What are context based payments?
Context-based payment is a new business model designed to remove the physical act of payment from the payment experience.
With context-based payments, the payment occurs in the background. The customer approves the payment but does not need to take out their wallet and hand over cash or a credit card. An excellent example of context-based payments is Uber. The customer doesn’t have to pay the driver; they merely exit the vehicle at the end of the trip.
These type of payments remove friction, making the shopping experience very smooth for customers. When applied to other business categories such as retail we can foresee the significant impact this will have on the customer experience.
A typical implementation within a retail environment would have the customer selecting items to purchase and then walking out without the need to take out a wallet, enter a PIN or inserting a card in Pos terminals.
In this situation, the customer would have an application of their phone which activates when they enter the store based on GPS or other geo-location technology. This application would contain their secured payment information and also record products that have been selected for purchase. These products can be entered by scanning barcodes or through other tracking methods with the payment triggered when the customer exits the store.
Many big platform companies such as Amazon with Amazon Go are already trialling technology and expect this trend expected to be the norm shortly.