Our Live5 for 2023

2023 – Digital or physical; a better world for all

In 2022, there was a lot of talk about the Metaverse of the future. People have started to envision a digital world without many of the issues – such as fraud and a lack of privacy – that we have with the internet of today. As we look to 2023, our Live5 shares several hot topics we expect our customers to be looking at. An internet that is secure, trusted and privacy respecting, in the Metaverse or not, is something we should all be working towards. 

1. The nature of money  – Central Banks will start making decisions on CBDC 

Physical money has been the underpinning of the modern economy for as long as the modern economy has existed. However, the digitisation of everything has inevitably led to the digitisation of payment methods – whether those are payment cards, direct-to-account access or even cryptocurrencies. Given this, it was inevitable that physical money would itself be digitised. Across the world, central banks are working on this in the form of CBDCs. Although CBDCs will need to work with the existing world – both physical and digital – they must also be able to support many future use cases including the metaverse, the micro-transactional world of IoT devices, and the world of machine learning-driven payments. We expect 2023 to be the year of change, as central banks start to decide exactly how they’re going to make this work. These decisions will have profound impacts on the geopolitical order, society, and incumbent payment service providers. 

2. Creating trust  – Orchestration will enable the fragmented identity landscape 

In our Live 5 last year, we touched on the increasing importance of payments orchestration enabling retailers to support a growing choice of payment methods to their customers. There is a similar need for identity orchestration – but not because consumers have so many different digital identities to choose from. Instead, orchestration is needed to knit together the wide array of fragmented solutions that exist or are emerging. In the US some people will have a mobile driver’s licence, in some parts of the EU people will have a “Bank ID” or similar, and potentially in the not too distant future, some people will have digital credentials held in a personal digital wallet. Customers that do not have (or cannot yet access) digital identities may be able to use physical documents to assert their identity. This can be facilitated via existing solutions that match physical documents to a real person. Rather than wait for fully developed digital identity ecosystems, organisations that need to identify their customers should be looking at orchestration as a route towards digital identity – with the efficiency, cost-saving, and security benefits that it will ultimately bring. We expect to see orchestration adopted as a strategy by many providers in the space. 

3. Giving people the tools  – We know what is needed. Who will provide it? 

For the digital world to be a safe, secure and private place, people need appropriate digital tools to help them. One reason so much fraud occurs on the web is that people do not have such tools or are not aware such tools exist. Whilst password managers exist, they are not without their own issues – the potential for data breaches and lack of education cause slower uptake.

Similarly, people consent to share far more personal information than they should (or are even aware they are sharing) because of the way privacy notices and consent forms are typically presented. It is unreasonable to expect the average user to understand the nuances of what is happening in a digital experience or to have the time to make informed choices about how best to protect their digital lives. People need trusted organisations to help them. Such organisations could do this by providing “digital agents” or “custodial wallets” to look after passwords, keys, credentials, and other sensitive assets by simplifying those complex choices. The proposed revision of the eIDAS regulation looks set to introduce government-backed wallets to EU citizens within a few years. These will not be so different from the mobile wallets used to keep payment credentials safe today. It seems inevitable that the wallets used for payments, identity, tickets, and many other uses will converge and that these tools will be used across both the digital and physical worlds. The question is whether anyone other than the OEMs can provide them.  

4. Convenience without cost  – Unattended payments challenging the incumbents 

Along with the issues of the digital world, there are pressing matters in the real world. Take the issue of worldwide labour shortages for example. This is a driver for a growth in unattended payments – for EV charging, fresh pizza kiosks, scooter hire and a myriad of other use cases. Japan is furthest ahead; they’ve hit the demographic time bomb first. But the rest of the world is following. Self-checkout (or no checkout) enables merchants to employ fewer staff and to use them to improve the customer experience, assisting customers as they shop. But it’s not just a change in the way we shop. Unattended payments are changing too. QR code payments, which have been so dominant in Asia, are starting to be used for unattended payments. Not only can these facilitate payments via alternate payment rails, challenging the payments duopoly, they challenge the wallet duopoly too – providing a convenient way to do payment, loyalty and identity in one hit. 

5. Saving the environment  – Making it easier to ride public transport 

Perhaps one of the biggest real world problems we’re all facing, is the environment. Today, public transport agencies and operators are still being impacted by the Covid pandemic, and their recovery is being impacted by strikes in the UK, security concerns in the US, and a shift in work patterns globally. These challenges fall at a time when the greater global challenge of climate change should see greater use of public transportation, yet we are now seeing increased use of cars. We believe complexities in the use of public transport often put people off even considering public transport as an option for how to get from point A to B. Access to public transport should be simple and fares transparent. More agencies around the world are migrating to open-loop account-based travel allowing passengers to turn up and ride with the credential already in their pocket, and being rewarded with free rides through fare caps to ensure they will always get the best value without having to think about it in advance. In other words, the same digital tools described above can be used to drive greater use of public transportation and improve our shared global environment.  

Digital technology is needed to secure transactions in both digital and physical environments. The Metaverse is creating the narrative for a richer, safer, and trustworthy internet of the future. There’s plenty of opportunity to improve the internet of today – which is what we expect our customers to be busy with in 2023. 

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