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Spotting a Desert Orchid between the payments weeds

From PayPal to Square, Braintree to Bitcoin, the payments business continues to flex and morph like the orange gloop in a lava lamp. Every week, I see at least two hot new technologies promising to radically transform the way we buy and sell. The success of every one of them depends on engagement from consumers, traders and, usually, the financial services industry. But with so many new options and ideas flooding the market, human nature tends to lead us to just ignore the noise altogether and stick to what we know. Offer us three options and we will choose one; offer us 100 and we will probably do nothing at all. It is clearly not realistic to back every horse, so how do we in the financial services industry spot a Shergar amongst the lasagne?

Here are five tests that might help:

  • The Trust Test: Consumers must inherently trust the provider to complete the payment, keep their money safe and protect their privacy and security. Otherwise, any new idea, however smart, will fail. Interestingly, whilst market surveys make clear that public’s trust in the banking industry as a whole is at a low, more detailed results show that the public’s trust in their own bank is still very strong.  I may be relaxed about using a non-traditional  brand to pay for my Vente Half-caff Skinny Caramel Mochaccino (whatever that is), but probably not so keen when it comes to settling my mortgage.
  • The Everywhere Test: If we can only use a particular payment method a quarter of the time, then we probably won’t bother – otherwise it’s just another thing to try to track. NFC was much-hyped, and is a delight to use, but the relatively slow uptake of the technology by retailers has meant that growth predictions for this payment method have now been slashed.
  • The “Can my Aunty Mabel use it?” Test: Payment methods must be quick, easy and intuitive.  If the checkout assistant has to explain what to do, or I have to hit a help key when paying on-line, we are dead in the water before we start.
  • The “What’s in it for me?” Test: Is it going to make my purchase cheaper? Is it really easy to use? Am I going to be bribed to use it through a better deal, reward points, or both?  Loyalty opportunities must be a consideration.
  • The Control Test: In any face-to-face sales environment, the primary competition for any new payment type is still cash. Cash is easy to use, convenient for the consumer and very private. The best reason to use something else is if it helps consumers to better track their money. A good solution will tell the consumer how much they are spending and how much they have left. It will help them to budget. As the Fair Banking Foundation has shown in its research, one of the most important routes to financial wellbeing is the ability to track our spending. 

The public can take its time in deciding how they want to spend in the future. For us in the industry with development lead times and competing priorities to consider, we don’t always have that luxury.  Nobody knows what tomorrow may bring, but hopefully these five questions will help to sort the Derby winners from the Donkey Derby also-rans.

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