How Voice-based Payments Are Changing the Face Of the Payments Sector

As cashless transactions increase, the industry's responsibility to promote inclusivity has taken on greater importance

By
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The COVID-19 pandemic has accelerated a significant shift in the financial services industry. Payments are at the center of this transition, considering digitization's central role in the financial life of an increasing proportion of the global population. As cashless transactions increase, the industry's responsibility to promote inclusivity has taken on greater importance. 'Payments' is not only a steady foundation of our digital economies but also a contributor to their growth and innovation.

Pexels

Using a QR code-based payment to buy groceries or simply tapping your phone at a sales terminal, we already shifted to digital payments even before the pandemic. However, the volume of cashless payments was highest during and post-pandemic period. According to a PWC report, global cashless payments are all set to increase by 80 per cent between 2020 and 2025, and almost triple by the end of 2030. The analysis further states that the highest growth will be reported from the Asia-Pacific region, closely followed by Africa, Europe, Latin America, the US and Canada. Such numbers are a clear indication of potential growth in the cashless segment across the globe.

A bigger, more significant, transformation is hidden beneath the move toward a cashless economy. Traditional payment methods, such as the modest paper check and analogue invoicing, are not only undergoing significant change, but the entire payment infrastructure is also changing as new business models emerge.

Two parallel trends are involved in this reshaping: an evolution of the front- and back-end components of the payment system (instant payments, bill payments, request to pay, plastic cards, and digital wallets); and a revolution entailing profound structural changes to the payment mix and ecosystem (the emergence of 'buy now, pay later' offerings, the development of central bank digital currencies, and so on).

So, where do voice-based payments stand as the payment industry undergoes a sea of change in coming years?

Consumers across industries are becoming increasingly interested in voice assistants as tech giants such as Google, Amazon, Apple, and others release AI-enhanced devices that predominantly use conversational voice interfaces. These voice-enabled digital assistants have covered most bases, greatly influencing the mobile-tech experience, from setting reminders to checking the weather to purchasing. Hence voice technology's lateral move to payments shouldn't be a surprise.

What began as a way to interact with clients and respond to their questions has now evolved beyond simple customer service to include transactional banking and payment services. Next-generation consumer experiences are being created through the growth of voice-based payment solutions. For instance, the online payment gateway hasn't changed much. Although it's a legitimate method, it necessitates ongoing IBAN and account number verification and app-to-app linkage. But for voice payments, you simply talk to your phone or earpod or a voice assistant to proceed with the desired financial transaction without any PIN verification. Your voice authenticates the transactions and processes payment.

Additionally, voice payments are anticipated to level the playing field by removing the necessity of digital literacy and awareness as entrance barriers to the burgeoning online payments industry. A user with any mobile device, a feature phone or smartphone can make payments using a voice system where one can speak on an IVR-enabled call-based payment system to complete transactions. It is as easy as making a phone call.

Is voice-based payments the next future?

The answer is a clear yes! The introduction of voice-based payments serves two sets of customer segments. One based in urban India is well versed with emerging technologies. This consumer already uses Alexa or Siri and is comfortable with UPI payments. The use of voice payments will introduce the next level of customer experience for them. Something secure, comfortable, and convenient to use.

The other customers for whom voice payments offer immense potential are based in rural India. Individuals who either use a feature phone or are digitally challenged. Voice payments is an all-devices, including smartphones and feature phones, digital payment solution. With the help of this cutting-edge technology, half a billion feature phone users might join the realm of e-payments.

The UPI's introduction in 2016 ushered in an era of digital payments. Though slow initially, it accounted for 50 per cent of retail digital payments in FY22 and is nearly 4.5 times the volume of debit and credit card transactions. And now we live in a world where even an average fruit seller on a cart accepts UPI payment. A lot is happening in the payment industry, so much so that many industry experts claim that the payment sector is entering a new era of payments 4.0, and it is safe to assume that 'voice' will be a crucial element of it.