Solving retail’s payment friction puzzle

When it comes to the checkout process for customers, speed and ease are key components. However, if a customer encounters financial difficulty, the checkout process can quickly go south. Any kind of barrier that keeps a consumer from completing their purchase is known as payment friction. This may require filling out a lengthy checkout form, having few payment options, or requiring a lot of personal information. The news for retailers is not good. The typical culprit behind cart abandonment, decreased conversion rates, and eventually, revenue loss is payment difficulty.

In a recent PaymentsJournal podcast, Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research, Suman Chaudhuri, Vice President of Revenue at CSG Forte, Javan Watson, Executive Director of Strategic Business at CSG Forte, and others discussed what causes friction in the payer’s experience, how to reduce it, and what tactics can be used without jeopardising a company’s bottom line.

Present-day Payer Experience Friction

Friction is usually thought of in relation to the online checkout process. However, payment friction can happen before to, during, or following a payment, according to Chaudhuri. Additionally, he advises companies to start considering the payment process as a journey rather than a one-time occurrence.

“When it comes to paying, today’s customers want options. They desire flexibility in terms of payment options, channel selection, and scheduling, according to Chaudhuri. Therefore, providing fewer options for payment channels, methods, and time leads to inconvenience, which raises the possibility of mistakes or missed payments and lowers overall customer satisfaction.

Chaudhuri noted clients’ escalating fraud concerns. Once the pandemic began, 60% of customer support reps worked from home. Customers may be reluctant to submit credit card information over the phone, making payments more complex and posing security risks.

Finally, isolated back-office systems cannot provide real-time information regarding customer payments or company reimbursements. “I believe that a contributing factor to the friction is the somewhat complicated checkout process,” Watson said. “Asking the client to enter more information than is strictly necessary.”

Businesses require new customers to register to build a database and provide discounts, promotions, and customised marketing communications. Watson said he often just wants to close the deal. Because many customers don’t want to give out their personal information, they may abandon their carts without a guest checkout option.

Watson also notes that sending clients to a third-party website instead of the merchant’s main website or providing limited payment alternatives can cause friction. Customers become distrustful of this, which exacerbates payment difficulties and cart abandonment.

“Customers want to be able to pay the way they want to pay,” Keyes continued. When they are unable to, it is annoying and they may give up on a transaction completely or at the very least become quite irate.

Credit cards, debit cards, ACH, BNPL, digital wallets, and many other digital wallet options have made checkout processes more distributed than ever. New possibilities appear daily. Companies don’t have to offer every option, but they should offer enough to satisfy customers. If not, people will be furious, making it hard for a company to handle.

Ways To Reduce Friction

Companies must meet customers where they are to reduce payment friction. Customers who don’t want to register should be able to check out as guests. Businesses must clearly display what and how much customers are being invoiced. To attract busy clients, organisations should make their websites mobile-friendly. Customers will become angry and less inclined to pay without these approaches.

Providing a variety of payment options reduces friction even further. In addition to the standard credit card, companies want to think about taking payments via ACH and digital wallets. Another successful tactic is to use tokenized, secure recurring payments, which eliminate the need for customers to submit their personal information each month in order to make payments. For enterprises, ensuring cash flow also means setting up tokenized recurring payments.

Chaudhuri stressed digitising the customer experience and eliminating payment friction. He recommends having a customer’s working phone number and address so companies can contact them before a payment is due. Having backup plans was also underlined. To promote on-time payments, he urges enterprises to contact or email clients if a bill is lost or unopened.

One thing that retailers frequently forget is how challenging it is to remove all obstacles from a customer’s first purchase, according to Keyes. Since you have never shopped there before, you must enter some information somewhere.

But what retailers frequently overlook is the extent to which repeat customers anticipate that there won’t be any conflict when they visit after the initial encounter. They desire to be completely remembered. They can tolerate signing in, but you won’t have a devoted customer if the payment details, shipping details, previous orders, and any other information aren’t available, easy to find, and need as few clicks as possible.

Putting Plans Into Practise Without Affecting Profits

The majority of companies are conscious that their clients encounter difficulties with payments and are willing to resolve the matter. Lack of funding and resources is the main obstacle to tackling this issue.

Watson advises companies to think about collaborating with a payment processor, such as CSG Forte, to help them. A low-code platform that is ready to use from CSG Forte can assist in meeting the payment requirements of companies of all sizes.

Chaudhuri also stressed the significance of leveraging analytics to identify which clients to contact and reminding them of payments via the channels of their choice.

The Payment Process: Prospective

Chaudhuri claims that analytics and artificial intelligence (AI) will be essential to providing businesses with a host of advantages, such as increasing the number of on-time payments, providing insights that help companies decide what to cross-sell and upsell to their clients, and generating customised customer experiences that increase client happiness and foster brand loyalty.

Keyes said that it’s important to provide the appropriate payment methods in addition to offering as many options for payment as feasible. It’s crucial to avoid providing clients with an excessive number of digital wallet options. AI analytics can help firms approach each customer with the most suitable payment alternatives depending on what they usually use by revealing which payment methods customers use most frequently.

Companies ought to keep making optimising the customer payment journey their top priority. Increased client happiness, timely payments, and a steady cash flow are the results of doing this.