Innovation in the way we pay - IoT and payments

From smartphones to refrigerators, the Internet of Things is steadily becoming more advanced and user-friendly. Consumers have developed a level of trust with IoT payment processing and are more readily purchasing items through a variety of devices within their homes. Ecommerce businesses will need to capitalise upon this trend if they are going to continue expanding their own reach, as customers are swiftly normalising the process of purchasing items via new and unconventional means.

From “Hey, Google” to the Amazon Dash

Secure payments are available through a number of devices, mostly operated by trusted payment processors. Google Payments, PayPal and Amazon Pay are all connected to at-home smart devices, such as the Amazon Echo and the Google Home. Shoppers can verbally order products while moving throughout their house, making the purchase experience easier and more cost effective as they can quickly compare pricing and brand quality.

Consumer-based items such as Amazon Dash, an ordering service consisting of multiple components including buttons, a Wi-Fi connected barcode scanner and voice command, make it easier for products to be purchased on-the-go. Additionally, single-use devices such as coffee machines that can automatically reorder pods or printers that can reorder ink, are increasing in popularity. Throughout all of this is a framework that is developed to be user-friendly, making it easier for customers to commit to purchases, and consequently making it easier for vendors to sell their goods. At the same time, this kind of marketing automation is primarily benefiting larger marketplaces, as they are the ones able to leverage themselves into customer homes.

Tailoring ecommerce to the Internet of Things

Ecommerce marketers need to understand and strategise around the way the Internet of Things is being utilized. Customers are more frequently searching for items by voice command, and in many cases, they are looking for the items that are going to cost the least. Ecommerce portals need to be particularly conscientious about their search engine optimization strategy.

If an ecommerce retailer isn’t appearing on the “shopping” page of Google, for instance, it’s likely not showing up when a consumer tries to purchase an item through Google Home.

Likewise, ecommerce marketers need to be aware of the fact that the Internet of Things is making it easier for customers to do a comparison search. Customers who are purchasing on-the-fly aren’t looking into warranty information, product guarantees or product details. They’re looking at the general description of the item and its cost. Due to this, soft selling measures may become less important than the bottom line: customers want the product that costs the least, delivered the quickest and produced by the most reputable vendor.

Creating Logistics and Shipping for the IoT

General ecommerce marketers are going to need to tailor their marketing for the IoT, but other companies are going to be able to revamp their supply chain and logistics around it. For marketers who have items that need to be repurchased (or who are developing smart items), an integration with the IoT can dramatically improve sales with a limited amount of overhead. Smart appliances can be designed around the idea of purchasing and repurchasing items, making it easier for businesses to recapture and re-target their core audience. Organizations can fine-tune and automate many of the processes that are directly related to sales and automation, therefore cutting down on staff, improving their operational expenses and expanding their overall reach.

Retail Spending and Brick and Mortar

It isn’t just ecommerce stores that need to adjust. Retail stores are also going to need to begin offering alternative methods of payment. Already, many consumers are seeking to make purchses directly through their phones. In the future, smart wristbands and other wearables may also become major methods of purchasing. This type of shift is extraordinarily convenient for customers, but there are problems with adoption. Merchants are often hesitant to adopt different means of spending until it has become standard even if it has a clear edge. This is what has made it difficult for chip-and-PIN transactions to become popular throughout the United States.

Merchants have to be more willing to adopt new transaction methods while also securing them. This may require additional training for staff and continued learning for retail business owners who want to remain knowledgeable about upcoming tech. Though investing in new payment technologies carries an upfront cost, this cost can be mitigated by the additional reach the merchant can have. Often, these new payment technologies will have a list of supporting merchants for their users.

Retail spending through the Internet of Things is expected to reach USD 2.5 billion by the year 2020. This trend is growing exponentially and cannot be ignored by retailers. Vendors need to move forward in optimizing their products and their campaign strategies for IoT purchasing, as well as looking throughout their existing processes for areas of potential improvement. Meanwhile, product manufacturers will need to look to IoT to improve their marketing and supply chain management. Companies that innovate and adapt quickly to this market have a far better chance of surpassing their competitors.

About Markus Bergthaler

Markus is Director of Programs and Marketing at Merchant Risk Council. He oversees the development of all Association program and marketing content including strategy, conference education, subject matter, website content, benchmarking and online forum topics. Markus joined the MRC from Wizards of the Coast where he led the company’s fraud department.

About Merchant Risk Council

The Merchant Risk Council is the leading global trade association for fraud and payments professionals. The MRC provides support and education to members with proprietary benchmarking reports, whitepapers, presentations and webinars. The MRC hosts four annual conferences in the US and Europe, as well as regional networking meetings for professionals to connect, exchange best practices and share emerging trends. #ProudlyACommunity

This editorial was first published in our Payment Methods Report 2018 – Innovations in the Way We Pay. The Payment Methods Report 2018 presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.