Today, both consumers and merchants are demanding more security and flexibility when it comes to their payments. This is why more people are choosing to pay with a credit or debit card through a simple and secure payment method.
A quick and simple payment method known as frictionless payments is a type of online or offline process that uses data collected from various websites and apps to make a purchase process more convenient for customers.
What are Frictionless Payments?
The concept of frictionless payments is a trend that’s shaping the future of e-commerce. It’s a type of payment solutions network that uses data collected from various sources to make a purchase process more convenient for customers. The payment methods must meet the following:
- Offers a faster way to checkout
- Eliminates or minimizes customer waiting time
- Makes the process easier by eliminating the need to remember PINs
- Makes the process feel natural during the customer experience
Types of Frictionless Payment Methods
1. Mobile and Digital Wallets
Although the terms digital wallets and mobile wallets are often interchangeably used, the two payment methods have unique ways of being implemented. Mobile wallets are commonly used by consumers who prefer to carry their purchases in-store instead of carrying a physical wallet. Although some payment methods, such as Apple Pay and Google Pay, are known to be digital wallets, they are also considered mobile wallets when used with devices and mobile payment services.
2. Mobile Applications
In addition to mobile wallets, other forms of payment that are commonly used for in-store purchases include mobile applications. These may include the use of QR codes, which are designed to circumvent the expensive POS terminals.
3. NFC (Near Field Communication)
Near-field communication, also known as NFC, is a type of communication technology that enables two devices, such as phones, to communicate with each other using a radio frequency field.
NFC is commonly used in combination with mobile wallets to allow consumers to make purchases in-store using their smartphones. Some of the most prominent payment methods that use this technology include Apple Pay and Google Pay.
Benefits of Using Frictionless Payments
In addition to being beneficial to both the customers and the business, the use of frictionless payments is also expected to bring numerous benefits to both parties. According to estimates, by 2022, more than $78 billion will be processed through invisible in-store payments.
1. Cart Abandonment Reduction
A study conducted by SaleCycle revealed that almost 70% of e-commerce shoppers abandon their purchases when they don’t complete their transactions. Baymard also noted that a quarter of them leave their shopping carts unattended due to a lengthy or complex payment process.
The use of frictionless payments can help minimize the amount of time it takes to complete an online transaction by allowing consumers to complete their purchases without having to go through multiple steps.
2. More Security
One of the most important factors that businesses can consider when it comes to enhancing their security is the use of tokenization. It allows them to provide a randomly-generated ID to their customers so that they can complete their transactions without having to enter their credit card details.
3. Improve Customer Retention and Satisfaction
The use of frictionless payments can help boost the retention rates of customers. According to studies, this type of payment method can help boost the satisfaction of both the consumers and the business.
The ability to pay with a button is perceived as a more convenient and comfortable experience for consumers. Apart from letting the customers complete their transactions without having to enter their credit card details, the use of frictionless payments also speeds up the processing times.
4. Better Customer Tracking
Customer data can help them improve their marketing and customer loyalty.
With the use of data, you can create personalized marketing campaigns that will help your customers have a great experience while making their purchases. You can also customize messages to help your customers navigate through your store’s offerings.
The use of frictionless payments can help boost the success of your business. It’s because of its various advantages that you must introduce this type of payment technology into your retail or e-commerce operations.