TechTarget gives us a clear-cut definition of the term “frictionless payment.”
“Frictionless payments are a method of using data from devices, apps, and websites to integrate buying opportunities as simply and seamlessly as possible into consumers’ everyday activities and natural environments.”
Large companies like Uber, Apple, and Starbucks have in-built credit card functions to help customers complete their transactions. Along with apps, contactless cards and mobile wallets have also helped frictionless payments to grow.
The popular statistics portal, Statista, has projected that frictionless payments processed $3.9 trillion in 2019. Meanwhile, analysts expect this tech to grow to $8 trillion by 2025.
Frictionless Payment Criterion
Frictionless payment refers to the online and offline checkout procedures where buying barriers are the lowest. They aim to make buying easier for the buyer and selling easier for the seller. This results in the reduction of the churn rate and shopping cart abandonment. Meanwhile, the customer experience and revenue take a hike.
A checkout process should fulfill a couple of these criterions to create a frictionless payment process:
- It enables a faster checkout
- It reduces or cuts the waiting time
- There are fewer steps required to complete the checkout process
- It becomes a customary part of customer experience
- It eliminates the customers’ cognitive strain
Given all the perks of frictionless payment, we might find it replacing the traditional checkout experience.
There are four essential forms of frictionless payments:
- Mobile Wallets: These digitally store your debit card, credit card, and rewards card information to your mobile device. This enables you to make a purchase without relying on a physical card.
- Mobile Applications: These days, it is mostly in use by ride-sharing companies. Just Walk Out technology by Amazon is an incredible example of this tech at work. It syncs with your credit card or checking account and operates on payments automatically.
- NFC: Near Field Communications is a contactless payment method that enables the smartphone to communicate with a payment reader. They must be close to each other for it to work effectively. The most famous form of NFC is Apple Pay.
- Contactless Cards: This is where you can wave your credit card or a debit card near the payment portal to pay without swiping or entering the PIN code.
Frictionless payment paving the way in ecommerce
Accepting and processing customer payment is the lifeblood of an ecommerce venture. Without an effective payment system at work, the business can’t make any money.
In today’s crowded online market, providing a secure payment method is merely a basic requirement. Consumers are placing more value on convenient shopping options. This could cover using digital currencies or paying over time.
Klarna is making waves with its “shop now, pay later” motto. It has 60 million consumers spread across 130 000 companies. It enables the buyers to pay after the checkout, within 30 days, or through installments. The shoppers have an option to pay later via Klarna; the business gets its money upfront. This means that merchants aren’t at risk of facing losses. It has an integrated fraud and customer credit check system that is safe for sellers and buyers.
Therefore, frictionless payment is the new face of convenient and easy shopping.
Let us briefly walk through the main reasons why customers demand less clunky payments and why organizations are willing to follow the suit:
Benefits for the buyer
- More time to focus
Unlike traditional payment, where the buyer has to stand in a queue, frictionless payment happens with fewer clicks. This gives more time to the customers to review and explore your store. When you let them scan the items they buy the most or save their credit card information; you effectively let them utilize their time. They might end up buying more products and appreciate your support.
- More flexibility and liberty
Ultimate convenience is the decisive factor between an enhanced customer experience and a moderate one. Technologies like mobile wallets, subscription billion, and contactless cards are removing all obstacles for the customers. However, it is essential that there are various options available for the buyers so they can choose the one that works for them.
- Lower cognitive pressure
Frictionless payments make the whole shopping experience less visible. It is less strenuous and painful for the customers as they don’t get into budget calculations right away. When you reduce customer’s cognitive strain, you amplify the chances of their positive reviews. They end up coming again for further purchases.
Benefits for the seller
- Reduces abandoned shopping carts
As per SalesCycle, 75.6% of customers will abandon their shopping carts without moving to a purchase. That is loads of potential profit going down the drain. A frictionless payment process helps reduce interrupted purchase procedures—instead, the number of happy customers increases.
- Greater customer satisfaction
The frictionless checkout process gives you a tremendous competitive edge over the rivals. If the opponents are still using conventional payment methods, this could be your time to lead a change. When you offer a frictionless payment method to the customers, they are more likely to choose your portal over others in the same field.
- Improved efficiency at checkout
Frictionless payment reduces the time that staff has to spend on individual customers. This enables the staff to respond to a large volume of customers. Frictionless payment eliminates the need for human interaction at checkout. When customers have this liberty, you will find a higher number of customers rolling in.
How to improve your frictionless payment process?
Cart abandonment is one of the biggest problems faced by ecommerce companies. Payment friction is one of the main reasons why this occurs. The solution to this issue is to remove barriers from the checkout process.
Here are some of the ways you can deploy to make checkout easier for buyers and selling easier for yourself:
- Meet local expectations
If the target of your e-retail business is international customers, it is essential to localize the experience. Present the payment page in the local language to enhance shoppers’ confidence. The same works for the local currency – if the buyers cannot view prices in the currency that works for them, this will cause friction in the purchase.
Make sure that the international customers can pay via payment methods they prefer. Every country has different preferences, and at times, buyers don’t have any choice. For instance, only one in five Brazilians could pay you if you accept international credit cards.
Localizing the payment option for the target audience is an uphill battle. There are payment partners you can connect with to take the intricacies of international payments off your plate.
- Optimize convenience on all devices
A frictionless payment experience begins with a well-designed payment page. Make sure the page is easy to navigate and works on all devices a customer uses. A responsive design can help to eliminate scrolling and makes filling forms easier.
Checkout is the most crucial element of user experience. Ideally, the payment page must have a customized design that fits well with your store setup. It will work if you get an externally hosted payment page to simplify the setup. This will reduce your PCI costs and scope and ensure that the payment service provider offers flexibility and extensive customization features.
- Balance security and convenience
One of the main barriers to frictionless checkout experience is the requirement from merchants to combat fraud. For example, 3D secure is often considered as a conversion killer. It guarantees payment and strong authentication, but it creates friction by an extra payment step.
An experienced payment service provider can help to find the right balance between customer convenience and payment security.
Payment innovation trends that will evolve ecommerce
The evolution of ecommerce doesn’t go unnoticed in the tech world. In fact, researchers are always looking for ways to make this process smoother and more accessible for all users. Payment systems are growing increasingly secure and attractive for customers.
Following are the three trends that will continue to evolve ecommerce:
- Growth of M-commerce
Widespread acceptance of payment via mobiles has taken the digital arena by surprise. Statistics show that the value of global payment transactions reached $2.4 trillion in 2023.
This has opened a new opportunity for ecommerce companies to go mobile. Innovations like Samsung Pay and Apple Pay help customers to make a purchase easily and safely. As mobile payment options will enhance, the incidence of cart abandonment in the online world will also reduce.
Fintech has paved the way for a secure and convenient customer experience.
- Widespread global possibilities
One of the primary benefits of contactless payment is the ability to pay across borders without a hassle. PayPal was the first company that made it possible. It allowed ecommerce companies to cater to new customers by providing options for global transactions. This encouraged payment providers like Western Union and Transferwise to jump into the digital currency game.
Thus, ecommerce companies no longer need to rely solely on the local market to increase sales.
Besides the frictionless payment options, Fintech rewards emerging markets to store money for the population that cannot access banks. M-Pesa is a company in Kenya that has an expanded user base because of these features. It allows the users to deposit money and make everyday purchases. People who had fewer options due to the traditional transaction system are now exploring new avenues.
- Frictionless experience via efficiency and cost-savings
Thanks to the continuous advancement in the tech world, emerging companies can now buy financial software packages to serve customers that were too expensive to afford earlier.
This has allowed making swift payments which attract customers from across the world. The Chief Product Officer of Payfirma, Kalle Radage, believes that frictionless payment will bring a faster growth of companies and better customer experiences.
Along with this, fintech is helping ecommerce companies to evolve through increased accessibility and efficiency.
Jump on the bandwagon
Expanding your digital presence through an ecommerce platform will maximize the potential of frictionless payment tech. It will also regain traction with customers as companies strive to thrive in the new payment order.
The stakes are higher as we swim across the virtual waters. Retailers should look for innovative ways to establish trust with their prospects. Most smartphones are now offering Google Pay, Apple Pay, and eWallets which you can easily use to pay for a website. This payment option is convenient for users who are growing addicted to smartphones.
Living in a world where a pandemic can change a business overnight, it is incredibly crucial to have a frictionless payment method for your customers. Most B2B businesses are assessing their reliance on physical payment and working on ways to reduce this.
Switching to electronic invoices speeds the time it takes to receive the payment. It also reduces the need to exchange physical documents.
Moreover, trading internationally can be an overwhelming task if you have entered the ecommerce world recently. Nonetheless, picking the right payment provider can dramatically simplify the complex task and improve your profit margins. The right payment partner can help a business to create a seamless and modern checkout process. It will also minimize the risk of obstacles at checkout and enhance the overall customer experience.
Parting Thoughts
In-store invisible payment technologies is expanding into mainstream retail to allow an increasingly seamless checkout experience. One of the first companies to show how frictionless payments work was Uber. Instead of making the customer wait for driver processing information, its app automatically charges money from the customer’s account without asking them to tap and enter the codes.
Frictionless commerce has a few bugs to work around. There are many consumers who need convincing. However, we can expect loads of improvements in the future as retailers look for different ways to help modern shoppers.
