We continue to inch closer to completely frictionless payments, but challenges and concerns around security remain. Here’s a look at the progress we’ve made and what to expect in the future.

Payments technology continues to forge forward at an accelerating pace. Alternative payment options are also gaining momentum, with mobile wallet adoption surging 68% last year. Payments organizations are handling changing consumer expectations around payments by leveraging agile, resilient, and flexible infrastructures, including the cloud, the manage integrations, and APIs within internal tech stacks. Along with innovative new payments options are improvements and added sophistication across data, security, and fraud detection. Overall, payments systems are poised for new growth and improvement. 

The importance of frictionless payments has been tested during the pandemic. Droves of consumers shifted shopping to the online and digital realms. Businesses, too, have had to adjust to these new trends and the new digital normal. This trial by digital fire has underscored the importance of providing a seamless, secure, and convenient payment experience — a frictionless one. 

The Evolution of Frictionless Payments

We’ve come a long way on the journey toward frictionless payments. From the time when credit card authentication involved signing a receipt to entering a pin on a POS terminal to filling out a long line of form fields for online commerce, payments have slowly but surely reduced the friction inherent in the process. 

Fast forward to today where contactless cards and mobile wallets that use biometric authentication are in play, enabling users to have a mostly friction-free experience when paying. But frictionless payments go one step further. To be truly frictionless, payments should be invisible. We’ve begun to see this with companies like Uber where paying is no longer a  thing that the end-user is even aware of. Instead, it happens automatically behind the scenes. In general, frictionless payments should: 

  • Be a natural part of the customer experience
  • Eliminate the steps and time needed to complete a transaction
  • Be fast

While we venture closer to invisible payments, there are other forms of frictionless payments gaining traction, including auto-renewing subscriptions, digital wallets, device-initiated payments, contactless card payments, contextual payments, in-app payments, and one-click payments.

Frictionless Payments and Security

In addition to omnichannel payments management and delivering a seamless experience, security is top of mind when it comes to frictionless payments. Balancing the elimination of friction with the optimization of security across a number of new touchpoints and interactions can be a challenge. 

While it’s true that consumers expect an easy, fast, seamless, barrier-free payments experience — almost 70% of consumers abandon carts at online checkout — they also expect the highest levels of security and data protection. A PwC report notes that nearly all (92%) of consumers expect companies to be proactive about data protection. 

There will likely be some pushback from concerned consumers as frictionless payments gain ground. While at least half (53%) of consumers in one study believe that biometric authentication increases payment security, slightly more than that (59%) are anxious about transactions that don’t require a password for payment. A degree of education will be critical in helping consumers get comfortable with secure, frictionless payments and newer authentication methods like biometrics. 

The Future of Frictionless Payments 

It was just over three years ago that Amazon launched Amazon Go stores based on “Just Walk Out” technology. The technology enables shoppers to use the Amazon Go app, scan a code upon store entry, select their items, and then simply walk out. Payment happens automatically, in the background, and sends a receipt to the user’s phone after they leave the store. The technology utilizes cameras, shelf sensors, and special package codes. Amazon now offers this technology to other merchants and retailers, increasing accessibility to frictionless payments. 

We’ll likely continue to see the proliferation of mobile wallets — a trend that was greatly accelerated by the pandemic. Using mobile wallets to order ahead and pick up in-store or for food delivery services is becoming a regular occurrence, thanks in large part to younger, tech-savvy consumers who use smartphones for everything. While older consumers are more resistant to change, they are still getting in on the action as well. COVID-19 has been a strong catalyst in contactless payment adoption, which is a trend that is likely to continue long after the pandemic releases its grip. 

Frictionless payments will play a big role in fostering customer loyalty both now and in the future. Removing barriers to payments without sacrificing security will remain at the forefront for retailers, payment service providers, and financial institutions alike. While the move toward frictionless received a boost in acceleration from the pandemic, the journey will continue even after the storm subsides.

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