Frictionless Payment Experience

Reducing friction improves the customer experience, resulting in higher profits. Find out how several companies eliminated the 'payments experience' altogether.

Electronic commerce was implemented on a basic level in the 1970s when many people began using Electronic Fund Transfers (EFT) and Electronic Data Interchange (EDI) to move money. Ever since the pandemic hit the world, there have been a lot of changes in the way people live and perform their daily tasks. One such change has been seen in the way people have started dealing with the transfer of money. The COVID-19 situation gave acceleration to online and digital payments. People have started using digital payments more than ever. A report suggests that global E-commerce sales will soon be hitting $5.5 trillion. Let’s look at how Amazon and other companies have reduced friction in the payments experience.

Ways to Eliminate the Payments Experience

Frictionless payment is generally defined as paying for goods and services without using a tangible means of exchange, such as credit cards or physical money. Taking a step further, a frictionless consumer experience may use technology that eliminates unnecessary steps at checkout or the checkout experience altogether.

Eliminating the payments experience is common for subscription services, where customers provide payment information once and get auto-billed periodically using a card-on-file. Invisible checkouts are also successful for mobile app-driven services like Uber that eliminate the pain points associated with traditional car services, such as a flawed payment experience where costs are not always transparent. Uber customers enter their billing information into the app once, know the costs upfront, and can finalize a transaction with a few taps on a smartphone.

On E-commerce websites, frictionless payments generally result from prepopulating billing and shipping information, either by pulling internet browser data or by using an existing customer’s information from the website database upon login. Should the user decide to opt for a third-party payment processor such as PayPal, the payment process can be simplified by enabling an embedded payment flow, where users complete their transactions without leaving the website.

How Does Amazon Go Eliminate the Payments Experience?

Amazon Go eliminates the payments experience in their stores. At these locations, you swipe your smartphone at the door, pick items off the shelf, and swipe out to leave. Using artificial intelligence, facial recognition, weight sensors, special packaging, and a slew of cameras, Amazon tracks the items you pick up, put down, and leave with.

Ultimately, Amazon is using technology to eliminate the greatest source of friction in a shopping experience: the checkout line. Competitors like Walmart are also testing ways to eliminate store checkout processes.

With the widespread adoption of technology, it’s no wonder that online shopping has evolved to rely more heavily on conversational commerce.  Up until recently, this has referred to embedding AI-powered chatbots into E-commerce websites, as well as interacting with customer service representatives and virtual assistants to shop through messaging apps like Facebook Messenger and WhatsApp. Amazon Echo and other voice technology are replacing these applications by eliminating even more of the customer payments experience, but there is an even newer technology to consider.

Imagine IoT-enabled printers that automatically order new ink cartridges when they sense low levels, air conditioners that order new filters, or even visual sensors that track your consumption of paper towels, soap, and various toiletries, replacing them automatically so that you never run out. All these possibilities can be achieved with technology that exists today, and based on the widespread use of mobile applications, users will voluntarily opt-in to such services for the convenience that comes with frictionless, automated payments. While such technology is desirable, it does raise questions about potential regulations, fraud, and other issues.

One way to mitigate risk when eliminating the online payment processing experience is through tokenization. By 2023, Cisco estimates that there will be 29.3 billion devices connected to the internet. Visa plans to bring secure payments to the Internet of Things, starting with wearables and cars. To make this possible, they will partner with technology companies like Samsung, using tokens to represent user accounts and payment information. For example, tokenized payments may be utilized in retail stores, gas stations, and restaurants.

Eliminating the Payments Experience

The time to eliminate the online payments experience is now. IoT systems and software to eliminate friction at checkout already exist, and the end result is better for the user and the merchant. Modern consumers want to pay quickly and easily, knowing that their personal information is secure when they’ve initiated a purchase on their own by walking out of a store with merchandise, as well as when payments are automated by IoT devices. As customers continue to utilize these systems, merchants may focus less on payment processing. Instead, they can invest in the use of contextual data that travels with the payment to improve the customer payment experience and their bottom line. Streamlining the payment scenario can help you immensely. Find out how!

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