June 28, 2020 | Louise Basse
The fifth generation of cellular wireless technology is right around the corner and is more than likely to have a disruptive impact on consumers, retailers, payment providers and other players in the financial services ecosystem.
There’s no doubt about it: 5G will revolutionise the payments industry, providing a more seamless shopping experience for both consumers and retailers alike. Increases in speed, convenience and network coverage will undoubtedly encourage a shift from physical cash to digital payments, mobile banking and mobile wallets.
This is good news for those on both sides of the metaphoric shopping counter. But how will 5G boost consumer convenience while at the same time providing payment providers and retailers with more secure checkout procedures?
Online shopping is now the norm and 5G connectivity will only accelerate this trend. You don’t need a crystal ball to predict that this growth is, in part, due to simple speed economics – faster, cheaper mobile connectivity means more shopping opportunities. Soon online purchases will be completed with a single tap, voice command or gesture. Even complicated procedures like credit checks and finance options, which have previously impeded the payment journey, could be processed much faster using 5G.
“Contactless payments have been booming, especially during the recent pandemic. This is one of the reasons why it will be vital for retailers to provide the right payment experience, one that feels fast and frictionless, as they navigate their payment options in the 5G era,” advises Nordic API Gateway’s Chief Business Development Officer, Michael Juul Andersen. “On the other hand, online retailers will need to employ new and innovative ways to checkout, like invisible payments, social payments and even facial recognition and authentication. It also means simply understanding customers’ preferred payment methods and catering to those preferences, like we see with the growing demand for PSD2 account-to-account payments all across Europe.”
But it’s not just about enhancing the experience for existing customers. What about the people living in places where the internet hasn’t necessarily been commercially viable? 5G’s speed and connectivity could reach these people and create shoppers out of many previously underserved customers who are attracted by the speed and simplicity of digital payments.
As the shift towards digital increases, so too does cybercrime, where the stakes become higher and the methods more targeted and destructive. Current cybersecurity measures, such as PINs, passwords and one-time passwords, will not in all likelihood be able to thwart these future threats.
5G, on the other hand, will exponentially allow for more data to travel across secure networks in real time. This will, in turn, allow security processes to protect payments against emerging threats in almost simultaneous fashion. Because of this, multiple checks can be performed at once against factors like geolocation, transaction amount and merchant ID.
“To help verify the user’s true identity, these insights can be merged with more subtle user indicators, like behavioural routines. This can then be combined with trusted devices to provide multilevel, multichannel security for users,” explains Christian Panton, Data Protection Officer at Nordic API Gateway.
In the long run, the potential security benefits of 5G could also help diminish the concerns of consumers who have yet to make the switch to mobile shopping due to a lack of trust in the technology.
It’s a payment provider's dream: Delivering tailored, one-to-one service to each and every individual, no matter how many users they might have. Thanks to 5G networks and scalable data-analysis platforms, payment players will be able to gather and peruse a plethora of data from various sources in an agile and automated way to paint a detailed picture of each customer. Based on that information, the customer can enjoy a more personalised experience at the moment of payment.
The 5G revolution will also allow payment providers to explore the endless potential of new technologies (e.g. APIs, AI, AR & VR, machine learning, IoT, cloud services, platform economy and more). These technologies can converge and build on one another, potentially reshaping the way we pay. See an item online you think would make a nice addition to your living space? 5G, together with AR (augmented reality), could allow you to ‘take it home’, make your payment and have the physical item shipped - all within minutes.
5G has the power to truly redefine and revolutionise payments moving forward, enabling consumers, retailers, payment providers and more to communicate, shop and pay - all at unprecedented speed, connectivity and reliability.
“The possibilities of 5G in the payments landscape are endless,” concedes Jonas Vogt Rasmussen, Chief Strategy Officer at Nordic API Gateway. “In time, we’ll be able to seamlessly move between physical and virtual environments, and make purchases faster, more engaging and more secure. The pace of data processing will have a huge, positive impact on the full payment value chain.”
Want to know how we can help you prepare for 5G by enabling quick and seamless payment options that will make all the difference to your business? Then reach out today and let’s get started!