The Role of Context-Aware Payments in a Digital Economy
By Dr Nima Amirshekari
A context-aware system is able in adapting its operations to a given context, without explicit user intervention and thus aims at increasing usability and effectiveness by taking environmental context into account.
On the other hand, digital transformation is about using the latest technology to do what you already do, but better. People have been using card payments for decades and recent contactless payments are increasing efficiency by mildly simplifying the process of payment authorisation. This is relatively good for small payments which include lower credit risks.
Context-aware payments aim to find use-cases that the payment is done with minimum user intervention. However, there needs to be a large amount of intelligence behind the scene. This usually includes applying big data analytics, artificial intelligence, location-based analytics, risk management and biometrics in some cases.
The digital economy is nothing but the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyper-connectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the Internet of Things (IoT). Digital economy provides an environment that every transaction can be interpreted within a context. In other words, the usual behaviour of each connection can be anticipated using historical data and forecasting mechanisms.
Now consider an inter-connected economy that can predict your usual and recurring payments (for example filling up at a nearby gas station every few days, morning coffee in a local café, monthly subscription of a newsletter etc) and simplifies the required actions for you while maintaining the security level.