The Future of Payments is Invisible

What comes to mind when you think of invisible payments? Is it the Amazon Go experience where a customer walks into a store, picks up the merchandise is automatically charged through their app as they walk out? Is it the instance where a customer uses their Apple Watch to pay for what they’ve bought in the grocery store? Or is it when a rider gets out of their Uber or Lyft as they reach their destination and the app takes care of the payment? The invisibility of payment depends on the consumer perception. It all comes down to how much friction there in the whole checkout experience. Do the consumers have to reach for their wallets? Do they have to use their phones at all to initiate the service even though the payment might be automatic?

The ideal payment experience is different for everyone. While some people still like using cash, others prefer using alternative methods such as mobile wallets or QR codes. Merchants too want to reduce friction at checkout to improve customer experience and minimize long lines that can lead to abandoned shopping carts. Whether you are running a business or paying at one, payment acceptance is slowly becoming more frictionless, simple and invisible – and everyone benefits. To take full advantage of this opportunity this trend, businesses need to educate themselves on different types of payment methods that reduce friction that are available for their in-store, online and mobile operations. Let’s take a look:

Contactless cards

Towards the end of 2019, Visa reported that they issued over 100 million Visa-branded contactless cards in the US in 2019 and they plan to surpass 300 million by the end of 2020. Contactless cards, like any NFC-powered payment method, add to the speed and convenience at checkout. Customers just tap their card and while the payment acceptance device is working on processing the transaction, they are able to already put the card back into their wallet. This behavior is common and is so ingrained in consumers that they don’t even realize that they are doing it. Using this method removes the friction of leaving your card in the payment acceptance device while it is processing the transaction and the customer can be out of the store quickly.

Mobile wallets

Mobile wallets follow in the footsteps of contactless cards, as they use the same NFC technology to transfer card information to the payment acceptance device. They can be used for both in-store and online payments:

• In-store – Backed by additional security benefits, mobile wallets (such as Apple Pay and Google Pay) allow users to tap their smartphone or compatible wearable on a payment acceptance device in-store to pay for merchandise. In addition, businesses can integrate loyalty features with these mobile wallets and make it easy for customers to enroll and use them. Mobile wallets remove friction of having to reach for your wallet at all.
• Online – In recent years, mobile wallets have also been implemented for online purchases. Customers shopping on many eCommerce websites can use their mobile wallets to pay for merchandise. It not only provides an easy alternative to filling your credit card information, but a user is new to the website, they won’t even have to fill out their shipping address. That information is acquired from the mobile wallet making purchasing something online frictionless.

In-App payments

Businesses that rely on the consumer using their mobile apps to purchase products or services often leverage in-app payments. This is where the customer initially configures their credit card or mobile wallet as a method of payment. Once they set their default payment option, the app can automatically pay for the products or services they buy. Ridesharing apps such as Uber or Lyft are common examples of this method. It removes friction from the buying experience as the customers doesn’t need to fill their payment information with every purchase online.

Alternative methods

With the increased use of smartphones over the years, many alternative payment methods have come into existence (including AliPay, WeChat Pay, etc.). These methods work when the merchant’s POS system scans a QR code on the customer’s smartphone which is already tied to their credit card or bank account and the payment is processed without the customer reaching for their wallet. In addition, peer-to-peer apps such as Venmo provide the merchant with a QR code that customers can scan by using the app on their phones to transfer payment for the merchandise they purchase. Venmo is popular among many merchants ranging from large retailers to volunteers selling Girl’s Scout Cookies at pop-up locations.

Frictionless Payments is the Starting Point

Consumers today don’t see the channel they are buying on. Starting a purchase on mobile device and completing it in-store feels like a natural progression, and it helps remove friction from the entire shopping experience. Making payments frictionless is just a starting point. As technology evolves, payments will become more frictionless and invisible. With the advent of artificial intelligence and machine learning, payment innovation will soon take the customer experience to a new level.

If you are looking to learn more about frictionless and invisible payments and how you can accept it in your business, get in touch with us.

Thomas Luke is Senior Sales Executive at Ingenico Group, North America