Frictionless Payments

  • Wednesday, September 21st, 2016
  • Author: Tim Maytom
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barclays pingitAs the world becomes more connected, mobile technology is becoming increasingly central to the retail experience, but payments can still be something of a stumbling block, says David Barclay, vice president of mobile marketing development at Barclays.

The way that people shop is changing. In the UK, 66 per cent of adults now own a smartphone, according to the latest Ofcom figures, and these devices are playing an increasingly vital role in many different areas of life – not least the retail experience.

This shift is not just about people placing an order using their mobile device, although this is certainly a key part of it. Mobile technology is employed at different points throughout the purchasing process, from choosing an item to making the payment, with some customers changing device midway through the shopping process. Research by Nielsen in 2016 concluded that 72 per cent of people research an item on their mobile devices before making a purchase, while 70 per cent use their mobile devices to check prices.

This behaviour has also introduced new types of client categories, including:

  • ROPO (Research Online Purchase Offline)
  • BORIS (Buy Online, Return In Store)
  • BIMBO (Browse In Store, on Mobile, Buy Online)

Mobile-first, and beyond
In order to take advantage of this shift, businesses are increasingly adopting a mobile-first strategy. In the past, websites were designed primarily for desktop, with a simplified version for mobile devices built afterwards. This often meant that the mobile site was a lesser version of the ‘main’ website, with reduced functionality.

Increasingly, however, businesses are taking the opposite approach: they are designing websites specifically for mobile before creating a version for non-portable devices. As well as being optimised for the smaller screen of a mobile device, these websites may take advantage of uniquely mobile features, such as location services and biometrics.

So as people’s lives, homes and vehicles become more connected through technology, how can retailers provide a seamless transaction experience and what can they do to ensure payments facilitate that experience, rather than impede it?

As the world becomes more connected, retailers aim to tap into consumers’ lives in a number of different ways:

In the smart home: Through everything from smart TV apps to connected appliances, The Internet of Things makes homes more interactive from a retailer’s point of view. We’ve already seen fridges that tell you when they need to be restocked, and physical buttons that can be pressed to order specific items. In the future, digital assistants could help people organise their shopping lists.

In the smart car: In-car apps allow people to order pizza while driving, using voice command technology, or to activate pumps at the petrol forecourt and make a payment after filling up. There are even in-car delivery services, which give couriers a temporary digital key that can be used to open the boot of your car and deposit your shopping, before sending a notification to the customer’s mobile device that the delivery has arrived.

In the store: Click-and-collect services allow people to place orders from their mobile devices before collecting them in person. Beacon technology can be used to navigate people around stores while capturing information about who customers are and what their buying habits are. If a particular item or size isn’t in stock, it can be delivered to people’s houses within 24 hours, turning an in-person transaction into an eCommerce one.

mm suggestions-3Smoothing out the bumps
Retailers are taking advantage of these new and emerging technologies, in an effort to provide consumers with a smooth and seamless retail experience. All too often, however, the process of making a payment can interrupt this.

Arguably, a great payment experience is the element that makes the least impression on the user, but it’s no less important. When consumers are using mobile devices, their attention is often split between a number of different activities. A payment process which is overly complicated or inconvenient may prevent the transaction from being completed, even when items have been placed in the consumer’s virtual basket – a phenomenon measured by retailers through the basket conversion rate metric.

A smoother payment experience is likely to result in a higher basket conversion rate. The fewer steps a particular transaction requires, the fewer the opportunities for the consumer to abandon the transaction. Conversely, a payment experience that involves multiple actions, and the need to remember and input passwords and card details, quickly starts to feel like hard work.

Simply put, frictionless payments do not get in the way of the purchase experience. Mobile payments seamlessly integrate into the purchase journey, masking the underlying card or account number tokenised for safe storage and security.

Successful examples include PayPal, Apple Pay and Android Pay, as well as Pingit. Another interesting development is the Zapp Pay by Bank app scheme, which is being launched by Barclays and Lloyds Banking Group. When the customer opens their banking app, he or she will be able to view their bank balances before making a payment. The system is being hailed as an alternative to debit card payments.

It’s also worth noting that some people do not like giving out their personal details during a transaction and do not want to initiate a full relationship with a particular retailer. Many customers prefer an anonymous payment experience, and businesses may increase basket conversion rates significantly by making guest checkout options available.

Finally, with so many different payment types available, a key challenge for retailers is knowing which ones they should use. No one can offer all of the payment methods currently available – but nor can businesses afford to offer just one or two. The perfect solution will be different for every business, but will likely be a question of picking a suitable selection of payment methods based on the company’s specific needs.

Visit to find out more about frictionless payments and how Barclays can help you choose the best strategy for your business.

This sponsored article first appeared in the June 2016 print edition of Mobile Marketing. You can read the whole issue here.