A smooth, fast and convenient payment method is essential for both customers and online businesses. Besides, at the checkout, customers are looking for payment methods that personalise the checkout experience for them, yet are secure. Enter frictionless payments. As the name suggests, frictionless means without any interruption, smooth, or without any additional steps. Frictionless checkout has become more popular these days. The basic idea is to give customers an option for trouble-free payment for what they want to buy.
The Indian eCommerce market is growing exponentially and is on the way to reaching $200 billion by 2027. This number is huge, and it means it’s high time you start focusing on frictionless checkout to give your customers a wow experience. The average cart abandonment rate is around 68% in 2022, and the primary reason is an inefficient checkout process or lack of frictionless payments.
This article will discuss frictionless payments in detail – right from the definition to its advantages, types, and future aspects. So, keep reading till the end to find out why frictionless payments have become the most desired trend lately and how it improves conversion rates.
- What are frictionless payments?
- Advantages of a frictionless checkout
- Trending frictionless payment methods
- Future scope of frictionless payments
What are frictionless payments?
Let us begin by understanding the meaning of frictionless payments. Frictionless checkouts or payments are data-driven approaches to payment methods which cater to one or more of the following aspects:
- Providing seamless experience
- Lowering the number of steps to checkout
- Reducing the consumer wait time and time to complete the transaction
- Reducing the need for input/clicks by customers
- Increasing conversions rates
Ever since the pandemic hit the world, with higher digital commerce adoption, there has been a significant increase in the demand for frictionless payments. Frictionless checkout is not a new concept but has been around for a long time. The evolution of frictionless checkout began with credit cards, followed by chip, PIN and tap payments. In recent times, fast payment methods like Buy Now Pay Later, and UPI has increased the demand for frictionless payments.
Advantages of a frictionless checkout
Now that we know the meaning of frictionless payments, it is time to look at its advantages. In one sentence, frictionless payments provide many benefits to customers and online business owners like you. Let’s have a look here:
Personalised payment methods and recommendations
In smarter checkout systems, where data checks happen before rendering of the payment page, customers see personalised payment methods. Business owners are able to provide a better experience leading to increased customer loyalty and higher average order value.
Reduction in cart abandonment
The most crucial benefit of frictionless payments is reducing cart abandonment rates. Frictionless transactions make the entire checkout process fast, so leaving the payment page or cart is no longer a choice. Frictionless checkout minimises the number of steps involved, thus ensuring customers complete the checkout process in a super-fast manner. As a result, eCommerce companies are investing heavily in the frictionless checkout process.
Improving customer satisfaction
As customers can pay with just a tap or click of a button without worrying about the payment security, they have a sense of satisfaction now. Since frictionless checkout increases customer satisfaction by completing the checkout process quickly, it increases the overall conversion rate. Thus, it is a win-win situation for both customers and retailers.
Saving a lot of customer time
Since frictionless payments enable checkout in a few clicks, customers save a lot of their time. Completing their payments in seconds. They don’t have to spend much time completing the purchase or remembering the passwords and entering OTPs. Instead, customers can complete their shopping journey with just a single click.
Enhancing your competitive advantage
Customers love a wow experience at every stage. The final leg i.e completing the payment is not any different. Customers would always shop from stores or websites that provide them with a faster and more secure shopping experience with higher security.
Trending frictionless payment methods
Here, have a look at the most used types of frictionless payments:
Unified Payments Interface (UPI)
UPI or Unified Payments Interface is an emerging option for making payments. The demand for UPI has increased a lot and it slowing becoming customers’ favourite payment method. In May’22, UPI payment crossed all records with 6 billion transactions with Rs 10 trillion in volume. Most eCommerce companies are embracing UPI payments as their top choice for frictionless payment methods.
Innovative UPI checkout flows like Magik UPI are further enabling higher adoption of UPI at the checkout reducing the payment processing costs for online merchants.
Buy Now Pay Later (BNPL)
Buy Now Pay Later or BNPL finance enables customers to make single or multiple purchases and pay at a later date in a consolidated manner. It is emerging as a catalyst in this space, enabling easy short-term credit with interest-free repayments.
Merchants across categories are adopting this card-less mechanism to offer one-click checkout convenience, increase order size and lower cart abandonment.
Digital wallets, mobile wallets, and e-wallets help customers pay quickly via the available balance or via the bank account linked to it. Third-party mobile applications built on UPI have witnessed a tremendous increase in the last few years.
Future scope of frictionless payments
Frictionless transactions are a pain-free process for checkouts. Not just today; frictionless payments are here to stay. Its benefits will be seen in the future as well. Here are two scopes of frictionless payments for the future:
Fast one-click checkout
Card payments are full of friction with lengthy form fillups and multiple OTPs. So, instead of choosing that, you can opt for frictionless payments that are faster and more secure, like the Buy Now, Pay Later and UPI options. *Card payments take 120+ seconds to complete, while UPI payment is typically fast – usually taking less than 10 seconds with a one-click checkout flow. *Nimbbl data. The demand for frictionless payment methods is growing from all the key stakeholders of an online purchase i.e customers, online businesses and issuers.
Increased security demand
Customers are concerned about their data and want to do business with only those retailers they believe can handle their data well. This calls for an increase in the demand for security. Incorporating frictionless payment will mean more room for security in business processes.
This means retailers will have to move from basic regulatory compliance to advanced internal security standards like improving source code and partnering well with the payment providers.
The frictionless transaction offers a seamless payment experience to customers and retailers. Going by the advantages, we can say there is a lot more scope for frictionless payments in the future. Therefore, businesses must incorporate frictionless checkouts in their processes. The technology behind frictionless payments continues to evolve, now is the time to embrace it for a better tomorrow. The progress of frictionless payments will bring in satisfied customers, increased conversion rates, and a trouble-free checkout experience. To sum it up in one line: frictionless payments are the future.
Nimbbl offers a faster checkout experience to its customers while maintaining the security and privacy of online payments. Give your business a boost with faster payments and reduced checkout page abandonments.
Frictionless payments and contactless payments are different because the former can be used both online and offline, whereas contactless payments can only be used in offline shopping. Frictionless transactions smartly use customer data for the shopping experience, while contactless payments require contactless cards or radiofrequency payment options.
Frictionless tech is any form of technology that focuses on making the shopping experience convenient, smooth, faster and better. In other words, frictionless is aimed at providing the customers with a wow experience.
A payment is frictionless when it follows specific criteria like fast checkout and minimising the number of steps needed to complete the payment. It doesn’t require your customers to enter OTPs, passwords, or log in to complete the purchase.