Seizing control of the customer interface in the future of payments

Payments play a crucial role in the financial world, acting as important conduits that allow money to flow smoothly, much like how plumbing is essential for the distribution of water. Any disruptions in this flow can have a significant impact, similar to when there are interruptions in utilities. At the top of this financial “plumbing” sits the customer interface, often in the form of a payment card, which enables customers to conduct transactions. Having control over this customer interface is valuable, as it allows for brand promotion, data collection, marketing influence, and the monetization of customer behavior.

We are witnessing a diverse array of payment experiences, with different customer journeys unfolding simultaneously. In some cases, the payment marks the end of the journey as the customer “checks out” while making a purchase in-store. On the other hand, emerging payment models, as seen with companies like Uber or Amazon Go, seamlessly integrate payment into the customer experience, making it almost invisible. This shift moves away from traditional “check-out” processes to ones where customers “check-in” at the start, without a noticeable “check-out” at the end.

These “check-in” journeys present a paradox:

• Advancements in payment technology make these journeys possible, yet the act of payment itself becomes less prominent.
• Despite consumers having more knowledge of payment options, the act of payment becomes nearly unnoticeable.

The evolution of payment methods goes beyond new transactional journeys to include alternative forms such as smartphones and wearables like watches and wristbands in traditional “check-out” scenarios. This evolution poses a challenge to banks, which have traditionally dominated the “check-out” customer interface. Payments through smartphones or wearables often rely on third-party e-wallets as the primary interface, with the third-party’s branding taking center stage. However, banks are not backing down; they are innovating by launching their own e-wallets. For example, Pix in Brazil and Swish in Sweden have been highly successful, with Pix reaching over 140 million users—around 80 percent of Brazil’s adult population—within two and a half years and Swish amassing 8.4 million users in a country of 10.5 million. Major American banks are also planning to introduce Paze, showing a similar strategic direction. The majority of consumers prefer a wallet from their bank over any other provider, presenting a significant growth opportunity. Banks are also enhancing the user experience by redesigning payment cards with intricate designs, offering personalized options, and using premium materials like metal. Metal cards, known for their unique weight, sound, elegance, and appeal, have captured customers’ interest worldwide, leading to improvements in customer acquisition and spending for banks and other issuers offering metal cards.

The competition for the primary customer interface is growing in the future of payments. Banks, armed with their own wallet products and sophisticated payment cards, are strategically positioning themselves to remain more than just providers of the underlying infrastructure. By improving the customer interface, banks aim to elevate their role in the evolving payments ecosystem, ensuring they not only provide the essential “plumbing” for financial transactions but also deliver a distinguished, customer-focused experience that fosters brand loyalty and engagement.