Science fiction no more; e-commerce evolves

SOMETIME in the foreseeable future, your “intelligent” refrigerator will be able to order milk, eggs, cheese or any food online once it detects that existing supply has turned critical.  While going shopping, your favorite clothing brand will immediately know your size as soon as you pick a design and a wearable device will confirm biometrics and authorize payment.

These are among the e-commerce solutions that may be part of day-to-day living as the Internet of things permeates across the world, global payment technology solutions provider Mastercard demonstrated during its Innovation Forum 2015 held recently in Kuala Lumpur.

While cash is still king in most parts of the world today, digital payments are seen gaining traction and payment technology is evolving from swiping to tapping and soon, to biometrics. The traditional point-of-sale (POS) terminal—one which merchants use to swipe our cards for either credit or debit transactions—will soon be a thing of the past.

The transformation is already happening, in some parts of the world faster than the others but nonetheless exhilarating. The age of the smart phone makes it all possible.

Mastercard’s digital payment platform MasterPass, for instance, allows consumers to use any payment card or enabled device to go beyond plastic and discover enhanced shopping experiences that are as simple as a click, tap or touch—online, in-store or anywhere.  This platform can be used to facilitate payments in transactions made through the many apps that are now emerging in cyberspace.

In some markets like Singapore or the United Kingdom, for instance, the Pay-at-Table app enables consumers to check in at a restaurant and pay the bill directly.

Asia-Pacific, home to 60 percent of the world’s population, is widely expected to set the agenda for global online retail in the next five years as e-commerce innovations attract more of the region’s young and tech-savvy consumers.

“Asia Pacific’s e-commerce trajectory has been nothing short of explosive, and with a growing consumer base that is twice as likel, to buy online than any other group in the world, the opportunities are endless,” said Sam Ahmed, MasterCard group head of Marketing for Asia Pacific.

The Asia Pacific middle class is projected to expand to over 1.7 billion people. The region’s three most populous nations—China, India and Indonesia—are seen by Master  Card to be the top countries of e-commerce growth in the next two to three years.

Based on a paper presented by MasterCard’s Ahmed in Kuala Lumpur, here are the 10 key transformations driving e-commerce in the region:

1. Mobile devices will be the door to High Street.

“The mobile screen will be a retail destination, opening up access to supermarkets, marketplaces, boutiques and niche stores,” Mastercard’s paper said.

But it was also pointed out that securing prime real estate on the home screen is critical, as this is where the war for the consumer will be fought.

“On average, smartphone users regularly access only 26.7 apps per month out of more than a million available for download. From air tickets to Air Jordans, the consumer is spoilt for choice, equipped with the ability to browse through billions of brands and products at the swipe of a fingertip,” it said.

Beyond consumer goods, other digital experts also expect smart phone apps to shift their focus from entertainment purposes like games, music, video and e-book to local services like life services, group purchases, taxi, travel and food services.  In the future, mobile devices can also become a tool for financial analysis, professional consulting, bonus points exchange, personal loans, transfer and remittance, mobile payment, outlet inquiry and personal wealth management. In China, for instance, mass media, entertainment, Internet and mobile phone services firm Tenpay Ltd. has started offering mutual funds through mobile phones.

2. Familiarity breeds consent.

“Merchants that use transaction data in a secure and intelligent way will unlock the trust of the consumer. People will be able to choose to only receive offers that are relevant and of value to them. Companies that get the equation right will be given permission to access more touchpoints in people’s lives.”

3. Marketing will bring magic to micro-moments to drive transactions.

“Advertising as we know it will be replaced by campaigns that respond to people’s immediate mental and emotional states. With the Digital & E-Commerce Engine, MasterCard is already seeing the effectiveness of similar targeted, real-time strategies.”

4. You’ll never shop alone.

Increasingly, consumers’ purchases are being influenced by what they hear from their peer group and the age of social media has made this feedback-sharing real-time.  Trust a horrible consumer experience to be the talk of the town in no time.

“Consumers will browse, rate and recommend products and services with friends and followers at all times. We already see an increase in partnerships between merchants and social platforms like Instagram, Facebook and Pinterest that make each shopping moment shareable with one-click. This taps into the growing dominance of influencer and peer marketing that consumers are growing accustomed to, “ the paper said.

5. Data will drive intent.

“We will be prompted to shop for things even before we know we need them. Fridges will generate shopping lists based on consumption patterns and preferences, and your location will serve up the best deal for dinner. Shopping will be one component of a much larger digital ecosystem. Data gathered from operating systems and mobile devices will inform what we buy, when we buy and who we buy from.”

6. Service and rewards will be the killer apps.

“Comparison shopping will make price tablestakes. The merchants who deliver on their brand promise in a personalized and emotionally engaging way will earn the dollars and loyalty of consumers. Reward systems and CRM (customer relationship management) programmes will become critical for sustainable success.”

7. Every retailer will set up a digital shopfront.

“Merchants of all sizes will be able to afford the assurance of secure payment transactions. Financial data management will be democratised by integrated operating systems developed by companies like MasterCard.”

8. Security in a heartbeat.

“The use of biometric data from mobile and wearable devices will ensure constant identity authentication. This is already being explored with the use of facial recognition and electrocardiogram (ECG) technology.”

9. The consolidation of digital wallets.

“With digital payments being progressively integrated on mobile phones, there will be less need to subscribe to a range of digital wallets (there are over 20 in India alone). Payment technology like MasterPass is enabling consumers, issuers and merchants to leapfrog to a secure digital payment network. This is happening through cutting edge technology in digitization, tokenization and authentication of card information. At the same time, big digital players like Apple, Samsung and Android are using existing payment networks like MasterCard, integrated into their card-on-file systems.”

Tokenization is a way of safeguarding sensitive data like bank accounts and financial statements by creating layers of alternative numbers.  In credit card processing, for instance, the primary account number is replaced with a surrogate value called a token so that the user would not have to worry even if he lost his mobile.

10. Faster checkouts, less fraud.

“The consolidation within the digital payments industry, and the innovations in digitization, tokenisation and authentication will mean that consumers experience a seamless checkout experience. This will also mean that merchants will not need to hold huge amounts of personal payment data which is making them a target for fraud.”