#Payment Technology

Going frictionless with one-click checkout

Technical Innovation
4 Mins.

Businesses are constantly looking for ways to streamline their customers’ online checkout experiences – and so minimize the number of carts they abandon. To help address that challenge, the world’s most popular payment card networks have joined forces to create Click to Pay, making express checkout a universal, intuitive, and secure experience.

With e-commerce becoming an ever-greater part of consumers’ everyday lives, the checkout process – and the associated digital payment method – is not viewed just as a transaction enabler, but also as an integral part of the shopping experience.

However, the wide variety of cards, devices, forms, validations, and authorizations means the user experience is not always as fast, easy, and reassuringly secure as it could be. The result: frustrated users, countless abandoned carts, lost sales, and reputational damage.

What’s clear from industry research is that if a merchant can provide a slick, intuitive, low-friction checkout process, conversion rates can be dramatically increased. Analysts at GlobalData argue that consumers increasingly demand convenience from their online payment tools: its 2021 Financial Services Consumer Survey recorded 43% of e-commerce users saying “simplicity and speed” was their most common reason for choosing and using a particular payment tool for online shopping – or not.1

So, naturally, businesses are constantly on the lookout for innovative ways to address this challenge and improve the customer checkout experience.

Rising to the challenge

It is hardly surprising that many consumers are frustrated with online purchases, given their experiences:

  • The average number of clicks from purchase decision to checkout completion stands at an astonishing 23, amounting to an average of 2 minutes and 7 seconds2 – and even more if the customer is encouraged/forced to register
  • A lack of consistency in online checkout processes also thwarts conversion; different merchants implement checkout and payments in sometimes bizarrely different ways
  • When consumers are sharing their card details with a merchant, there are often valid security concerns about how those are handled, moved around, and stored.
  • When entering card details by hand – commonly via small mobile screens – any error can send the customer back to square one, interrupt the checkout flow, and result in a loss of revenue for the merchant
  • The customer challenges with such processes are reflected in the high frequency of cart abandonment: rates are currently running at 56% in Europe and 69% in the US3, with 25% of abandoned carts due to long, complicated checkout processes, a figure that rises to 30% when shopper registration is required.4

Efforts to resolve this situation have already given rise to the widespread use of card-on-file facilities, where customers’ payment credentials are logged securely (as tokens) and then available for future use, enabling them to auto-fill their checkout details and complete transactions quickly.

That approach is certainly widely seen as beneficial and is driving huge growth in tokenization at the network level. A new analysis from Juniper Research estimates that the annual number of tokenized payment transactions will exceed 1 trillion globally by 2026, up from 680 billion in 2022.5

That won’t be a surprise to issuers and merchants. Tokenization protects customers’ stored payment credentials by replacing sensitive data with token values that hold no intrinsic value. This prevents malicious actors from gaining access to payment data in the event of a data breach.

However, a big factor accelerating the adoption of tokenization is the rapidly increasing popularity of one-click checkout, say market analysts at Juniper Research. As e-commerce merchants and card networks seek to reduce purchase friction, they want to encourage mass adoption of tokenization to improve security checks and therefore payment approval rates.

“A fast and frictionless checkout process can significantly boost business conversion rates,” says Alex Gatiragas, Director, Digital Payments Solution Experience at G+D. “That’s why merchants and payment providers are continuously looking for ways to improve the customer experience and increase sales and conversion rates. The easier it is for a customer to go from considering a purchase to finalizing it, the more likely they are to buy.”

Accelerating checkout flows

Woman pays with smartphone with only one tap

In recent years, the Holy Grail of easy one-click payments has been known by various names: express checkout, express payment, instant payment, buy-now button. What those have in common is a goal of enabling “express checkout flows” – letting customers check out and pay with the least amount of hassle.

The first wave of such tools was offered by individual merchants and card schemes (think Masterpass or Visa Checkout). Customers had to sign up with each service provider separately – which, if they used multiple cards, didn’t always save them much time. Now, card networks want to make the process more universal with a service that encourages mass adoption at the network level.

It’s a major, global commitment. The world’s most popular payment card networks (Mastercard, Discover, Visa, and American Express) joined forces in 2020, under the auspices of payments infrastructure standardized organization EMVCo, to develop a consistent, streamlined checkout capability branded as Click to Pay. Since then, they’ve been joined by China’s UnionPay and Japan’s JCB.

Their proposition is that a consumer can register once with one card issuer – or even with some larger merchants – to have secure, low-click checkout available for all the cards they use in the network – wherever they see the Click to Pay logo. In short, checkout is a consistent, fast, familiar, secure user experience – even when a user is on a website as a guest rather than as a registered user (around one in five e-commerce payments is actually a guest checkout).4

“Keeping checkout as a consistent, secure user experience is vital. And one-click in the shape of Click to Pay solves it all – the whole ecosystem benefits,” says Gatiragas.

Click to Pay unpacked

Here’s how it works: consumers set up their cards with Click to Pay via their mobile banking app or after entering details on the merchant’s checkout page for the first time. They can then save those for future use.

Once the card is logged, checkout is lightning fast. On selecting the Click to Pay logo at checkout, customers are presented with a list of all their registered cards, automatically and securely loaded. They choose which card they want to use and, after checking the information, they place their order, and payment is made. No forms, no additional authentication, no onscreen micro-typing.

Click to Pay offers the advantage of having in-built security measures, including tokenization and 3-D Secure, the protocol through which the domains of merchant, issuer, and interoperability interact to provide an additional security layer to card transactions. And, by default, it restricts access to customers’ card data. The data is stored on the card-issuing bank’s servers, and even the retailers that the customer is buying from cannot access card details.

But, as well as delivering compelling benefits to customers, express checkout in the form of Click to Pay is designed to benefit the entire online retail ecosystem: merchants, payment service providers, and card issuers alike.

Benefits and onboarding for merchants and Payment Service Provides

For merchants, the promise is to benefit from faster checkouts, which invariably means fewer abandoned carts and higher sales conversion. They can expect to see improved card authorization rates and a reduced risk of fraud too.

How is that enabled for them? Merchants with digital shopping applications (or payment service providers operating on behalf of a merchant) can implement the Click to Pay experience by partnering with a Secure Remote Commerce Initiator (SRCI). An SRCI (accredited by EMVCo) can position the merchant to initiate the first-time creation of the Click to Pay capability for the merchant’s customers.

Benefits and onboarding for card issuers

Issuers can enable consumers to push their card credentials to Click to Pay via the issuer’s mobile banking app or website by integrating with a push provisioning solution.

Through their card network partner’s interface, issuers can enroll card data and enable their members’ cards for use at any merchant that has adopted the Click to Pay solution. Members can either be pre-enrolled or enrolled in Click to Pay directly as part of their first Click to Pay checkout.

“Consumers can experience an easy, intuitive, and secure e-checkout experience, regardless of the payment card, digital channel, or device they use.“
Alex Gatiragas
Director, Digital Payments Solution Experience at G+D

From the start of the Click to Pay initiative, both merchants and issuers could see the advantages. “For merchants, it means an increase in conversion and security robustness,” highlights Gatiragas. “And on the other side, the issuers gain customer confidence, trust, and increased usage of the card for online payment, elevating the card to that coveted top-of-wallet position.” Click to Pay also benefits issuers by lowering the risk of fraud while giving them a degree of control over the provisioning of the cardholder’s data to the merchant environment.

For the US launch alone in mid-2020, more than 10,000 merchants had enabled the universal digital checkout solution for the benefit of their customers, according to Mastercard.6 And as the service has rolled out globally, that number has grown significantly.

It points to the fact that for the whole e-commerce ecosystem, the proposition has been long anticipated: by providing a frictionless payment checkout experience, there will inevitably be more happier customers, more card transactions, and more business for retailers.

  1. GlobalData, 2021 Financial Services Consumer Insight Survey

  2. PYMNTS.COM, Data Brief Q2 2022

  3. Fresh Relevance, “Real Time Marketing Report for May 2022”

  4. Netcetera Click to Pay

  5. Juniper Research, Payment tokenization market forecasts

  6. Mastercard, “Click to Pay: Mastercard expands simple and secure digital checkout experience in Asia Pacific as consumers flock to online shopping”

Published: 29/09/2022

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