New technology has expanded the ways we pay. Where cash was once king, credit and debit cards now reign supreme. Even that upseating is in the process of dynamic change. As consumer lifestyle preferences shift and convenience is valued over all, many consumers are looking for even easier ways to pay online.
This is where frictionless payments begin to take hold. Embedded and “invisible” payments experiences are taking ecommerce by storm, enabling consumers to pay for goods and services in the blink of an eye. In fact, as biometrics continue to seep into the payments experience, the blink of an eye (via facial recognition tools) may be a new way to pay soon enough. Ecommerce companies like Uber have made it easy to conduct commerce on mobile phones without even experiencing the act of payment. Instead, users simply choose what they want: transportation from Point A to Point B; the actual payment happens behind the scenes, so as to not encumber the customer.
This is the new trend in payments: frictionless payments. With it comes a lot of responsibility on the part of merchants to ensure that these types of transactions happen safely and securely
Security in Frictionless Payments
As digital commerce accelerates and the Internet of Things (IoT) grows, payment options are growing in tandem. With 8.4 connected devices—a number forecasted to increase to 20.4 billion within two years— it’s not surprising that consumers want to be able to pay anytime and anywhere. It’s critical to ensure these “anytime, anywhere” payments are protected with the utmost security.
An example of such security measures is 3D Secure. The first 3-D Secure (Three Domain Secure) authentication has been around for years as a security layer for card-not-present (CNP) transactions. One of the primary reasons it was created was to increase consumer confidence in online transactions. While it was effective in securing transactions and garnering the confidence of consumers, it also introduced unnecessary friction and false positives into the equation, causing merchants to experience more cart abandonments.
The new 3D Secure 2.0 (3DS2) has made frictionless payments a primary focus. The updated version allows the transmission of more data during transactions, enabling risk-based decisions for authentication. Using token-based and biometric authentication allows this protocol to facilitate secure, frictionless payments by freeing up consumers from the need to remember static passwords.
Other Considerations for Frictionless Payments
The core component of frictionless payments is convenience. Users are able to pay on their terms without being overburdened by security measures (though the security is still in place to adequately protect transactions). Having the proper payments infrastructure in place has become increasingly important to facilitate frictionless payments as new channels become commerce channels.
Conversational commerce has ushered the rise of using voice assistants and chat bots (via messaging apps). As more mobile websites and mobile apps come into play, consumers are increasingly using mobile wallets as streamlined ways to pay from a smartphone. This signals great strides in optimizing convenient ways to pay; however, the fraud problem still exists on these channels. It’s an ongoing game of striving to make the payments experience seamless for consumers without making it a cake walk for bad actors.
Each new payment channel and instrument can be an open invitation for hackers and fraudsters looking for an easy target. The interconnectedness of these channels and payment methods (credit cards to wallets and wallets to apps, etc.) make it ripe for the fraudulent picking. Merchants that go the route of offering in-app payments should be sure that login security is strong without being cumbersome for the end consumer.
A Vision for the Future of Payments
We will continue to see frictionless payments get more sophisticated as technology evolves. Existing technology has already afforded consumers some interesting and unique ways to shop and pay. Amazon, an e-commerce mammoth, has led the charge in frictionless payments. Their Amazon Go grocery store promotes what it calls a “a check-out free shopping experience” where customers don’t endure a checkout line—they simply walk out with their selected items, which are automatically charged to their connected Amazon account.
No matter where you are on the frictionless payments journey, it can be beneficial to work with a professional, trusted payment processing partner. PayArc offers payments support across the spectrum—from payment gateways to chargeback management and fraud prevention—to help merchants streamline payments across all channels. Reach out today to learn more about how we can help you optimize your payments operation.
