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The digital payments innovations having an impact in retail

Digital payments have revolutionised retail, fuelling the rise of e-commerce and seeing the use of cash decline sharply as it’s replaced by card payments (both contactless and PIN) and, increasingly, mobile payment methods.

But some retailers are taking things further, using digital payments as the foundation for new and innovative services. Indeed, UK online SME retailers are becoming increasingly open to new technologies and innovation to help drive growth over the next year.

With these developments in mind, here are our picks of the most interesting ways in which digital payments are being used in retail:

Worldline’s bid to bring bitcoin to Swiss retailers

European payment infrastructure provider Worldline recently teamed up with financial services firm Bitcoin Suisse to allow cryptocurrency users to spend their bitcoin in Swiss shops.

The initiative has been made possible by Worldline’s acquisition of SIX Payment Services, the former arm of the Swiss stock exchange group that provides payment card terminals to 85,000 Swiss retail outlets.

Worldline now wants to combine this infrastructure with cryptocurrencies and has signed a letter of intent with Swiss crypto company Bitcoin Suisse, which will act as a go-between, converting bitcoin into Swiss francs. This fiat currency will then be used to pay for goods and services in Switzerland.

A pilot project is planned for 2020, with Worldline planning to roll out the service to other European countries if it’s successful.

Klarna’s new approach to e-commerce

Payments firm Klarna enables consumers to buy online without having to provide payment details to the merchant they are buying from.

Instead, Klarna pays for the order, which is then dispatched. Klarna then invoices the buyer, who typically gets 14 or 30 days to settle. Its core products are interest-free in the US and UK, with merchants paying for its services.

An example of Klarna’s innovation is its work building an omnichannel payments service spanning fashion retailer H&M’s physical and online storefronts. This includes ‘frictionless’ in-store, mobile and online payments, a better delivery and return process, and more flexible payment options.

Klarna secured an investment of $460 million in August, making it Europe’s most valuable fintech startup with a valuation of $5.5 billion.

Ingenico’s WeChat Pay option for Chinese e-commerce retailers

Payment solution provider Ingenico has rolled out a suite of payment methods in China that now supports WeChat Pay.

The suite includes the ability to integrate WeChat Official Accounts, enabling “online businesses to gain better access to one of the world’s most significant online markets”, according to Ingenico.

Gabriel de Montessus, senior vice president of global online for Ingenico Group, said the company’s “expertise [in China,] combined with the new set of payment capabilities, will allow international merchants to reach Chinese consumers that were previously difficult to access”.

IKEA’s blockchain-enabled supply chain payments

Nordic retail giant IKEA recently accepted payment in digital currency using the Ethereum blockchain to settle a transaction with a local retailer in Reykjavik.

Tradeshift – the blockchain-powered supply chain, payments and marketplaces provider that facilitated the transaction – said it marked a “major step forward in business payments and finance”.

Tradeshift’s platform completed the transaction using an ether-based version of the Icelandic krona created by Monerium, the first and – so far – only fintech company authorised to issue regulated e-money on blockchains.

According to Tradeshift co-founder Gert Sylvest, the transaction was enabled by smart contract-generated bills that effectively settle themselves. These ‘smart invoices’ help lower administrative hurdles in business-to-business and cross-border transactions.

RBI seeks bids for pilot projects in retail payments

The Reserve Bank of India (RBI) is taking payment innovation in retail to another level, with its regulatory sandbox scheme, which enables new financial products to be piloted with restricted availability.

The bank invited applications to test new products and services for retail payments under the scheme at the beginning of November. Start-ups, banks and financial institutions must submit applications by 15 December, after which the RBI will select the most suitable ideas.

The RBI set up the regulatory sandbox in August to facilitate the development of innovative products for retail payments, digital know-your-customer initiatives and wealth management.

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