The dawn of invisible payments

PR photo: Hans Henrik Hoffmeyer, Senior Vice President, Nets Mobile Services
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Kære læser. Artiklen her er en del af det engelske magasin Copenhagen Fintech. Indholdet er udformet på engelsk, da det også henvender sig til en udenlandsk læserskare, som deltager på eventen Money2020, hvor Berlingske Media er mediapartner. Magasinet er udformet af Berlingske Medias kommercielle redaktion i samarbejde med Copenhagen Fintech. God læselyst.

Sponsored by Nets

What if you could just walk into a supermarket, grab whatever you need and walk out without touching your wallet?

Up until recently, this has been known as stealing. Today, however, we are looking at a future, where this could be legal and a part of everyday life. It is already possible now to make payments through your phone and not just by card or cash, and in just a few years, they might even become completely invisible. Take the Amazon Go store that has opened in the US recently as an example: customers log in with an app upon entry, take the stuff they need and walk out. The systems automatically charge the customers’ Amazon account.

“The end goal is to have invisible payments. That’s the road we’re headed,” says Hans Henrik Hoffmeyer, Senior Vice President of Nets Mobile Services. “The technology is there. Now it’s only the innovative pace at the retail stores which sets the limit,” he adds.

Mobile payments becoming the new standard
We already saw the first major step towards invisible payments earlier this year. The introduction of card-based or ‘dankort’ payments on the mobile phone marks a seemingly small but highly significant change in the way we pay for goods at the stores.

“Mobile payments indicate a renewed dialogue with the customer in the store. Payments are becoming more than payments, because shops now attract the customers’ attention through their mobile phones, where they can give offers, sell more and improve the customer experience,” Hoffmeyer says.

When you pay for groceries at the supermarket, the scenario usually unfolds like this: You start packing the food at the end of the counter, but when the cashier tells you the price, you have to elbow your way back to the terminal, get your credit card out, type the pin and press “accept,” while people are waiting impatiently in line. This is the kind of inconvenience invisible payment will change.

Hans Henrik Hoffmeyer, Senior Vice President of Nets Mobile Services.

»The end goal is to have invisible payments. That’s the road we’re headed.«

Nets has been testing a new check-in and check-out feature on its Dankort payments app, which means that you can check your card in when you pass the terminal and continue on to pack your groceries. Once the final payment is due, it will appear on the phone display. You can then simply swipe to accept the payment directly on the phone instead of having to walk back to the terminal.

It might seem like a small change, but history shows how that can still make a big difference.

“Since we introduced contactless cards, our users have been enabled to simply tap their card instead of inserting the card and entering a pin, which is really a minor change if you think about it,” Hoffmeyer says, adding that this improvement by itself caused contactless payments to gain so much popularity that they accounted for over 25% of payments in a little more than 18 months, which is unprecedented globally.

“It shows that even if you marginally improve the experience, the customers will take to it immediately,” he says.

Hans Henrik Hoffmeyer, Senior Vice President of Nets Mobile Services.

Accelerating change
It’s still only less than two years ago that contactless card payments were introduced in Denmark, but now the next wave of mobile payments is ready to take over. Experts predict that at least 50% of payments will be carried out by phones by 2020. According to Hoffmeyer, this could easily happen even before then. “The transition is already well underway. Though people mostly associate payments with physical stores, they have been paying with their phone on many occasions − for example for parking,” he says.

It wasn’t long ago, however, when cash was still the prevalent form of payment. During the 1990s, cash accounted for 60% of all payments, but fast forward to 2017 and you will find that coins and paper notes were down to 20%, according to the Danish National Bank. Nets anticipates that the launch of Dankort on mobiles will help drive this trend further.

“We have gone from decades to months between new technologies being brought to consumers,” Hoffmeyer says, referring to the time it took for payment cards with magnetic stripes to get chips and to become contactless and, ultimately, to appear on mobile phones.

“It’s all part of a future trend, where technologies are introduced at an accelerating pace and where consumers adopt the technologies faster − as long as they work and increase convenience,” he says.

"I forgot to cancel my Netflix subscription again…"
The shift to mobile payments also marks the coming of an era of more intelligent payments, for example when managing online subscriptions. It can be hard to keep track of the increasing amount of online subscriptions from streaming services like Netflix and Spotify. They all have access to your card, but, at present, it’s not possible to manage these payments centrally. With mobile card payments, however, that is going to change.

Take the smart token from Nets, for example. It can be best described as a virtual copy of your card, which can be programmed to work the way you want it to. Let’s say, you only want your Spotify subscription to last for three months. All you have to do is put a limit on your token, and it will expire after three payments.

Another possibility is to create tokens for your kids. These tokens can be customised to only work during daytime hours or at certain stores. They may even be limited, so they can’t pay for alcohol or cigarettes.

“Tokenization makes payments more secure and it gives you programmable money,” Hoffmeyer says.

Towards invisible payments
While programmable money and invisible payments can seem futuristic, they are actually indicating a return to the past. In the old days, shopkeepers used to keep a tab on every customer, who could then take whatever he or she needed from the store without paying for the goods each time. The shopkeepers also knew when someone was too young to buy alcohol or cigarettes.

This is not very different from a future, where payments happen automatically and intelligently with no need to tap a card for every transaction.

“We have to remove the complexity from payments,” Hoffmeyer concludes, anticipating a future where mobile payments become invisible: “It’s not so far away.”


This article is part of the commercial publication 'Copenhagen Fintech'. Click here to view all articles