Future of e-commerce payments: Friction, frustration

Future of e-commerce payments: Friction, frustration

I have a feeling that the future of e-commerce payments is going to be like that Christmas of 2011 when I got my first iPhone. Frankly, I didn’t know what to do with it. I put it back into the box and it sat there for months. And I waited nearly a year, when my previous (flip) phone breathed its last breath, and I was forced to use it.

It frightened me. It frustrated me. But I got used to it, worked through it and I’m glad I did.

When it comes to the future of e-commerce payments, I don’t recommend taking the same approach.

According to the panelists in the seminar titled Making Secure Customer Authentication and Frictionless Customer Experience Co-Exist at Money 2020 Europe, patience is going to be required when making an online, cross-border purchase.

The panel consisted of Moderator Amos Kater of UL; Brian Gaynor of JP Morgan Chase; Monica Monaco of Trans EU Affairs; Brian Crist of Uber and Gabriel McGloin of First Data.

Agree or disagree: Secure customer authentications are never customer-friendly

That very statement was presented to the audience and the panel before the seminar, with attendees answering via text. In the beginning of the seminar, about 65 percent disagreed – including 3 of the 4 panelists – while 35 percent agreed with the statement.

At the end of the panel, responses evened out somewhat, with roughly 55 percent disagreeing with 45 percent in agreement.

Here’s why: The panel spoke of the changes in secure authentication that are going to be in the works as soon as the end of 2017:

  • Much more emphasis on authentication: The consumer and the merchant must have mutual confidence that each is who they say they are.
  • Use – in some cases mandatory use – of 3D Secure 2.0, ascertaining the credit card holder is the real cardholder.
  • Use of 2-factor authentication methods: Answering 1-2 security questions in addition to use of a username and password.

Where will additional secure authentication steps be felt in e-commerce payments?

Quick…who has the fastest, most efficient payment experience in e-commerce?

  • Uber comes to mind: Customers contact Uber through the app on their smartphone, to which their payment method is established. The fare is automatically calculated, and the customer rates the Uber driver. Easy peasy.
  • Amazon is an excellent example: Once an account is created with payment details, it is only 3-4 steps to make a purchase.
  • iTunes is also a good model: With payment details already stored on an iTunes account, all the consumer needs to provide is a thumbprint, and within seconds a song is downloaded.

Before long, there may be some extra steps with digital retailers, such as answering a security question:

  • What is the name of your first school?
  • What is the name of your closest childhood friend?
  • In what city were you born?

Having to provide a password and PIN when prompted, as in the 3D secure model, is also a probability.

“The consumer will have a perceived safer environment, but they will get frustrated as a result of the extra friction that will be there when they’re trying to do a purchase,” said Mr. McGloin. “Over time, people will adopt and adapt. When 3D secure 2.0 comes out, there are going to be lots of innovative ideas in terms of how to authenticate a user through various biometrics. I think there will be particular methods that, once they’re simplified, will win out.”

As the authentication of e-commerce payments begins to take shape, it will also sustain the biggest fear of many merchants: Shopping cart abandonment.

Let us echo Mr. McGloin’s line: We must adopt and adapt.

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