The payments landscape in Ireland is changing as consumers continue to replace cash with card, app or mobile payment in their retail, transit and service transactions.
Retailers are being forced to reassess how flexible their own payment acceptance methods are as their customers' behaviour constantly evolves, as a whole steadily moving towards digital payments.
This doesn't suggest that the end of the high street is upon us, however. The latest consumer spending index from Visa revealed that face-to-face spending rose 5.1pc year-on-year, the sharpest increase for a year and a half.
While we are at a tipping point in terms of spending more via card than cash, consumers still value the in-store experience - but they are expecting this experience to be enhanced.
Furthermore, in areas where cash would have traditionally dominated, apps such as MyTaxi and JustEat are increasingly being used.
According to Visa's Ireland country manager Philip Konopik, technology is also currently being developed to make service and transit payments even more seamless across the board.
He believes Ireland has the framework to become a region leader in terms of payments and shares how IoT, biometric identification and social media is expected to shape the payments sphere as we know it.
How has the payments market in Ireland developed recently?
The Irish market has changed fundamentally in the last few years. The main driver is the contactless acceptance and adoption and getting to ubiquity. Although it has been five years ago since it was introduced, it's only in the last two years that it's really gotten to mass adoption.
There's always an element of fear [involved in acceptance] and card payments, when they were introduced, had that level of fear to it. With education, with improvements to the security features on the merchant and issuer side, the consumer can become much more comfortable. Anything new is always perceived to be scary and different; as human beings we're quite adverse to change.
Any kind of consumer change just takes a long time and you need to make sure that the messaging and experiences are made as ubiquitous as they can be as that's really when you see things take off.
Are changing consumer trends impacting merchant decisions?
It becomes the chicken and egg situation. How can you get merchants to do that and customers to follow that trend unless one or the other is there. It takes lots of juggling on both sides, engaging with and helping key merchants. Initially it's all about the big players who can shift the dial, but we're in a position now where it's all about the small players, the day-to-day grocery shopping, corner shops, pubs and hospitality.
There's a lot of work to do in terms of transit, with taxis, Luas, buses, rail etc. But how do you enable that experience and ensure that the experience the consumer has is frictionless? If you have to take time to recharge your Leap card or if you don't have the right change, then that becomes a hassle.
Where is Ireland at with contactless transit?
Contactless transit is still emerging. I think 2016/2017 have really been the transitional years where more cities and countries in Europe have seriously started to invest in that technology. We have really built up the capability on our side as we have seen the demand build up. For Dublin, I can't think of a reason that we can't have [contactless transit] as soon as possible.
I know that the National Transport Authority (NTA) have advanced plans to revamp transit for Dublin as a whole. We've worked with the NTA in helping to progress this agenda and support them in any way that we can. In terms of when, there's lots of moving factors that they need to consider in terms of what the right solution is and how they're all going to link together. It's not as easy as a single merchant moving over to contactless.
Face-to-face spending -v- E-commerce
The future of commerce is not about one or the other, it's about the blended experience. A lot of companies and service providers talk about the omni channel experience; phone, shop, browse and research online. How merchants work with that is important and it's near impossible to make the experience completely seamless but we've gotten a lot further down the line. Retailers are changing the use of their retail space and I think that transformation hasn't really taken off yet. The digital enablement in-store to change how consumers shop is going to be quite fundamental.
With millennials now, it's a social experience. They are tweeting and Snapchat-ing and sharing images of outfits from the changing rooms with each other at the same time and getting feedback. If this is already happening, how can the merchants use that engagement to help you to make faster decisions, better decisions? And why do you even need to go to the till at that point. If you know what you want, you should be able to pay and go.
The high street is about to be transformed
If you could facilitate a payment anywhere and anytime, what does that experience enable you to do? How does it allow you to use your your space more effectively? How does the customer experience change when you go into a shop? That's really exciting because that's the change that can tap into the customers' preference for face-face experience instead of online.
Online, there's no doubt you find cheaper bargains if you look hard enough but in-store is a different experience and more stores will become showrooms. There's this schizophrenic approach to it as consumers want something right now and we're going more towards that immediate delivery. As transportation becomes cheaper and more intelligent here, it will enable the kinds of models that will have the goods at the door by the time you get home.
Are you looking for the end of cash?
I think cash is important, there's always going to be cash, it fills a function, but - in reality - in the vast majority of transactions, we don't actually need cash. It can become a hindrance as much as a facilitator.
In Sweden, less than 2pc of all consumer transactions are cash while in Ireland it's probably at least 50pc. Payments are fragmented; you can pay with your watch, your phone, your card, bank transfer, cash. With PSD2 coming into the marketplace, there's going to be even more functionality is coming down the tracks. Soon you will be able to pay with your fingerprint, your face scan, your voice.
For a corner shop to keep using cash, for example, if consumers are driving cash payments, it becomes a consumer choice. But it costs you to transact in cash. At some point you may realise you are taking a minority of your payments in cash - and handling that cash becomes expensive. So do you want to offer your customers that service at that cost? It becomes a business case eventually.
Is there a best way to make a payment?
Once you start using your phone or your watch to tap, that becomes your 'go to' [payment option]. Having to insert your card then, if the retailer doesn't allow that, becomes a hassle. There's no right way to pay but we want everybody to find a way to pay that's best for them.
Cash is anonymous, no-one knows who you are are but there are significant benefits and loyalties tied in to using a card, for example. Convenience, security and speed, but more and more financial reward as a loyal consumer. As that business case becomes stronger, you will naturally see people moving away from cash.
Our job is effectively to inform consumer who are low transactors and give them incentives. With intelligence and loyalty tied into payments, suddenly you can create these big data experiences that were impossible before.
There is no doubt that cryptocurrencies are here to stay. Bitcoin as an anonymised crytpocurrency is problematic in a way as, until it becomes regulated, the rules are very unclear. Anti-money laundering (AML) and Know Your Customer (KYC) rules are in place because you want to avoid things like organised crime, terrorism, bribery, corruption. So when you introduce a cryptocurrency that doesn't do any of those things, it comes with a lot of risks.
I believe that there is a place for these and different currencies will create different frameworks for them to operate in to make them more palatable for Financial Institutions (FIs) and banks to start trading with them. But, from a consumer perspective, you'd almost have to think of it as a commodity today. Revolut have found a solution which is palatable to them, for example. There's no reason why another bank couldn't do the same thing. I still think the AML and the KYC pressure on the bank that allows that become intensified.
Where do we see payments in Ireland in the next five years (or less!)
* Transit - While I'd love to have contactless transit here in two years, I'd be very comfortable that it will be around in five years' time. We have a very good relationship with the NTA, we engage with them regularly to help plan the vision around that.
* Social media - In the next year, we're likely to have the similar solutions that to the UK such as Facebook peer-to-peer payments. Suddenly we'll be able to pay anybody who is on Facebook through that. There will be loads more, there are already are smaller players in the Irish market who enable that.
* Payment forms - There will be less and less cash, and adoption from retailers and micro retailers will increase substantially i.e your plumber will have a mobile-enabled device to take a payment (phone or transfer). That will become more common over the next two years, standard in five years' time.
*Consumer rewards - If you're shopping anywhere we will create solutions so that you won't need to present your card, By virtue of your payment method, that will automatically link up, so you can earn points anywhere, with any merchant.
* Social media apps becoming holistic WeChat is an example of an app that allows you to do a multitude of things - pay, invest, order goods, book restaurants - around 40 use cases in one single solution effectively enabled by the society being as ubiquitous as it is. We are more fragmented here so it's not as easy to do that but the fact that we've done it is inspiring the likes of Facebook and Google to create a similar solution.
* Internet of Things (IoT) will explode - Today we have about 6 billion devices connected globally so in about 20 years time we will have 30 billion and by 2030 we will have 50 billlon. All of those connected devices - your car, your washing machine, your fridge, your TV - they will all be able to make transactions. Unless they can make transactions on your behalf they are not really that useful.