The Freedom of Frictionless Payments

Aug 11, 2022
5 minutes Read
Embrace the freedom of seamless transactions with Frictionless Payment, Digital Wallets, and Contactless Cards for unmatched convenience.
The Freedom of Frictionless Payments

Taking a taxi in a new city can be frustrating. Can you pay with your credit card or do you have to use cash? That’s friction. If you opt for public transportation instead, there could be more payment uncertainties. Do you need to buy tickets? Do you need to buy a transit card? How do you load it with value? That’s friction. Shopping online has payment frustrations, too. Sometimes you’re stopped at checkout, and asked to create an account with a password and verification. That’s friction.

Remember when car services like Uber and Lyft changed all that? Signing up on an app meant logging your card information in a single time, and the rest was history. No problems. There was no need for drivers to carry any clunky payment terminals. No obstacles. And people could head out with empty pockets and no purse. All they needed was a smartphone to transact the payment and store a record of it. No friction.

As you might have guessed by now, frictionless payment is any kind of online or offline process that takes the friction out of the payment experience. It removes steps from the payment process and makes the checkout process smoother and faster. Nowadays, innovations in frictionless commerce are making paying for things a seamless part of our everyday activities.

Instead of going through all the customary steps at checkout – standing in line, ringing up items, presenting the bill, choosing a payment method, authenticating the payment with a PIN or a signature, and issuing receipts – transactions are completed effortlessly. Often all that’s needed is a single tap or wave of a smartphone on a payment terminal or QR Code. With a store app that already has your payment information stored, all you need to do is click “Buy.” By whatever method, frictionless payment is making paying easier, faster, and more convenient.

The advantages aren’t just felt on the customer side. There are major benefits for retailers, too. Easier payment processes translate into better customer experiences, so shoppers spend more time on online stores and in-store. Less friction means they make purchase decisions faster, which leads to bigger spends and far fewer abandoned carts. When it coming to totaling those sales receipts at the end of the day, frictionless payment options put more money into merchants’ pockets.

Digital devices are making payment magic

What spurred this influx of payment convenience? Frictionless commerce is enabled by data from devices, smart apps and websites and wireless connections. NFC (Near Field Communication) allows electronic devices to transmit data over short distances. Those low-speed connections are what enable the taps, swipes and waves of frictionless commerce. Holding your phone near a terminal instantly completes the transaction. Your smartphone authenticates you, removing the need to enter a PIN or provide a signature, and proof of payment is issued and stored automatically.

In fact, the need to authenticate purchase methods is what introduced so much interference in the checkout process. Cheques and credit cards were revolutionary as convenience and security advances, but those enhancements slowed things down. Credit card companies and merchants needed layers of proof to show that payees and payers were who they said they were. When purchasing moved online, those layers translated into more accounts for customers to create, more fields to fill out, and more passwords to try and remember.

Thankfully, frictionless payment offers high security as well, in ways that are simplifying the checkout experience for shoppers and merchants. In a process called tokenization, credit card numbers or account data submitted by shoppers gets swapped out for strings of characters called “tokens” that can only be unlocked with a special key. That way, businesses can save encrypted data for future automatic transactions, such as monthly subscriptions, without retaining direct access to sensitive customer data. One-click checkouts use secure tokenization, too, and customers love the seamlessness of “one-and-done” payments.

With less obstacle at the point of sale, frictionless commerce is taking off. Sources have shown that $3.9 trillion sales were processed globally through frictionless payments in 2019. Juniper Research has estimated that $1.9 trillion will be processed through contactless cards and that 50% of the global population use some form of digital wallet by 2024.

Different modes of frictionless

Frictionless options are flourishing. Whether you’re shopping online at home, shopping in-store, or just using your smartphone to browse or check email, here’s a rundown of frictionless methods that are gaining traction with shoppers and retailers.

  • Mobile and digital wallets: Ditch your credit card, debit card, and loyalty card and store the details on your smartphone instead. Make payments using NFC straight from platforms like Apple Pay, Google Pay, and WeChat Pay. Retailers love them for reduced fees, better security and faster processing.
  • Mobile apps: Download a specialized app from a favourite brand or store, and buy directly from your phone. Or, pre-order at home, then head to the store to skip the line and finalize payment from the app.
  • QR code solutions: Accept payment through a scannable QR code. This popular, one-tap solution relies on the smartphone camera. The QR code opens a range of digital wallets, with full security, contactless payment, receipts and other features.
  • Remote payment links: Leverage emails and newsletters not only to keep in touch with customers, but to make sales. URLs or QR codes embedded inside can turn these communications into frictionless shopping and payment experiences. Clicking the link takes customers instantly to checkout to buy the latest item, renew a subscription, or pay an outstanding invoice.
  • Contactless cards: Most cards these days are equipped with embedded chips that work by NFC to send payment data between cards and payment terminals. One tap usually seals the deal, with no need to enter any PIN or other information. Some cards impose purchase limits to reduce the risk of fraud, and may require PIN-verification for larger-than-usual purchases.

Building payment into the environment

Our days are marked by the purchases we make, and a business’s success is measured by the conversions it drives. Digital innovations and enhanced security are coming together to build a future that builds payment seamlessly into our natural environment, making it an extension of those everyday activities. Paying for things no longer demands we slam the brakes and launch into a complex, time-consuming, and exasperating checkout routine. Aside from speeding things up, frictionless payments are improving the entire customer experience, in turn, creating a more lucrative future for brands and retailers.

OTT Pay is a leader in mobile payment and QR code payment solutions. For help designing and implementing a frictionless payment strategy to grow your business, contact us our sales team at 1-800-688-9838.