New in Payments: No Touch Required
Not long ago, consumers had three choices when it came to paying for goods and services – cash, personal checks and credit cards. Today’s consumers also have the option of linking their payment cards with their smartphones and smart watches to make payments. The change in payment options is not limited to consumers – merchants can now use a small phone dongle and an app, like PayAnywhere, to conduct their business, rather than the big, bulky payment terminals that aren’t mobile. It only makes sense that the next step in the payments evolution would be to pay with your voice.
Contactless payments, such as NFC and all the various Pays (Apple Pay, Android Pay and Samsung Pay) are certainly convenient, but you still need to tap your smartphone on the terminal or wave it in front of the card reader’s sensor – your credit or debit card information is stored in the corresponding app on your phone, and the phone and the payment terminal “talk” to each other, allowing you to pay for goods and services. However, recent technology from Amazon and Google is paving the way for the day when consumers no longer need to dig through purses or pockets for a phone or wallet.
Amazon’s Echo hands-free voice-controlled speaker system and virtual assistant can be directed to play music, and provide news, weather or other information. It can also lock doors; control indoor temperature, lights, appliances and electronics; and even summon an Uber ride. When connected to a Capital One credit account, Alexa – the virtual assistant – can provide consumers with card balances, information on recent transactions and even make payments. So it is not surprising that Amazon is working to give Echo/Alexa the ability to make purchases. In the first of what is expected to be many such agreements, Domino’s Pizza partnered with Amazon to allow Echo users to order pizza through Alexa. “The magic of ordering pizza without lifting a finger and just using your voice is now a reality with Alexa and Domino’s,” said Rob Pulciani, director of Amazon Alexa, in a March 14, 2016 article on payments industry news site PaymentEye. “We’ve made it easy for companies like Domino’s to use the Alexa Skills Kit to create more natural, intuitive ways for customers to interact with their services.”
Google’s Hands Free, on the other hand, combines visual identification and a smartphone app (you submit your photo when you create your account) to allow consumers to make payments for goods and services. When ready to make a purchase in a participating store, you simply say, “I’ll pay with Google,” and your purchase is made. Hands Free is available for both Android and iOS; however it’s currently only accepted at a handful of Papa John’s and McDonald’s restaurants in the South Bay area of San Francisco, so it’s not exactly in widespread use, but the practicality and convenience of Hands Free for both consumers and merchants is promising. While your smartphone would still have to be close by, imagine going through a fast-food or coffee shop drive thru and not having to fumble for change or a credit card. For merchants, accepting Hands Free could mean more sales by speeding up transaction times, especially at places that see heavy traffic, like drive thrus or even sporting event concession stands.
But how secure are voice-activated payment systems? Voice-activated payments work in a very similar manner to mobile payments, requiring a password, PIN or thumbprint to activate - meaning even if your phone was stolen, the credit account information would remain secure. Because of this, there is no reason to think Echo/Alexa and Google Hands Free will be any less secure than tapping or waving your smartphone over an NFC terminal.
Voice-activated payments may not be widely available yet, but like mobile payments, it’s just a matter of time until they are ushering in a cashless era in which you won’t even have to take your wallet out of your pocket or handbag to pay for a meal, a cup of coffee or even your groceries. So the only question left is, whatever are we going to do with all of those obsolete wallets?