is an incentive to be better.

Streaming services – as well as an increasing number of subscription offers and online marketplaces – give content creators and brands a more efficient way to become more visible, even if it means being a smaller fish in a pretty big pond. The even greater risk for the brand is not being found at all, and for the aggregator, it is not having enough supply to keep the demand engines vibrant and strong. Each has an incentive to make invisible work.

Invisible is also an opportunity to make the right things visible.

As commerce moves increasingly online, a shift that will only accelerate over the next decade, the act of purchasing itself – not just payments – will become more invisible.

Consumers won’t initiate all of the purchases they make today using their smartphones, tablets and computers. Across a wide range of devices, AI and machine learning will power those smart, personalized and secure experiences, and will anticipate what could be needed and make suggestions – or just automatically make the buy.

Appliances will reorder supplies, alert repair people to service calls and order parts to arrive in time for the repair. Shopping lists will be auto-prepared based on previous purchases and will auto-order – we are already seeing that now with “subscribe and save” options on Amazon and other sites.

Consumers will “set and forget” the purchase of things that don’t require their personal involvement with a merchant or marketplace. Promos and discounts will be automatically applied. Alexa or Google Assistant will remind a consumer that supplies are running low and ask whether a refill is needed. All of these purchasing experiences will just happen as planned, and will be charged to the registered, tokenized credential on file with that marketplace, merchant, aggregator or voice assistant.

In a world where purchasing becomes invisible, consumers will need even more visibility into what was purchased and when, as well as an opportunity to pause, add or cancel. They will need alerts when spending limits are close to being maxed out, so they will know whether it’s okay to splurge on that new fall wardrobe or whether they should put half of that money into the savings account that they’ve been building for a home remodeling project. One can imagine in that world consumers being given a choice for how to pay and new offers to do so based on what optimizes their purchasing power and personal savings and spending goals at the time of that purchase.

Payment players can thrive in this invisible world. Transaction volumes will increase as frictions fall and everything becomes digital — and the act of transacting becomes seamless, secure and consistent.

But they will need to learn how to play in a world where there’ll also be increasingly intense competition to be the payments credentials stored and forgotten, and where there will be room for wallets that make it easier to add and subtract cards across multiple apps.

It’s possible that as the payments and commerce and brands and stores and merchants become much more invisible, the need for an “everyday app” becomes more tangible, giving consumers the purchasing and payments control center that they will no doubt want to see every day, as innovators continue to deliver the invisible purchasing experiences they find so valuable.