Industry trends update: benefits of Tap to Phone, GenAI, and other emerging payments technologies

Financial institutions that add tap-to-pay capabilities to their business banking apps can offer microbusinesses, sole proprietors, and freelancers simple ways to accept card payments, says Ian Benton in a recent Impact Note from Javelin Strategy & Research.¹

These embedded tap-to-pay capabilities—also known as Software POS (SoftPOS) or TTP—transform smartphones and tablets into POS devices. So a merchant can accept contactless card and mobile-device payments through the app without any additional hardware.

"Nearly 75% of sole proprietors do not own a card payment terminal, and only half of businesses with one to nine employees have the necessary hardware," says Ian. As well as making payment acceptance easy, integrating POS capabilities into their app lets a bank position itself as central to the daily financial management of small businesses. This can be an opportunity for banks and credit unions to counter the competitive threat from fintechs, many of whom use payment acceptance solutions to disintermediate FIs.

SoftPOS or TTP offers a range of potential benefits to merchants and is changing how they relate to their customers and payment processing providers, according to a Report by TSG and Discover Global Network.² With the global transaction value processed via SoftPOS projected to rise from $1B in 2023 to $11.8B by 2028,² the report explores a number of use cases, including:

• Retail, where associates can take payment from customers anywhere in the store, reducing wait times at checkout
• Restaurants, where diners can pay at the table, shortening wait times
• Micro merchants, who can accept contactless payments with quick and easy setup
• Mobile businesses, which can use a smartphone or tablet as a hub of business functions, including payments
• Mass transit operators, who can make onboard ticket sales an option for travelers
   

Through Cybersource, Visa Acceptance Solutions offers a range of capabilities to help financial institutions and technology partners implement next-gen in-person payment solutions. Tap to pay and Tap to Phone have been widely adopted—more than 700,000 Tap to Phone terminals are active in 71 countries³—and continue to evolve to meet the demands of sellers and consumers. Building on the success of these technologies, Visa is testing a range of new services—including tap to add card, tap to authenticate, and tap to receive funds—that let anyone with a debit card and participating app easily start to receive payments. Learn more at Visa’s blog.

A recent Forrester report⁴ examines the benefits of other emerging technologies in payments. Among the technologies offering benefits within one to two years, the report lists:

• Conversational AI. These applications provide a simple language-based UX that embeds payments and drives chatbots, consumer devices, and digital experiences. Conversational AI can help banks and other payment firms save costs by automating queries. "Online commerce and voice-enabled payments will see the biggest impacts," says the report's author, Lily Varon. Key areas will include helping customers and businesses during the purchase journey and with post-purchase reconciliation.
• Edge intelligence will use local data for more efficient payments and better experiences, meeting increasing customer demand for personalized and localized experiences that can't easily be processed by core infrastructure. Examples include payments approval within a VR headset. Edge intelligence can also enable greater security by integrating device biometrics and other factors into payment authorization.
• Zero-party data (ZPD) platforms will assist firms in optimizing payments by helping them ask customers for information that's hard to infer and deliver personalization that isn't intrusive. This can help enhance customer trust and loyalty with payment services that are contextualized according to point of use and customer preferences.
   

When it comes to technologies expected to deliver benefits within two to five years, the report includes generative AI (GenAI). Most firms surveyed for the report (including Visa) said they planned to increase their investment in GenAI over the coming year. The majority said they would start by focusing their GenAI efforts on back-office transformation (rather than customer-facing solutions) to improve employee productivity, automate rule optimization, or enhance customer support.

Visa has pioneered AI in payments since 1993 and Visa Ventures has been investing in innovative payments and commerce solutions since 2007. Now Visa is among the first payment networks to invest directly in GenAI through its recently launched $100M Generative AI Ventures Initiative.

We'd love to talk with you about these and other trends and innovations in the payments industry. Feel free to reach out and discover how Visa Acceptance Solutions and our uniquely open payments platform can help you build the future of payments.

And keep an eye out for our next update for more news and analysis.