The evolution of payments in a customer experience-led world

How software providers can deliver seamless and frictionless transactions that keep their clients’ customers spending 

Do you remember the last time you paid for an Uber? You just tapped to book a ride. No keying in card details. No password. No ‘pay now’ button. That’s the definition of a truly frictionless payment. These ‘checkoutless’ experiences are becoming the norm and should be front of mind for software providers as we enter a new era in payments. 

Where once we needed our card and CVV number to buy anything online, payments are quickly becoming integrated within the software that sellers and services use, making transactions almost invisible.  

With 40% of UK consumers in the tech savvy, digital-native Gen Z demographic*, and more people than ever choosing to use mobile and contactless payments, preferences are quickly shifting toward hassle-free purchasing.  

Subscription services are also growing, like Netflix’s seamless streaming and Spotify’s simple, invisible (and easily forgettable) monthly payments that unlock a vast music library by comparison to track by track transactions. 

Consumer Convenience 

We’re quickly moving from a ‘cardholder present’ world to one where invisible payments like impulse spending at Amazon are the norm. Customers can purchase pizza from the sofa with a voice command and buy groceries using their fingerprint or a scan of their face without ever having to reach for their wallet.  

Central to the popularity of frictionless and invisible payments is the customer’s experience. Nobody approaches a transaction thinking about the payment. They want an outcome. Whether it’s a ride into town, a chart-topping tune or travel insurance, the focus is on fulfilment, not finance.  

Customers no longer want to dig out a credit card. In fact, 87% of them will abandon an online shopping cart if the checkout process is too difficult. And, the less they think about making a payment, the more they’re likely to spend. 

Mobile Modernity 

As cash usage continues to diminish and 66% of all UK in store card transactions are made through contactless methods, mobile payments continue to grow, standing currently at 21% of all transactions.  

It used to be commonplace to browse on mobile and buy on a laptop or desktop machine but, in an era where Android has replaced Windows as the world’s most popular operating system, the mobile experience is now a priority.  

As Apple Pay, Google Pay and others see astronomic growth, enabling customers to pay using their preferred method and on their preferred platform is essential. 

The Payment Imperative 

Software providers should take notice of these trends. Their software holds the key to enabling the type of transactions that consumers demand and merchants are desperate to deliver.  

However, rather than simply adding payment functionality to their software, it must be integrated to become a core part of the service their clients deliver. It needs to remove the friction from the payment process to provide the best possible experience for customers, enabling them to pay with ease, how and where they want.  

To remain competitive, you must take steps to provide frictionless, invisible payments within your software, which means embedding a payments workflow or integrating one with your offering. 

With payments, security and authentication baked into your software, you can take steps to enable the frictionless payments that your clients and their customers crave. By improving the way payments are handled, you’ll not only differentiate your software and increase the growth potential of your business but help your clients to do the same by retaining existing customers and attracting new ones.  

It will enable them to offer invisible and frictionless payments and even adopt a SaaS model to encourage consistent spending over longer periods rather than one off payments. 

But how do you ensure the payments integration within your software delivers the experience today’s customers expect? 

It must meet all of the following criteria: 

• Ease - If things become complex shoppers will look for simplicity elsewhere. The transaction must be as smooth as possible as well as secure. 
• Accuracy - A mistake, especially financial, almost always means the end of a customer relationship. Your software must be error free and flexible to meet consumer demands. 
• Flexibility - Making online transactions flexible, with less friction, creates a more user friendly customer experience. With more consumers switching to digital wallets, this enhances the opportunity for more seamless transactions. 
• Immediacy - Consumers buy when they need something, not just when a service is available. 24/7 access is critical, as is compliance and partnership with financial institutions through a trusted payment facilitator. 

Sources:  

[*] https://www.mckinsey.com/industries/retail/our-insights/the-influence-of-woke-consumers-on-fashion