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Frictionless Payments: The Never-Ending Pursuit

Penny Webb
Apr 26, 2017


“Frictionless payments” is an industry concept that has been around for many years. The phrase is used to describe a desire to limit the amount of customer interaction during a transaction, making the purchase process as smooth as possible from start to finish.

While the payment portion of a purchase can be the more laborious aspect of retail transactions, merchants and financial institutions must also focus on the end-to-end user experience when looking for ways to simplify the act of making a purchase. Streamlining the purchasing process should be a top priority for retail establishments and nonprofit organizations that want to attract new customers or contributors, or drive existing users to return more often.

No matter the industry or organization, there are essential gains to be made by applying the frictionless payments approach to customers’ purchase or donation experiences.  

The following techniques are often used to reduce friction in the payments process...

  1. The implementation of a one-time setup process that dramatically reduce the effort required for future purchases or interactions.

  2. Implicit trust in the business to securely store pertinent payment and personal information.

  3. A seamless payment process.

  4. The elimination of user pain points with options such as downloadable purchased content, electronic receipts, free shipping, and free returns.

Checkout abandonment, which occurs when users opt out the process after beginning a purchase, is a common problem that plagues online merchants in the same way long checkout lines affect brick-and-mortar businesses.

Companies like Amazon and Starbucks have distinct frictionless payment approaches that both leverage available technologies to improve the end-to-end retail experience in stores and online. Amazon rolled out their first one-click payment option in 2000, and have continued to reinvent the retail experience. The Amazon Dash button (which just won the gold for Best Merchant Solution Innovation Project’s annual awards) is a perfect example of a frictionless transaction that bridges the physical and virtual worlds. Frequently ordered products can be requested with a single touch of an actual or online button. The Amazon Go store will not include standard checkout lines, but will instead rely on machine learning, sensors, and artificial intelligence to track the items a customer picks up. Starbucks, after realizing the order line was a major friction point for food and beverage purchases, began offering online ordering and payment. Thanks to the Starbucks’ smartphone app, all that a mobile-savvy customer has to do when they reach the store is walk up to the counter and pick up their order. No lines, no waiting!

Many companies use external payment solutions in an attempt to avoid the requirement to comply with PCI regulations. Vendor partners like PayPal and Visa Checkout are consistently focused on making their embedded payment processes simpler, often only requiring that a user to give their consent to process the payment request.

Security is always a controlling factor, and organizations must balance convenience with safety when shaping the payment experience. Attention to emerging technologies and new uses of existing technologies such as near field communications (NFC), biometrics, and radio-frequency IDs (RFIDs)can be used to safely speed payments at the physical point-of-sale. These components improve security for the buyer and the seller, while removing traditional pain points like scanning items, providing signatures, entering PINs or typing usernames and passwords.

There is no single approach to creating frictionless payments that works for every business. Organizations should review the steps necessary to make a purchase or donation with a fresh set of eyes, and use their unique knowledge of their customer base to design and build the best customer experience. Any time a customer is required to stand in a line, enter a large amount of data, or fumble to locate their credit card, businesses should recognize that instance as a sticking point that introduces friction. Removing those obstacles is what frictionless payments are all about. Organizations that eliminate these pain points will reap the rewards of creating a better, simpler world for their customers.

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