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The Emerging Payment Technologies Landscape and How to Plan Ahead

In recent years, the financial services, retail, and tech industries have introduced new ways to pay for goods and services through online, mobile, and traditional point-of-sale (POS) channels. Two common goals of these emerging methodologies are increased satisfaction for consumers and expanded opportunities for companies. While the range of payment options continues to evolve, there are a few early leaders:


  • Digital Wallets – These apps store credit card information on a mobile device, such as a phone or a watch. Apple Pay, Android Pay, and Samsung Pay are the best-known examples, but many merchants are also developing their own digital wallets.


The apps communicate with compatible POS systems to enable transactions. Digital payments offer solid security, employing measures like tokenization, which replaces account numbers and other sensitive data with randomly generated values. Tokenization and other dynamic data elements make digital wallets hard to spoof.


  • Hybrid Online-Mobile Systems – A hybrid system uses a combination of personal computers and mobile phones, allowing consumers to do things like authenticate online purchases with their smartphones. One early example is the iPhone’s ability to enable payments on a Mac.


  • EMV Technology – These credit and debit cards contain an embedded chip in addition to the traditional magnetic strip. The chip is considerably harder to clone than a magnetic strip. Plus, the chip generates unique data for each transaction, which makes it possible to validate the card on each use. Thus, chip cards can help reduce Card-Present (CP) fraud such as the use of counterfeit and lost or stolen cards.


  • Contactless Payments – Instead of inserting or swiping a card, contactless devices let consumers hold their payment method— such as a card, phone, or smartwatch—on or near the merchant’s terminal. A chip, similar to EMV cards, holds the information necessary to complete the transaction.


Thinking Ahead

Payment cards, including credit and debit cards, are likely to dominate the payments landscape for the foreseeable future. But other payment methods are expected to become more important over time.


A smart strategy for merchants and others in the payments ecosystem is to recognize the continued primacy of payment cards, while paying close attention to emerging technology adoption trends.

Merchants that begin scenario planning now will know what is required to implement new payment methods when consumer demand becomes impossible to ignore.


The article and information provided herein are sponsored by Discover® Global Network for informational purposes only based on independent research and are not intended as a substitute for professional advice.