Thales Blog

What’s Next For Digital Payments – And The Security Implications

December 16, 2016

It’s that time of year when people start reflecting on what happened in the last year and what is expected to happen in the new year. It’s no secret that blockchain was the single most impactful technology story of 2016. Why? Because it offers unique and revolutionary benefits over legacy systems and promises very much more for the future of trusted connected systems. Blockchain’s design inherently ensures transaction integrity but trust in the system as a whole also depends on the security of cryptographic keys at various end points which need to be very carefully created, managed and used. For example, a great strength of blockchain is that once a transaction is committed it can’t be undone – so participants must ensure that their identities cannot be abused.

In the coming year, I predict we will see blockchain gain wider adoption and be deployed to not only improve the efficiency of a wide range of financial transactions but also the security of the processes. There will be continued innovation in blockchain-based real world applications that go beyond the financial vertical, leading to a new crop of startups. We will also see increased attention from regulatory bodies over issues around governance and cybercrime. There is also a possibility of patent wars and subsequent litigation which could slow the adoption of blockchain in various sectors. Either way, blockchain’s popularity and expanded use cases will be worth watching in 2017.

Mobile commerce and payments are other areas for growth. Just last month over Thanksgiving weekend, for the first time ever, retailers saw more traffic from smartphones than desktop computers. Compared to last year, overall mobile revenue grew by 30 percent during Thanksgiving weekend. This demonstrates the comfort that consumers have with using their smartphone in more and more situations as well as the convenience they offer.

What is next in 2017? Millennials in particular will continue to find benefits and value in converting to mobile wallets. Carrying payment cards will seem “old-fashioned” when more consumers realize the fast and seamless experience of NFC, or even QR, technology. Add-on benefits, like those Alipay has instituted in its app, will help drive greater adoption for companies who want to increase their marketshare. However, I predict a glut of alternative payment options, not all of which will view security as a primary concern. In fact, I believe that at least one of these new payment start-ups will suffer a breach in 2017.

When you think of the possibilities of how blockchain and mobile can work together to drastically change a wide range of financial services, it is also easy to recognize that real-time payments will come into play as well as expanding the options of how we pay for goods and transfer funds.

In 2017, I expect that real-time payments will drive innovation as payment service providers start leveraging this capability. I also anticipate that these three trends will collide and create near instantaneous and secure fund transfers for payments or peer-to-peer lending.

I predict that the Thanksgiving weekend experience of this year will develop as the norm during 2017 with mobile as the preferred commerce platform and payments continuing to evolve as a frictionless process, with additional options to pay becoming available. The ability to find what we need, or want, easily on our mobile device, check out reviews on the item as well as where one can get the best deal, determining whether we can pick it up a few blocks away or have it delivered to our home and paying for it with a seamless experience is a convenience we can all appreciate. Gone will be the days of tiresome searches on the internet, asking around about the item, and driving around town for a deal only to realize you left your coupon and checkbook at home.

The bottom line is that we are in a time of rapid technology innovation that is disrupting how commerce and payments are conducted. The payments industry must also understand that their future success is based on trust with consumers. And that trust can easily fail if strong security measures that customers expect are not an integral part of this innovation. It is incumbent on all of us in the payments industry to implement best practices to safeguard consumers if we want to see greater adoption of these exciting developments.