Why we’ll never look back from frictionless payment tech

We've all witnessed the exponential rise of e-commerce this year, with IBM figures showing projected growth of nearly 20% in 2020. The industry has effectively jumped ahead five years in just 12 months – and this is just in retail, so doesn't include the vast increase in other online transactions across both B2B and B2C industries.

But what we don’t see is the stacks of technology that underpins this rise. Payments are a key part of this, and paytech facilitates each part of the digital payments process as companies transact online. But we have a problem: nearly £114 trillion in worldwide B2B and B2C transactions occur every year, but until now, only a tiny portion were digital. And as those of you in the industry know, 'payments’ is just one word that covers a whole host of intricate processes and multiple stages that ensure a payment is processed correctly.

Setting up an effective payments procedure can seem like a complex ordeal, but it is fundamental to not only providing excellent customer service, but also to driving sales. When done correctly, the benefits can be vast; you might be able to service a whole new geography or attract customers by offering a plethora of different payment options, for instance, all of which can boost growth and revenue.

The rise of smart checkout tech

In the last few weeks alone, we've seen Klarna named Europe's most valuable fintech, and Amazon trialling technology that allows customers to pay by waving in its Go stores – proof that payments are at the forefront of innovation and big business in its own right.

So, against the backdrop of this year and the disruption that has taken place across all areas of business, it's been interesting to observe the simultaneous overhaul of the payments industry that is currently taking place. This transformation is being driven by changing consumer expectations, the uptake and accessibility of new digital technologies, and an attitudinal shift in how we pay and get paid. 

Juniper Research's recent report revealed that the value of transactions processed in retail by smart checkout technologies, where a frictionless model replaces the fixed checkout process, will reach £294 billion in 2025, up from just over £1.5bn this year.

Before the COVID-19 pandemic, none of us would have thought anything of physically entering a PIN on a Point of Sale (POS) device or exchanging cash by hand. But amid heightened safety and hygiene concerns, those businesses that have been able to quickly pivot or retrain their customers to leverage the technology they already had, are seeing the best way through the current situation

Jumping on the payments bandwagon

The numbers are there, but how can this kind of technology be used by businesses, and to what end? Well, expanding your digital presence via an ecommerce platform or mobile app, for instance, will be key to maximising the potential of frictionless payment tech and regaining traction with customers as businesses strive to recover and thrive in this new setting. 

And the stakes are even higher now, with customer expectations on service, delivery, content, price, and communications increasing since the pandemic started. Many people have had more time to make more considered purchases and the more companies have done for them during the difficult times, the more customers have come to assume this is normal.

For instance, retailers will be looking for innovative ways to maintain trust and make their payments processes as seamless as possible for both staff and customers, such as allowing the use of a mobile app in-store as an option for contactless payments. Another good example of the innovative tech available to retailers is eWallets. Most smartphones today natively offer Apple Pay, Google Pay or other eWallets, which can then be used for paying on a website, in a mobile app or via an in-store NFC reader. In addition to being contactless, this increasingly popular payment option is convenient for increasingly smartphone-dependent consumers.

And this doesn’t just have to be the preserve of consumer-facing companies. With the current crisis meaning more people working from home, companies are rethinking their office spaces and remote working policies altogether. One impact that we are seeing is that B2B businesses are reassessing their reliance on physical payments altogether. As people look to avoid paper, switching to electronic invoices and allowing your customers to pay electronically will speed the time it takes to get paid, while also eliminating the need for a physical exchange of documents.

Matchmaking with PSPs

One of the good things that comes with the complexity of the payments market is that there are lots of options to be explored. Different payment service providers (PSPs) unique offerings can bring a host of benefits including fraud protection, chargeback management, tax remittance, and comprehensive reporting, to name a few. When looking at the broader picture of your balance sheet, the right PSP should strive to boost revenue, reduce friction in the checkout process and streamline many of the manual back-office processes involved in reconciling payment data. 

The potential for online businesses to operate across borders and in new markets is a good example of where PSPs can help grow profit from a new revenue stream. Trading internationally can be an overwhelming prospect if you are new to ecommerce, but picking the right payment provider can dramatically help to simplify that process and maximise your margins.

Ultimately, the right payment partner can help businesses to create the most modern, seamless and efficient checkout flow as possible, minimising the risk of obstacles such as checkout abandonment and enhancing the customer experience. Businesses facing the potentially cold, harsh light of the new market that they are now operating in, can find comfort in leaning on a PSP to help navigate the complex world of payments. And with frictionless tech at their fingertips, they’ll never look back.