Okay wants to make the payment process as smooth as possible, specifically when it comes to customer authentication. While this is just one part of the payment process that can introduce friction, it is often where checkout abandonment occurs. In this post, we’ll try to describe some of the options that we’ve seen in the market regarding frictionless payments, including their strengths and weaknesses.
Simplifying the payment process has been a goal for merchants, banks, issuers, and payment processors for years. But this is no surprise, as statistics have consistently shown checkout abandonment being as high as 88%.
The most frictionless payment systems are the ones that require little to no effort outside of clicking a button. Amazon is famous for this with their 1-Click patent, which saves card information and a personal address to a file. The main disadvantage with this is that a customer still has to register, including their payment details, which might make some skeptical.
A payment vendor which has solved the “single click to buy” problem in an arguably more elegant way is Klarna. They allow website owners to embed a payment form on their website where Klarna “magically” remembers all the customer details. This means that no specific user registration is required.
However, with the stricter requirements from PSD2 today, the payment is often followed by a strong customer authentication (SCA), which introduces an element of friction, and surely inspires some users to abandon their shopping carts before paying.
How much friction is introduced by the customer authentication can vary wildly from issuer to issuer. Here in Norway, BankID is the de-facto standard and is used for eBanking, government services, and customer authentication for 3DS card payments.
With BankID, the website (or app) only needs to know your phone number and birthdate in order to initiate an authentication. The authentication itself is quite simple: you get a pop-up on your phone with some details of the transaction, and two random words that you have to compare with the text on the website. You are then required to enter your secret PIN on the phone.
The benefit of this is that you can use the same username (phone number and birth date) and password (4 digit PIN), helping merchants and banks get trustworthy identification that customers actually remember.
Interestingly, payment service providers (PSPs) have also started using customer phone numbers and birth dates to simplify identification for payments. Instead of entering a card number, you enter these two identifiers instead, which simplifies the beginning of the payment process. While you still have to enter the PIN on your phone, BankID has been promising to launch an app where you can use biometrics.
The process that comes with using BankID is much different from how it works with one particular large bank in France. Here, when ordering, you’re required to use your card number to identify yourself. When the SCA process starts, you’re told to open the app on your phone. To open the app, you need to enter your PIN. Once the app is running, you’re asked to authorise the payment, which requires another authentication, but this time it can be done with biometrics.
As you can see, the process is much more time consuming and complex - not ideal for customer satisfaction.
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Okay has focused heavily on the SCA aspect of the payment process. If the Okay SDK is used for authentication and is part of your payment app, then you will see just how much we have been able to fine-tune the user experience.
Instead of requiring the user to open the app, we’ll send a pop-up notification that, when clicked on, automatically shows the transaction details within the secure execution environment embedded in the Okay SDK.
To make the process even more frictionless, we recommend using biometric authentication, but with fallback to PIN if for some reason biometrics are not available. This makes the customer authentication process as simple as possible for the end user.
At the end of the day, the lesson is simple: adding extra steps to the payment process directly leads to checkout abandonment. But by making customer identification simple (like avoiding usernames and passwords) and the authentication process as streamlined as possible, you will reduce end-user friction. Less friction means more completed payments, and more completed payments means much happier merchants.
Are you in the market to reduce end-user friction? Read more about how the Okay solution works or book a demo today.