Digital Payments, PayPal, and Why the Industry Is Only Getting More Interesting

John Knuff

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For those of us immersed in the digital payments industry, how people pay for things is often far more intriguing than what they’re actually buying. And it just keeps getting more interesting.

There was the Visa payment ring that Olympic athletes wore around Rio de Janeiro this summer and used to pay for things with a tap of the hand.

The “mobile order ahead” option is common and expanding, allowing customers to pay for everything from coffee to a chicken sandwich, or a television, all via their phone.

And if you want to pay for purchases with your designer watch? It’s coming soon.

This is all good stuff, but these incredibly complex transactions must happen seamlessly in seconds to meet consumer expectations for instant satisfaction. In a video interview with Equinix, PayPal Global Product Head Akshay Krishnaiah calls his customers “global citizens” who demand an ultra-secure, high-performance digital payment experience on any device from anywhere in the world. Watch the interview to hear how PayPal makes that happen:

As the holiday shopping season approaches (spoiler alert: The National Retail Federation projects holiday sales at +3.6% this year), digital payments are trending. We thought we’d take a quick look at some of those trends.

  • Payment by Wearable

The Visa payments ring is one example of a wearable that can double as a digital payments device. Apple Watch is another, and many more are coming. Mastercard, for example, says it wants to bring its contactless payments system to as many devices as possible. Just last month it announced a partnership with contactless payments specialist Fit Pay to introduce the technology to Internet of Things devices and consumer wearables, including timepieces featuring bands by leather goods designer Jean Rousseau.

  • Checkout in the Cloud

The combination of mobile devices and apps makes it possible for customers to select and pay for something wherever they happen to be, well before they get to the store. More and more stores are giving them this option. Consumer retail chains such as Starbucks and Chick-Fil-A have jumped on this trend with good results. Target has also instituted a buy online, pick up in-store program and reports the number of orders picked up in-store increased 50% year-over-year in the first half of 2016.

 

  • An App All My Own

Retailers are increasingly integrating credit and debit card options into their smartphone apps. CVS, for instance, debuted its capabilities this summer, joining major companies like Walmart and Starbucks in establishing its own digital payments system. The reason? About 1-in-5 Americans are expecting to use their phones to make an in-store purchase in 2016, according to eMarketer, and the percentage is expected to rise. Some retailers aren’t content to let another company control this critical relationship with the customer, especially when they can use it to nurture customer loyalty with rewards programs and customized offerings.

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A Smooth Experience

While change in the digital payments space is exciting, it’s not necessarily smooth. As PayPal’s Krishnaiah noted in his interview with us, there is nothing simple about executing a digital payment. It takes a host of partners from disparate ecosystems (i.e. financial, mobile, retail, advertising) all working in concert for a payment to be as seamless and safe as consumers expect. Achieving that takes a few things, including:

  • High-speed, low-latency interconnection on a global scale, to provide an instantaneous purchasing experience.
  • A choice of high-quality and innovative partners, integrating functions with Application Programmer Interfaces (APIs) at each step of the digital payments chain.
  • A secure, ultra-reliable and resilient interconnection platform that can reach end users out at the edge worldwide without fail.

 

Equinix delivers all those things. We’re in 145+ facilities in 40 markets and can deliver an average 99.99999% worldwide uptime rate. We host all the ecosystems that must collaborate to make mobile payment transactions work, and we can make it easy and cost-efficient for an enterprise to deploy IT near the right partners in each of them. Another key is that the digital payments partners inside Equinix can all directly connect to each other, for high-performing, safe connectivity and fast transaction execution everywhere.

Read the Equinix white paper, “Interconnected Commerce: A Revolution in Value Creation,” to learn about the evolution of non-cash payments and what we see coming.

John Knuff
John Knuff General Manager, Global Financial Services