In our latest roundtable discussion, we at Human Element gathered to discuss where we are now, and what’s coming next in the world of payment methods – and how they’ll impact businesses transacting online. With representatives from tech, accounts, marketing, operations, and strategy, we duked it out over tap-to-pay, digital wallets, becoming a cashless society, and more.
Meet the Contenders
Sabra Bander: A Champion of Inclusivity
Sabra is a passionate advocate for making technological advancements accessible to all demographics. As Human Element’s director of account management, she brought a perspective focused on the downstream implications of technological shifts in the payments space, risks of malicious donation prompts, and the real human struggle of contending with the cashierless concessions experience at Ford Field.
Kevin Gardner: The Pragmatic Visionary
Kevin is not only Human Element’s technical lead, but a forward-thinking technologist with a keen eye for the practical applications of emerging technologies. When he’s not busy leading the charge on Adobe Commerce patches, his adventures in implementing site features for clients including alternative payment methods make him a source of wisdom for digital wallets, biometrics, and the systems that power online commerce.
Dane Dickerson: The Contrarian Conspiracy Theorist
Dane Dickerson leads the digital marketing team at Human Element and has his hands in a little bit of everything; his interests in international payments regulation, power moves by big tech and the governments they live under, and AI enthusiasm inform his nihilistic outlook on payment methods. His skeptical outlook not only on change but risk brought a contrarian flair to the proceedings.
Andrea Evans: A Small Business and End-User Ally
As our Director of Product Strategy and Consultative Teams, Andrea brought a keen eye for user experience, store manager struggles, and security risks to the table. She brought the practical realities of implementation with busy clients to the fore as a barrier to adoption, and a call to store managers to make secure payments a priority.
Gary Goodman: The Privacy Protector
Gary is a senior strategic consultant, former small business owner, and expert in user experience, site strategy, and business growth. His personal experiences with fraud and his concerns about the loss of privacy in a cashless society drove his contributions to the debate. He echoed concerns about malicious usage of tap payments and the issues that already exist with inaccurate in-person transactions.
Adopting Digital Wallets in eCommerce
The discussion kicked off with Sabra highlighting the conversation about generational differences in payment method expectations.
“Something that I’ve been paying a lot of attention to since the MMA conference and the meetings we have with clients is conversations around the changes that need to happen with legislation, curriculum, and manufacturing processes regarding generational expectations. I think similar things are going to happen with user experience and payments; there needs to be an overlap of what some older generations are comfortable with versus newer generations. There’s already sort of a precursor with online payments for using a digital wallet, so it’s not necessarily a barrier within that experience.”
Looking toward the horizon, she noted the push at Adobe Summit for rolling out Adobe Pay as a Shop Pay competitor. The potential to integrate cryptocurrency exists with those wallets as well, opening the door to more alternative currencies across a host of platforms.
Cashless Society
The most contentious part of the discussion revolved around the idea of a cashless society. Sabra shared an anecdote from the Detroit city council during their debates around a mandatory cash acceptance bill for local businesses. This legislator attempted to buy a salad from a self-serve restaurant and was unable to purchase it because they didn’t accept cash and they had no electronic payment method. The salad was tossed (but not for eating) into the garbage.
While that might feel like a low-stakes issue, inability to pay for basic goods and services with government-backed legal tender creates real inclusivity and economic equality issues. 24% of Detroit residents and 4.5% of Americans lack bank accounts and credit cards. Cash-to-card ATMs can bridge some of the gap, but at a cost both to individuals (who pay fees on those transactions) and store owners (tasked with maintaining those machines).
However, she noted, it lessens business risk in most cases to go card only, both for theft and accounting reasons. For eCommerce, hard cash is rarely an option, but it is still a factor for businesses serving customers in multiple places online and off.
Kevin imagined a future where processing fees are a thing of the past, making it easier for small businesses to adopt digital payments. “We’ll become a cashless society when card processors move towards eliminating processing fees,” he predicted.
Some voiced concerns. Gary shared, “I still use cash sometimes because sometimes I just don’t want things tracked,” highlighting the issue of privacy whenever digital payments are involved. Speaking from the fringes of the legal system, Dane argued that too much of the United States economy consists of illegal or grey-area activity for a full transition to cashless to even be feasible, but that many digital wallets like Venmo and Cash App are already filling the role of convenient, person-to-person transactions for most people who don’t cheat on their taxes.
Biometrics: Security Win or Security Liability?
This opened up discussion on the privacy risks and rewards of Biometric authentication. Biometrics as a convenience to logging in are already commonplace, especially on smartphones as mobile wallet payments approach $3 trillion annually, but security of these systems when deployed in a public environment, rather than a personal mobile device, is less understood. And biometric systems pose accessibility issues, with Andrea noting that biometric authentication systems have been noted to perform worse for users in racial and gender minorities, in addition to failing users who physically cannot utilize the authentication method. A broad range of authentication methods exist, but access to those methods and implementation in payment apps is far from universal.
Sabra described how the physical process for tap payments carries a risk of malicious charges: “I was at a rest stop in Canada and I went to use my tap-to-pay at the register. Right in front of the register they had a donation box for you to drop your quarters in that also had a tap-to-donate. I had to take my card carefully across the tap to donate to use the actual payment terminal, and I almost donated five dollars without meaning to. It makes payment so easy, maybe too easy such that it becomes a problem.” Notably, tap-to-pay for phones authenticates the user before the terminal is tapped, providing little defense against this kind of malicious charge.
Nevertheless, Kevin held fast in his prediction that acceptance of mobile wallets by retailers will be “less of a feature and more of a rule in commerce, both eCommerce and brick-and-mortar sales.” The tech stack and processors that lie behind this shift are yet to be seen. Dane pointed out how regulatory changes from the Digital Markets Act in the EU and increasing antitrust enforcement in the US may force Apple to open its phones to a wider set of mobile wallet providers. The impact is hard to gauge; Android already allows for alternate mobile wallets, and few have managed to have a positive impact.
The Real-World Issues With Digital Payments
As part of Human Element’s development services for eCommerce sites, we have to test payment gateways on client sites to ensure orders process correctly.
If you think that sounds easy, it can be anything but. For sites that lack a payments sandbox, gift card payments (which are easy to utilize across multiple team members with no employee risk) simply fail with many processors who see them as likely fraud. Company cards can process better, but still run risks when card companies see many canceled transactions from multiple locations in the U.S. that they cannot identify as legitimate tests. Andrea brought up how just purchasing gift cards raises red flags and can impact a business’s credit rating. It serves as an important example of how automated fraud prevention complicates digital payments and introduces new failure points.
One success to cheer, though: mobile wallets, along with tap-to-pay cards and chip cards, have made huge strides to prevent fraud and laid bare the security concerns with status quo checkout. Dane shared that card companies have shifted liability to businesses for the most insecure payments, telling merchants, “If you have somebody put in their actual card number, we are going to assume it’s your liability that any fraud occurred with this.” The best way to avoid problematic leaks of customer payment information, he argued, is to avoid ever seeing it on your server by discouraging payments with a plaintext card number.
We would not be surprised to see regulation force higher security standards for digital payments in multiple areas. Forcing the end-of-life for unauthenticated card number payments is an easy start, with potential future regulations including mandated testing and replacement of POS terminals, local file transfer for receipts, and data regulation for standalone biometric devices.
AI Meets Payments
Speaking of fraud prevention, AI has already upended the systems that manage inauthentic charges, on both the crime and prevention sides. AI’s ability to detect unusual patterns and prevent fraudulent transactions in real-time was a major contributor to the discontinuation of signature verification for most card payments in the US without a replacement verification method as happened in the EU with PINs for chip cards.
To complicate matters, Dane noted that tech companies big and small have bet big on AI chatbots capable of making purchases on the user’s behalf. What’s to distinguish an AI bot built for theft and an AI bot built to help you shop? In absence of answers, Andrea spoke for the group that “AI is going to also be a big player in the fraud and security realm.”
Optimizing eCommerce Businesses for Changing Payment Methods
One thing is certain: the future of payment methods is complicated. For storefronts today, the biggest opportunity our group identified is expanding choices at checkout to serve a wider audience. Enabling Apple Pay at checkout is associated with a 100% increase in revenue for iOS users, and other options like Shop Pay and Venmo likewise lower friction for users ready to convert. Encouraging checkout methods that minimize risk is equally important; any time a credit card number is input on a site, even with appropriate hashing, processing, and deletion after checkout, the risk of leaking sensitive information increases. Society isn’t ready yet to stop using card number-based transactions, but they should be eliminated whenever possible.
Looking Forward
Payment methods are evolving, and with the right strategy, those changes can create a better, more secure experience for customers across all industries. We’ve got our eye on the future to keep our clients at the forefront of payment technology and practice.
