COMMENTARY: A Forecast for Secure Payments in 2023

The world will not stand still in 2023—not in retail and certainly not in payments. For the coming year, security and automation will be the focus of the trends and innovations we’ll be seeing in the payments space. Let’s explore this further.

Credit card tokens from Visa, Mastercard, Discover (Diners), and American Express are not an entirely new topic, but they will arrive broadly in the market in 2023. These substitute values for sensitive card data can be stored by merchants so that the card is immediately available as a means of payment when the customer logs in to his or her account online—without having to re-enter the card number, and even with the original image of the physical card for better recognition.

In addition to the visible elements, a transaction-specific cryptogram and strong encryption functionality contribute significantly to the security of card payments online. This type of secure payment is also practical for customers since the card token remains valid beyond the expiration date of the card, so there is no need to renew the means of payment in the customer account in the future.

It is not only e-commerce that will shine with innovation in 2023. Physical retail also has to reposition itself in the light of inflation and spending restraint, and payments will help. Meeting today’s customer wishes and becoming more flexible means moving away from the classic checkout zone when it comes to payment.

That means modern point-of-sale terminals that no longer “hang on the cash register” will take off even more in 2023. The card readers of the future are controlled directly by the payment platform via the cloud, establish their connection via LAN, WLAN or SIM card, and are thus available wherever a sales opportunity presents itself. Payment initiation is not limited to a cash register. ERP software or even a Web site can also initiate the card-present transaction.

Vending machines can be a complement or even an alternative for some stores to reduce costs, and they too are turning to payments in the cloud. Contactless card payment is a must with modern devices, and integrated terminals will also be able to be controlled and monitored via the cloud. Communication with payment apps represents the next level of convenience. This is where the classic vending machine arrives in the online world via the smart phone.

Expanding the definition of vending machines to include e-charging stations, fuel pumps at gas stations, and parking management systems, we will see a change in payment in 2023. For example, increasingly, refuelling will be paid for from the car, and even via e-commerce payment methods like apps. A related topic is in-car payments, where the car itself becomes a means of payment for vehicle-related and external (streaming, parking) services.

The pandemic has taught customers about contactless payment. Some of them leave their wallets at home and pay with their phones. But we are also seeing more and more solutions for getting paid. Mass providers such as Apple and PayPal are relying on phones with their own apps as a replacement for a card terminal. The target group here is small merchants.

Phone POS technology uses “PIN on glass” technology to implement PIN entry on the merchant’s own smart phone in a secure and PSD2-compliant manner. These solutions have to be certified, but the main task will lie with the retailer. The merchant must convince consumers that the PIN remains hidden and cannot be read.

The technology is suitable not only for boutiques and flower shops. Chain stores can also use their smart phones to receive payments on the sales floor and accept cash-on-delivery payments through their delivery drivers.

Consumers have become quite comfortable with digital ways of paying, whether the transaction happens online or in the physical realm. At Computop, we expect this comfort level to continue in 2023, particularly as security remains a keen focus and cloud-based innovations continue to emerge in the payments space.

—Jed Danbury is a vice president at Computop.