On August 11th, 1994, Philadelphia’s Phil Brandenburger purchased a Sting album ("Ten Summoner’s Tales," to be specific) with a Visa card, and changed the world forever. A big feat for such a small purchase, but on that day Brandenburger tapped VisaNet to do something unheard of in the world of commerce up to that point. He bought his album online.
The next day, the following headline ran in The New York Times — Attention Shoppers: The Internet Is Open.
Flash forward two-and-a-half decades — and it is fair to say that the shoppers have paid attention. In 2018 alone, global online retail sales came out at $2.8 trillion, and projections show a growth of up to $4.8 trillion by 2021.
That growth, Visa’s Global Head of Payment Products and Platforms TS Anil told Karen Webster in a recent conversation, has not always been fast going. The early days of the web was a lot of hurry-up and wait, particularly when it comes to coaxing people into digital commerce.
Because 25 years ago, he said, the internet was a vastly different and far less commerce friendly place. Dial-up was the norm, and one could brew an entire pot of coffee in the time it took to load a website and consumers had their doubts about the wisdom of typing their credit card numbers into a computer connected to a phone line. Progress was particularly slow for the first 15 or so years, he noted, with most of the spiking growth coming out of the last decade or so.
“The game-changer in eCommerce was really mobile — because it created consumers that were always on and always accessible. It moved away from that dial-up model which was slow and fixed to one spot — and into the world we live in today when you come out of the subway and have made three purchases before you’ve crossed the block,” Anil noted.
But while the developments of the last decade have been impressive, Anil told Webster, in terms of eCommerce the ballgame is still in its early innings. The next generation of digital commerce advances is coming, pushed along by technologies just now coming fully to fruition and a modern consumer looking for an entirely integrated commerce experience across channels.
“Like with all things in payments, it builds and builds, until you hit that point of inflection,” Anil noted, saying that inflection point is probably much closer than most imagine.
Why "Rapid" Innovation Is A Slow Process
Once an inflection point has happened, and a significant change in consumer behavior is observable, it can seem as if the change happened overnight. One day commerce was an entirely in-store experience, the next the mall parking lots were empty and everyone’s front porch was covered in Amazon boxes.
“The tipping point can seem abrupt, but usually it comes after a big, long slog that happened before then. Getting everyone signed on is a slow burn initially. But then volume starts to shift because people see the value, which brings more merchants along once that flywheel gets going — this stuff catches on.”
Being part of that “long slog” he noted, can be draining and can wear on the patience because the gap between what is available in the present and what the potential is is so evident. Moreover, he noted, building the technological and operational infrastructure that undergirds innovation is just hard work. It’s also often “unpopular work” because to those who can’t see where it is all going, these investments in advancement can seem like money falling into a well for a long time.
However, he noted, for all the ways in which the enablement climb can be tedious or draining — it is also fun, particularly as one nears the summit and can see all the pieces moving forward and coming together.
“We are excited because as we are now seeing the actual pace of adoption picking up across all of these different technology areas, we can see that the next major change coming into focus. It is hard to say exactly when that is happening, there are people who make who careers of that, but we are starting to really know that it is happening in the next five years, maybe less.”
The Technology Under The Sea Change
Tokenization got its first introduction to the market about five years ago, and it is just now, Anil told Webster, that they are really for the first time able to start living up to their full potential. A tokenized transaction, he noted, isn’t the same thing as a regular bank transaction and their real value starts to kick in when players across the payments and commerce ecosystem fully utilize their potential as encrypted packed of authorization data that can not be compromised.
That use case, he noted, becomes particularly important when one considers the rapidly expanding world of the internet of things. Today, Anil said, digital commerce is still something consumers very much associate with being moderated by a screen — either a computer or phone.
That whole form factor, he said, is rapidly changing with the emergence of voice activate platforms and advances like connected cars.
“I think we’re just getting started when it comes to these areas,” Anil told Webster, saying the eCommerce experience is becoming the commerce experience in general — experiences across a variety of channels, on a host of digital checkpoints with a customer's full expectation their journey will be safe and secure no matter when the step in or out of the transactions.
The up and coming “next generation of stuff” hitting the commerce ecosystem has created a lot of variety, Anil noted, but also an awful lot of fragmentation as many players have thrown a lot of potential solutions out there. Getting the future to the next step, he noted, increasingly requires industry standards to get up there and diffused throughout the ecosystem at scale.
Anil points to Visa’s advances Visa SRC — built on new EMV® 3-D Secure (3DS) for Secure Remote Commerce as a breakthrough in that regard, particularly in tackling the 80 percent of online transactions that are done by “guests” as opposed to those who register and leave a card on file with the merchant.
Things like data tokens and SRC, Anil noted, are a long time in the building and perfecting — but once in place, and more importantly in extensive use, they can allow for the next big things in digital advances to occur.
“Lots of different people will build those applications over top. Our role is to be the enabler of that innovation.”