Are You Providing Frictionless Payment Solutions?

Electronic payments are trending toward seamless, even invisible, payment experiences that take care of transactions behind the scenes with little effort on the part of the customer.

Customer experience has become the new battleground with businesses across all sectors vying for customers and their loyalty. Payments are an integral part of customer experiences, but the types of payment experiences consumers prefer — or will tolerate — have changed in the digital age.

E-commerce merchants have the opportunity to make payments virtually frictionless for their customers. Tokenized payment data enables customers to make purchases with just a single click. But how can solutions providers enable brick-and-mortar merchants to provide frictionless payment experiences?

How to Recognize Frictionless Payments

Frictionless payments should have some, or all, of these features:

· Short wait time

· Fast checkout

· Minimal steps in the transaction process

· Requires little effort on the part of the consumer

· Naturally integrated into the customer experience

The trend toward making payments as seamless, frictionless — even invisible — is driven by the increasing influence of millennial and Gen Z consumers and advancing technologies.

Frictionless Payment Examples

Frictionless payments are practical and widely adopted in some use cases. Many travelers and commuters pay tolls via transponders that communicate with readers when they enter and exit a parking structure or toll road and charge a payment card on file. Alternatively, some systems use license plate recognition to charge an account.

Another example is Disney World “MagicBands,” wristbands that enable theme park guests to charge purchases to their hotel rooms.

Removing Friction in Retail, Restaurant and Services Applications

For most businesses, offering license plate recognition or magic wrist band solutions won’t get much interest from your customers. But there are solutions that will help you remove friction from payment transactions:

Mobile apps — Starbucks is the perennial example of frictionless payments via mobile app. The popular app combines payment, loyalty program, gamification, ordering, and other features tailored to individual customers. At the store, customers open the app, tap pay, and hold their smartphones up to a scanner. They can set the app to automatically reload their cards to make the process even more frictionless.

Mobile wallets — Near-field communication (NFC) enables payments via mobile wallets such as Apple Pay, Google Pay and Samsung Pay. Customers unlock their smartphones with their passwords, fingerprints or by drawing a pattern and then hold it near an NFC reader to transmit payment data.

Contactless payment cards — Also using NFC technology, contactless payment cards enable customers to simply tap or wave their cards near the reader and automatically pay for payments up to a certain amount. Tap-and-go payments are simple, yet safe, using the same security technology as EMV payments.

Voice ordering — As easy as online shopping with just a click can be, Amazon has made it even easier by enabling customers to just ask Alexa on Amazon Echo to place their orders. Voice interfaces can also change the way customers place their orders at quick service restaurants.

Signs of Things to Come

Some merchants are exploring ways to make in-store payments completely frictionless. Amazon Go stores, launched in 2018, use “Just Walk Out” technology. Shoppers use the Amazon Go app, scan a code when they walk into the store, choose the items they want — then just walk out. They receive a receipt on their phones after they leave the store. Amazon Go’s technology is proprietary, but it reportedly uses shelf sensors, cameras, and specialized package codes to make the system work.

Most merchants may not be providing cashierless payment solutions, but do you offer customer solutions that can remove friction from payment transactions? It’s a trend you should respond to with solutions that make payment experiences — and customer experiences on the whole — easier, more convenient, and more likely to contribute to customer loyalty.