A Primer For Frictionless Payments

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We are getting closer to completely frictionless payments, but there are still challenges and security concerns. Here's an update on our progress and what to expect in the future.

Payments technology continues to advance at a rapid pace. Alternative payment methods are also gaining traction, with mobile wallet adoption increasing by 68% last year. Payments companies are adapting to changing consumer expectations by leveraging agile, resilient, and flexible infrastructures such as the cloud, managed integrations, and APIs within internal tech stacks. Along with innovative new payment options, there are advancements and increased sophistication in data, security, and fraud detection. Overall, online payment gateway systems are poised for further expansion and improvement.

During the pandemic, the importance of frictionless payments was demonstrated. Thousands of shoppers have shifted their shopping habits to the online and digital realms. Businesses have also had to adapt to these new trends and the new digital norm. This digital fire trial has highlighted the importance of providing a frictionless, seamless, secure, ...
... and convenient payment experience.

The Evolution of Frictionless Payments
We've come a long way in our quest for frictionless payments. Payments have slowly but steadily reduced the friction inherent in the process, from signing a receipt to entering a pin on a POS terminal to filling out a long line of form fields for online commerce.

Today, contactless cards and mobile wallets with biometric authentication are available, providing users with a mostly frictionless payment experience. However, frictionless payments go a step further. Payments should be invisible to be truly frictionless. We've seen this with companies like Uber, where paying is no longer something the end user is aware of. Rather, it occurs automatically behind the scenes. In general, frictionless payments should include the following:

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

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

Frictionless Payments and Security
When it comes to frictionless payments, security comes first, followed by omnichannel payments management and delivering a seamless experience. Balancing friction elimination with security optimization across a number of new touchpoints and interactions can be difficult.

While it is true that consumers expect a simple, quick, seamless, and barrier-free payment experience — nearly 70% abandon carts at online checkout — they also expect the highest levels of security and data protection. According to a report, nearly all (92 %) of consumers expect businesses to be proactive about data protection.

As frictionless payments gain traction, there will almost certainly be some pushback from concerned consumers. While at least half of consumers (53 %) believe that biometric authentication improves payment security, slightly more (59 %) are concerned about transactions that do not require a password for payment. A college education will be essential in assisting consumers in becoming comfortable with secure, frictionless payments and newer authentication methods such as biometrics.

The Future of Frictionless Payments
Amazon Go stores based on "Just Walk Out" technology were launched just over three years ago. Customers can use the Amazon Go app to scan a code upon entering the store, select their items, and then simply walk out. Payment through the best online payment gateway is made automatically and in the background, and a receipt is sent to the user's phone after they leave the store. Cameras, shelf sensors, and special package codes are used in the technology. Amazon is now making this technology available to other merchants and retailers, broadening access to frictionless payments.

The proliferation of mobile wallets will almost certainly continue, a trend accelerated by the pandemic. Using mobile wallets to order ahead and pick up in-store or for food delivery services is becoming more common, owing to younger, tech-savvy consumers who use smartphones for everything. While older consumers are more resistant to change, they are still participating. COVID-19 has been a strong catalyst for contactless payment adoption, which is likely to continue long after the pandemic has passed.

Both now and in the future, frictionless payments will play a significant role in fostering customer loyalty. Removing payment barriers while maintaining security will remain a priority for retailers, payment service providers, and financial institutions alike. While the pandemic has accelerated the transition to frictionless, the journey will continue even after the storm has passed.