UKTN: Digital payments: between security and experience

Customers expect better and better customer experiences with as little friction as possible. Merchants pull out all the stops to ensure an optimal customer experience without compromising the safety and security.

Three examples of removing friction:

Buy now – Pay later: In this case, customers do not have to pay at all at the moment they buy the product. The payment is delayed and is executed at a later date or the payment is split in instalments.

Checkout-free: Customers do not have to wait in a queue in order to pay for their products in a store. The stores are cashierless. However, the payment still takes place when a customer leaves the store with a bag of products. The store keeps track of customers’ purchases by a combination of sensors, computer vision and machine learning. When the customer leaves the store with his/her products, the total costs of the product are charged to the customers’ account, for example via an APP.

Mobile-minded: Mobile commerce is growing exponentially. Consumers browse a lot of webstores via their mobile phones. While mobile phones are widely used to shop in webstores, many retailers’ webstores are still not optimized for mobile phones. Retailers have to switch to a mobile mindset when it comes to online payments and have to invest in optimizing the mobile experience. Progressive Web Apps (PWAs) can help enhance the mobile experience and enable quick debit and credit card payment set up.

The advent of PSD2

While retailers want to make their online payments processes as frictionless as possible, they also have to be compliant to the new rules and limitations that PSD2 brings. One of those rules is the obligation to implement two-factor authentication on all transactions above £30. This means a customer has to prove his/her identity twice to finalize the payment. In order to provide a frictionless experience for the customers, retailers have to think about ways to make the two-factor authentication as easy as possible. For example, a fingerprint scan on a mobile phone.

Additionally, awareness is very important for retailers. Retailers have to be aware of the importance of making customers feel at ease when they process a payment. This limits the amount of purchases that are canceled by customers during the payment process.