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The Role of Social Media in Extending Financial Opportunities – FinTech Examples

Facebook alone gathers 98 personal data points for targeted ads

The number of social media users worldwide has reached 2.34 billion and is expected to grow to ~2.95 billion by 2020. Social media users generate 500 million tweets every day, and share 1.3 million pieces of content on Facebook every minute of every day, not mentioning other widely adopted channels. Two things allowed social media to become a powerful machine: the level of engagement reached through scale, and permissions.

While the level of engagement on social media channels has been quiet explored, permissions are a bit more curious. The average user will spend over five years of his/her life on social media, getting the latest news, engaging with friends and acquaintances, etc., paying a rarely-spoken-about price in exchange – precious personal data. How much does Facebook, for example, know about its users? According to its new targeted ad education portal and updated ad preference settings, Facebook puts together 98 personal data points that it knows about its users. For those really curious about all 98 data points Facebook is using to target ads, here’s the full list pulled by equally curious people:

  1. Location
  2. Age
  3. Generation
  4. Gender
  5. Language
  6. Education level
  7. Field of study
  8. School
  9. Ethnic affinity
  10. Income and net worth
  11. Home ownership and type
  12. Home value
  13. Property size
  14. Square footage of home
  15. Year home was built
  16. Household composition
  17. Users who have an anniversary within 30 days
  18. Users who are away from family or hometown
  19. Users who are friends with someone who has an anniversary, is newly married or engaged, recently moved, or has an upcoming birthday
  20. Users in long-distance relationships
  21. Users in new relationships
  22. Users who have new jobs
  23. Users who are newly engaged
  24. Users who are newly married
  25. Users who have recently moved
  26. Users who have birthdays soon
  27. Parents
  28. Expectant parents
  29. Mothers, divided by “type” (soccer, trendy, etc.)
  30. Users who are likely to engage in politics
  31. Conservatives and liberals
  32. Relationship status
  33. Employer
  34. Industry
  35. Job title
  36. Office type
  37. Interests
  38. Users who own motorcycles
  39. Users who plan to buy a car (and what kind/brand of car, and how soon)
  40. Users who bought auto parts or accessories recently
  41. Users who are likely to need auto parts or services
  42. Style and brand of car you drive
  43. Year car was bought
  44. Age of car
  45. How much money user is likely to spend on next car
  46. Where user is likely to buy next car
  47. How many employees your company has
  48. Users who own small businesses
  49. Users who work in management or are executives
  50. Users who have donated to charity (divided by type)
  51. Operating system
  52. Users who play canvas games
  53. Users who own a gaming console
  54. Users who have created a Facebook event
  55. Users who have used Facebook Payments
  56. Users who have spent more than average on Facebook Payments
  57. Users who administer a Facebook page
  58. Users who have recently uploaded photos to Facebook
  59. Internet browser
  60. Email service
  61. Early/late adopters of technology
  62. Expats (divided by what country they are from originally)
  63. Users who belong to a credit union, national bank or regional bank
  64. Users who investor (divided by investment type)
  65. Number of credit lines
  66. Users who are active credit card users
  67. Credit card type
  68. Users who have a debit card
  69. Users who carry a balance on their credit card
  70. Users who listen to the radio
  71. Preference in TV shows
  72. Users who use a mobile device (divided by what brand they use)
  73. Internet connection type
  74. Users who recently acquired a smartphone or tablet
  75. Users who access the Internet through a smartphone or tablet
  76. Users who use coupons
  77. Types of clothing user’s household buys
  78. Time of year user’s household shops most
  79. Users who are “heavy” buyers of beer, wine or spirits
  80. Users who buy groceries (and what kinds)
  81. Users who buy beauty products
  82. Users who buy allergy medications, cough/cold medications, pain relief products, and over-the-counter meds
  83. Users who spend money on household products
  84. Users who spend money on products for kids or pets, and what kinds of pets
  85. Users whose household makes more purchases than is average
  86. Users who tend to shop online (or off)
  87. Types of restaurants user eats at
  88. Kinds of stores user shops at
  89. Users who are “receptive” to offers from companies offering online auto insurance, higher education or mortgages, and prepaid debit cards/satellite TV
  90. Length of time user has lived in house
  91. Users who are likely to move soon
  92. Users who are interested in the Olympics, fall football, cricket or Ramadan
  93. Users who travel frequently, for work or pleasure
  94. Users who commute to work
  95. Types of vacations a user tends to go on
  96. Users who recently returned from a trip
  97. Users who recently used a travel app
  98. Users who participate in a timeshare

There, no need to wonder anymore – Facebook alone knows enough information about its users to make one cringe. Some of that information is ‘scarier’ than other. That’s not the important part yet, though.

In the last five years or so, this exchange of personal data for access to vast networks (with continuous enrichment of those networks with diverse personal data), wasn’t really under the spotlight. As we saw financial technology startups in the lending business gain ground, alternative data became a thing of interest. In the quest to reinvent the way to assess consumer-related risk (as well as extend credit to unscored and questionable), startups were found more imaginative than traditional institutions.

While the wealth of data offered by alternative sources is certainly an increasingly important contributor to one’s personal profile, social media, in particular, can only play a complementary role in shedding a brighter light on the risks involved with extending financing to individuals and businesses. The controversies involved in the use of such data do not yet allow its consideration for a substantial part of one’s credit profile.

Social media will play a complementary role for extension of financing, not a substitutional role for existing models

Back in 2013, Eric Bradlow, now a Faculty Director at the Wharton Customer Analytics Initiative, emphasized social data being most useful when it is applied to people with little or no credit history. “It’s an additional, valuable data source that could be quite predictive of someone’s behavior,” he said. “It’s going to be especially valuable when there is sparse data on an individual.” Looking at new variables is standard practice anyway when building predictive models in credit. “They’re constantly looking for variables that add predictive power to their score,” Bradlow added.

The cases when social media can ‘sharpen the image’ and extend financing opportunities include:

  1. Add a predictive power to the score: Assessment of pointing indicators that can add a predictive power to algorithms;
  2. Patch the lack of history: Holes in the data available to credit scoring where there is little other information about a person (young people who have yet to build up a credit history; international students/employees, immigrants (refugees or other);
  3. Lack or immaturity of assessment systems: Countries where robust credit history-based systems do not exist or are immature.

FICO study found that with the right alternative data, it can accurately score large numbers of previously unscorable credit applicants. In fact, more than 50% of these applicants can be scored.

FinTech examples: How lending & scoring companies approach social media in risk assessment

  1. Lenddo: Lenddo creates credit scores using social media.
  2. Facebook: In 2015, Facebook secured a patent that allows creditors to assess your creditworthiness based on the credit rating of the people in your social network.
  3. Neo: Neo can offer lower-interest rate loans after considering the quality of connections on a LinkedIn profile.
  4. ZestFinance founder (former Google CIO): “People who type only in lowercase or uppercase letters are more likely to be deadbeats (all other things equal).” ZAML considers 70,000 signals and feeds them into 10 separate underwriting models.
  5. Kreditech: Looks at information from social networks, which is voluntarily shared by applicants. What type of friends do you have? Do you live in one place and always party in another? It looks at 8,000 indicators.
  6. Kabbage: Social media data is being used to help approve loans for small businesses.
  7. DemystData: Integrates social along with telecommunications information, and corporate data to create the risk profile associated with an individual or small business.
  8. Happy Mango (credit score based on cash flow management): Allows users to submit testimonials about their character – positive feedback provides 10% of a score, which is on a scale of 0 to 100.
  9. LendUp: Looks at social media activity to ensure that factual data provided on the online application matches what can be inferred from Facebook and Twitter.
  10. TrustingSocial: Credit scoring 2.0. Its engine extracts tens of thousands of data points from social networks (Facebook, Twitter, LinkedIn, Weibo). It tracks hundreds of signals to detect any anomalies in behavior, network and interaction patterns.
  11. China’s credit rating for everything: Traditional, social, and online inputs to the total score. The online score includes interactions with other internet users, ‘reliability’ of information posted or reposted online, and shopping habits.
  12. FriendlyScore: FriendlyScore uses over 820 variables contained within existing online social profiles to generate a holistic view of a person’s creditworthiness.
  13. Credit Sudhaar (credit advisory, Arun Ramamurthy, co-founder): “Alternative sources of data, including social media, are an important part of creditworthiness assessment. It is only through the use of psychometric tests, social media data and other unconventional sources of information can companies and banks identify the intention of a potential borrower.”

Source :

How [And Which] FinTech Startups Are Breaking Banking for Freelancers

I posted an op-ed on the shadow banking economy and the new American dream in Yahoo Finance a few weeks back. Today, we’re going to put some practical information into practice as a part 2 to this sub-market in the banking in the industry. I’ve talked about how the global financial system is broken & how freelancers are basically getting the short end of the stick. The free banking economy goes much deeper than you may think. The freelancer economy is happening all around us. IRS calls them “independent contractors” or 1099ers. The government actually likens these people to public stenography or auctioneering in an official capacity; but in reality, freelancers are part of a much larger portion of the economy. In fact, every third working American is freelancing.

The Major Problems With Freelancing

One of the first thing you learn when running a company is to push back on payments to vendors as much as possible to massage the numbers. That means months or waiting; for some freelancers, that means waiting on the way they support their life. It probably sounds like a minor problem to somebody whose wallet is overflowing with credit cards. But if you zoom out to a global scale, you see hundreds of millions of workers who don’t operate on credit and who need that money yesterday.

If you really want to see what financial solutions do to you today, transaction fees on international payments give you the picture. PayPal, Stripe & Square are  considered by some to be profiteering with the fees they charge. But those companies expect you to think they are innovative or providing a service when you send money to other countries. They’re ripping us all off.

Let’s take a freelancer in the Philippines, who makes $5 per hour and just finished a $100 project. He or she probably had to work a few extra hours just to pay fees that they incur from the payment processor. Imagine your bank charging $1,000 to cash a check of $10,000. Additionally, you can only withdraw $20,000 at a time, and there is no customer service or credit. And, “sorry, we don’t serve your country. Coming soon. Thank you for cooperation.” This is where the new frontier of the free economy lies. When I say ‘free economy’ I mean a workforce that is independent of cubicles, employers and even the government.

The existing financial system has been built for hundreds of years, and now it’s changing in weekly sprints. If the financial systems can’t support the speed of operation or methods for the workforce, they’ll go off the grid. Go to other service providers. Other jurisdictions. Other realities. There are another billion people involved in our economic turnover, with the needs we have from around the world and the advancement of IT and outsourcing. The market is turning towards them, but financial payments system is miserably failing them.

Unlike almost every other industry, the bolts of the US financial industry are so tightly screwed, starting your own bank just doesn’t sound like a good startup idea. It makes this conversation seem almost realistic – “How about we launch a satellite into orbit with artificial intelligence on board that will monitor face expressions of every cat on the planet and deliver catnip to them with a drone in 10 minutes?” – “Sounds like a great idea!”

“Maybe we should open a bank instead?” “Hmm… I like the cat idea.” It’s goofy but is a somewhat recognizable type of conversation in Silicon Valley. Silicon Valley Bank,the most “startup-friendly” bank in the world, refuses to take new FinTech clients. “The risk is too high,” they say.

In my other piece on this topic, we learned that Crunchbase knows 43 payment startups (17 launched after 2010) with more than $10M in venture funding in the United States. In the meantime, Europe and Asia are moving ahead. There are thousands of new startups in this space. Here are some examples of the latest unicorns and soon-to-be-unicorns from Europe:

Adyen (Dutch, $2.3B); TransferWise (UK, over $1B); Nutmeg; Currency Cloud (UK); iZettle (Sweden); Funding Circle (UK); Klarna (Sweden, over $2B); Zopa (UK).

We are not even talking about the bitcoin universe, where thousands of new rivals are tearing the global banking industry apart. For many areas like micropayments, cross-border import/export operations and illegal markets, bitcoin is already the standard.

The wild west reality of banking for freelancers with net 60 payments, 5% withdrawal commissions and loans at 1% daily is held together by strings. It will evaporate once a few startups bold enough to call themselves banks of the free economy and structured as legal entities in Singapore or Malta, will offer premium banking services to freelancers and their clients around the globe.

These new banks will have hundreds of millions of very loyal customers worldwide, healthy profit margins and untied hands in terms of banking regulations, reserves, reporting, etc. Massive financial systems where money is paid for the sole purpose of moving it around will die out. Your credit limit will be pre-approved based on the karma of Github and number of Instagram followers. Your Mastercard plastic will arrive in three days by mail. Your home loan and health insurance will be crowdfunded by random hedge funds.

Once the new cross-border, freelance-friendly banking services become available, the economic spiral will continue, pulling more conservative professionals from the comfort zone of large corporations into the free world. More skilled workers will have more control over their own lives. Then you’ll see an exit from the traditional full-time employment. It will extend financial markets even further, leaving traditional banks with fewer and fewer customers. 

Many people will have to find new ways to innovate and provide banking services, but overall, this is something that is long overdue.


Six Risks the Financial Services Industry Will Face in 2016 and Beyond

The modern financial services industry drastically differs from the one we had ten or even five years ago. As the pace of technological advancements accelerates, no industry can remain untouched. Banking is an industry especially touched and transformed by technology and emerged new types of players.

However, advancements of any kind always come with certain sacrifices. The efficiency of automation often lacks individuality and customization; also, the speed of underwriting often comes with significant risks of bad loans portfolio.

Both national and global governmental structures recognize rapid changes and pay close attention to them in order to anticipate possible risks and opportunities. Thus, in one of the most recent reports by the World Economic Forum (WEF) on the role of financial services in society, the organization recognized the six most important risks faced by the financial services industry.

Alternative sources of finance

As expected, WEF believes that the substitutes to capital available from traditional financial institutions (such as marketplace lending platforms) pose a certain threat to the stability of banks. While they certainly foster financial inclusion by enabling access to capital to those commonly rejected by banks, alternative sources also carry almost all the same financial risks that are associated with traditional credit products.

In addition to the potentially flawed risk management of the alternative financing sources, WEF suggests that in some cases, those businesses may shift the risk towards the customer with potentially significant losses carried by investors.

Market electronification

Companies like Robinhood, Wealthfront, Nutmeg and a range of other robo-advisors brought in a whole new way of trading assets. Not only have these companies significantly democratized trading, but have also engaged in passionate debates around the appropriate use of trading algorithms and the actual vs. perceived level of liquidity in global capital markets. Despite regulatory actions taken to ensure that capital markets incorporate factors of safety and testing, WEF believes this remains an area of intense scrutiny.

Security of data

Cybersecurity has always been and is expected to remain one of the most dangerous plagues of financial services industry. With the value of loss due to fraudulent activities in online banking expected to hit $7 billion by 2020, it is the number one priority to viability and sustainability of the whole industry. As businesses increase their reliance on technology and continue to amass larger stores of data, it becomes increasingly important (and difficult) to ensure resilient systems are in place to safeguard information, as WEF suggests.

It is important for industry participants to share the best practices and data on cyberattacks in order to improve existing security systems and adjust them to evolving risks.

Industry conduct

Often lacking attention, the matter of professional misconduct is an important one. Misconduct is believed to be one of the largest sources of technology-driven risk as technology can significantly boost the potential of illicit actions that have evaded detection. In addition, because of the fact that technology often is far ahead of regulatory capabilities, deployed tech-powered innovation may lack control and bring potential compliance risks.

Some uncertainty also exists around the ownership of customer data and what is considered appropriate use of this information. The fight for maximally accurate underwriting will always encounter a data privacy issue, which is why there needs to be a distinguished line between enhanced risk analysis and use of data to refuse in credit to a particular customer.

Payments effectiveness

Payments has been one of the hottest segments within the financial services industry. The highest number of FinTech disruptors supported by VCs are usually innovating payments. The face of industry has changed and now payments are not part of the banks or network providers exclusively. Services like PayPal and Alipay have drastically changed the perception of payments and customer expectations. Previously pure tech companies are now at the forefront of innovation in payments and dominate the market.

With tech-powered innovation, the risks, however, are still the same. Across the globe, countries are working to improve the resiliency of their payment rails and have also begun to develop new systems (EMV, blockchain-powered solutions, etc.) and stores of value which may actually impact the effectiveness of monetary policy and transmission mechanisms, as WEF reports.

Regulatory arbitrage

We have already discussed the issue of regulating the technology-driven innovation, and WEF joins the part of the professional society to acknowledge the importance of clarifying the regulatory framework. Moreover, as WEF believes, the regulatory remit is often not consistently defined across countries and is based on a company’s legal entity designation vs. the financial activities that it engages in. It allows some businesses to fall through the supervisory cracks, reduces the portability of business models and stifles innovation.


Blockchain and Financial Inclusion for Citizens in Poverty


Since its appearance, blockchain technology hasn’t left headlines with an increasing number of use cases and applications. It seems nearly every global financial institution nowadays is involved in blockchain-related initiatives one way or another.

As the LTP team has been reviewing the blockchain ecosystem for quite a while now, we have seen interesting if not outright promising solutions for authentication, blockchain-as-a-service, open-source blockchain, application developmentmobile wallets, compliance and trading and investment and beyond.

Although blockchain technology is believed to bring a significant cost and security relief in the financial services industry, it is also a substantial force in fostering financial inclusion for citizens in poverty, as the UK government suggests in the report on distributed ledger technology published earlier this year.

The government claims to be paying out ~£166 billion of taxpayer’s money in welfare support every year, out of which a large number goes to un- or underbanked citizens that face barriers to financial inclusion due to credit checks, access to traditional financial products, and the costs of unauthorized transactions.

Blockchain technology is believed to be a potential remedy to the problem and power “cheap and supportive means of getting these claimants into the benefits system.”

Blockchain-powered digital identities for financial inclusion of the citizens in poverty

“Digital identities could be confirmed through distributed ledgers running on securely-encoded devices – or even through software on a mobile device – which would allow end-users to receive benefits directly, at reduced transaction costs to banks or local authorities.”

As a result, the citizens in poverty will become fully included in the financial system through a secure distribution point that is more reliable than a bank account, the government suggests. Moreover, the solution can be built with a purpose of integration with external systems in order to diminish the fraud and error possibilities in the delivery of benefits for the financially excluded given that blockchain-powered digital identities will be tamper-proof.

By creating a digital identity built on blockchain technology, citizens lacking appropriate access to the financial system would gain a higher independence and better chances for welfare.

“Through the innovative application of such technologies, it would be possible – with agreement from the benefit claimant in question – to set rules at both the recipient and merchant ends of welfare transactions. This may present the opportunity for ministers to consider options for achieving better policy outcomes from the distribution of welfare support by agreeing or setting rules around the use of benefits.”

Although we haven’t heard of a govern-scale rollout of such initiatives, there are certainly successful companies allowing to create a blockchain-powered digital identity. Among those are such players as, OneName,ShoCard, BitNation and others. Blockchain technology is believed to have a tremendous impact across industries and the number of companies providing a platform to create and securely manage digital identity will certainly be growing.

Digital identity beyond the financial system

Although we have been looking at the application of distributed ledger in the matter of financial inclusion, the idea of blockchain-powered digital identity carries a broader range of benefits. A particular group in need for such benefits are migrants.

Some estimations suggest that there are more than 232 million undocumented migrants internationally and the number continues to rise. Since many of those people do not have a formal identification document at the new place of residence, they are often victimized and hold a disadvantageous position in the financial system and beyond. The problem is especially relevant for women and children. Moreover, sources report that over 800,000 men, women, and children are bought and sold across international borders every year and are exploited into forced labor. In the global scale, the number is believed to be reaching 21 million.

At the end, the idea of tamper-proof digital identity will find a broad range of industries it will be used in since it bears important benefits. It will aid not only people provided with a secure digital identity but also the governments and businesses across industries.

Source :

How FinTech Impacts Purchasing Behavior and Enhances Business Efficiency


Customer purchasing behavior has been significantly transformed since the accelerated adoption of FinTech solutions, known for their convenience, customer-centricity and emphasis on UI/UX rather than the movement of funds. Technology and experience-focused solutions like PayPal, Venmo, Square, Stripe comprised the first generation, and nowadays – a benchmark – for the most convenient payments experience in every regard.

Retail/commerce has been affected the most by those solutions, which empowered and boosted the growth of SMEs, not mentioning e-commerce as the greatest benefactor of FinTech advancements. Mobile-focused, minimalistic and simple payments solutions have changed the perception of how a purchasing experience should be, forcing industries to adjust to changed expectations. Not only has FinTech challenged existing approaches, it has also introduced ways for all stakeholders to win – the customers, retailers, financial institutions, etc.

Think With Google has identified certain ways businesses nowadays can connect with their customers in different ways, transforming the purchasing behavior powered by FinTech solutions.

Businesses can reach their customers wherever and whenever they are – thanks to mobile and app fever

FinTech has introduced a different way to speak to customers – to understand them, reach out to them through social media channels or any channel of a customer preference and even accept payments through the means of social media. Businesses can speak to customers wherever they are at any moment – all thanks to the rate of mobile technology adoption, ubiquitous connectivity and the growing use of social apps.

Having a better understanding of how customers behave in their channels of preference also allows businesses to identify the right moment to intervene and develop a comprehensive strategy that works holistically across channels such as search, video, social and display. This leads to the next important change that happens across industries enabled by their respective FinTech solutions.

Context matters

Nowadays, the context of conversation between customers and brands is as important as ever. The relevance of the message is arguably the most significant factor predicting the success of the ‘operation.’ Simply being there in these moments isn’t enough, as Google puts it. Companies need to look at how people are searching – the questions they ask, the terms they use – and create ads and content that provide helpful answers.

The ways FinTech has contributed to the opportunity to be relevant to every customer without the need for million customized solutions are with chatbots and chat commerce. Built into messaging apps, chatbots come as close to the customer as possible to being a personal assistant in any endeavor. They provide a relevant answer and allow to completing a purchase in an instant. Messenger is an example of a solution that has grown into a platform for chatbotsto connect brands with customers, find the exact product customers are looking for and provide an opportunity to buy that product momentarily.

Simple, convenient payments methods for frictionless experience

Easing the way into a payment will not do any good is the payment experience itself does not hit a benchmark. FinTech companies providing payments solutions, however, were able to match the needs and uncomplicate the payments experience as possible with some imaginative approaches. Authentication and security startups have also contributed to removing barriers to a successful online shopping experience with advanced, invisible working solutions.

More importantly, Google notes that the step from research to purchase should be a simple and seamless one. Therefore, customers should be given multiple ways to buy — whether that means driving them to the e-commerce site from a YouTube video or from a local inventory ad to a nearby store.

The variety of options improves a customer’s shopping experience, leading to a lower rate of abandoned carts and higher sales of a higher volume. With APIs being open on the left and right and extremely easy implementation of checkout options, there is no reason not to smoothen the last step in the online shopping journey.

Understand fragmented experience

Most importantly, today, businesses can and should measure every moment that matters. It’s no longer enough to simply measure the online conversion. With mobile, the path to purchase is now fragmented, as the purchasing experience itself. As a result, companies need to measure results online, across devices, in apps, and even in stores.Data management and reporting solutions allow businesses to understand and correct their strategies, adjusting customer experience for better results.


In the World of Invisible Payments.

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The invisibility of certain financial services is a cornerstone of a seamless experience, contributing to the usage growth and expanded opportunities for businesses. Invisible and uninterrupted payments experience, in particular, can have a dramatic impact on any type of service adoption and drive never seen before growth in sales across industries, especially retail and commerce.

“In a way, invisible payments can make payments a more integrated, intuitive part of the user experience. The best user experience removes as many pain points as possible no matter the location of the user or the brand they’re interacting with,” Chris Francis, Vice President of Market Development at WorldPay suggests.

Today, however, the opportunity with invisible payments services is yet to be explored as existing widely adopted security solutions and payment technologies do not allow a completely non-interactive experience authorizing a transaction. Nonetheless, given that today’s consumer doesn’t want to wait for anything, the introduction of invisible, instant payments are a natural course of action for businesses and financial institutions to keep up with market demands.

In the world of invisible payments, the friction and necessity for a human intervention are removed from everyday activities involving any financial transaction. So far, Amazon has come the closest to bringing the idea into reality with its concept of Amazon Go store, eliminating the whole part of standing in lines to make a payment as the payment experience itself is removed from the most payment-centered activity – shopping. Amazon Go’s Just Walk Out Technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When the customer is done shopping, he/she can just leave the store. Shortly after, Amazon charges person’s Amazon account and sends a receipt.

Google has also been working in the same direction with its Hands Free App that allows users to make in-store payments without ever reaching for the phone or wallet. The app is currently running a limited public pilot in a small number of Silicon Valley stores. The Hands Free app uses Bluetooth low energy, Wi-Fi, location settings, and other sensors on customers’ phone to detect whether the person is near a participating store. This enables users to pay hands-free, without fumbling with the phone or even opening the Hands Free app.

The search company, however, did not completely remove the payment moment from the shopping experience – a person still needs to go through the cashier and indicate a desire to pay with Google. After that, the cashier confirms customer’s identity, using initials and the photo that the customer added to Hands Free profile. At some stores, Google is also running very early experiments using visual identification to further simplify the checkout process. All images and data from the Hands Free in-store camera are used only to confirm person’s identity for each Hands Free purchase. Images and data from the Hands Free in-store camera are deleted immediately; however, they can’t be accessed by the store, and are not sent to or saved to Google servers.

The development of IoT technology will play an imperative role in advancing invisible payments solutions running on the connectivity of personal devices, including vehicles, homes, laptops, wearables, etc. The need for carrying a particular device (not speaking of wallets) will be eliminated as any tech carried by a person will be able to carry the same function. Equipped POS terminals then can interact with any personal devices with payment functionality to perform a transaction without the need for a person to interfere at all.

The seamless, invisible payment experience comes with certain possible drawbacks for the customer. With invisible payments, the  traditional part of any service consumption – the payment for that service – is completely removed, thus, taking away a feeling of spending, which is a positive side for businesses, but removes the sense of reasonable spending behavior. Automatically deducted payment with no feeling and experience of making a payment at all allows customers to experience the product/service without the need to evaluate the deduction because the payment becomes literally invisible in the whole process. PFM platforms will ‘have a blast’ offering sophisticated strategies to save money when the numbed feeling of spending money will hit pockets.

At the moment, there is not much on financial institutions expressing interest in taking payments to the next level. Technology companies are more likely to beat banks in regard to invisible payments because for banks, the technology will eliminate the part of the business revolving around credit/debit cards and proprietary payments apps loaded with those cards. Therefore, financial institutions may take some time to catch up or miss out on the opportunity at all in their attempt to keep banking apps relevant. With invisible payments, financial institutions will have to forsake cards and invest significantly in the development of features allowing a hands-free payment. At the end, while technology companies can focus on providing the best possible payments experience, banks are the ones moving money and risking own capital in case the security is compromised in favor of that experience.

Invisible payments can change the experience beyond shopping. Professionals from ToneTag bring examples of toll plazas and metro turnstiles – invisible payments would allow people to drive or walk across without stopping to pay every morning.

In the restaurant business, certain startups are already appropriating the dine-and-dash culture. As reported by Upnext, using beacons with Bluetooth Low Energy (BLE) technology, companies like Dash, Reserve, and Tab allow diners to pay quickly and easily by just saying their name to the waiter or barman. All these apps turn dining out into an experience that’s only about the food, the people and the atmosphere – and not about the bill anymore. The app automatically bills the cost to the user’s card, which is stored securely in the cloud so there’s no need to call over a waiter or think about whether you have enough cash. Payment has become an automatic process that takes place in the background, the edition notes.


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