Boosting Your Checkout Experience: A Guide to Frictionless Online Payments
Frictionless online payments are the holy grail of checkout experiences, and it’s a fact that checkout conversion rates depend on a positive user experience. Yet online shoppers now have higher expectations for e-commerce traders than ever before. This pressure can seem daunting to merchants who want to retain loyal customers while capturing new ones. As such, online shoppers now expect a seamless payment user experience.
Indeed, the issue of payment at checkout is arguably the most important step in the buyer’s journey. Yet customer frustration with the payment process has led to widespread cart abandonment when it comes to online sales. For instance, according to recent data provided by the Baymard Institute, cart abandonment rates currently stand at around 70% — meaning that only three out of ten customers who fill their shopping carts actually make it to checkout to complete their purchase.
Answering the key questions for achieving frictionless online payments
Thus, it’s vital for e-commerce merchants to understand what motivates this behaviour: What frustrations do online shoppers have with their checkout? How can merchants work alongside payment providers to deliver a better-quality experience and boost checkout conversion rates?
With that goal in mind, Brite Payments conducted a study early this year in association with YouGov, surveying six key European payment markets to comprehensively analyse customers’ online payment preferences, as well as some of the frustrations and setbacks they commonly encounter in their typical digital payment experiences. Checkout Part 2 of our Payment Insights webinar below to see what our payments experts thought of this in 2024:
In this article, we’ll explore some of these findings and interrogate some of their broader implications for the payments industry as a whole. In particular, we will focus on how to achieve frictionless online payments. We’ll also discuss how instant account-to-account (A2A) payments and other Pay by Bank options at checkout could be a way forward for merchants struggling with these issues. Read on to learn more.
The payment checkout experience: common online checkout issues
So, what are some of the biggest issues e-commerce shoppers have with their online checkout process? And how do these harm consumer demands for frictionless online payments?
According to the relevant data collected by our survey, the most common issues participants had with payments at online checkouts were:
- The need to create an account to complete a payment
- Needing to use an app to make a payment
- Too many steps or redirects
The main thing to notice about these answers is that they all seem to involve an extra step in the payment process. When purchasing, customers don’t appreciate being sidetracked.
In a recent webinar, Brite Payments Chief Commercial Officer Luke Trafford commented on this issue: “I think in the end, it’s all about friction. [Customers] are running a marathon through your website. They are at the finish line, and they just want to grab the tape. When you just put a wall there, they won’t be happy.”
The more steps, the more problems the customers seem to have — even if the long-term benefits of (for example) creating an account will lead to less hassle in the long term.
Looking at this with some empathy for our online shoppers, we can infer that customers don’t like to have their shopping delayed with tedious minutiae or extra steps in what should be a relatively straightforward process.
What can we take away from these findings? For starters, merchants looking to integrate payment solutions into their checkout process should always try to improve the payment user experience. They need to make frictionless payment their biggest priority and only include extra steps as an absolute last resort. If merchants don’t attempt to remove these obstacles, they’ll be unable to improve their checkout conversion rates.
But what steps can they take to achieve this?
How to get frictionless online payments right
Firstly, merchants should focus on removing obstacles, such as incorrect payment methods, to ensure a smooth and efficient checkout process for consumers.
Furthermore, merchants should present payment methods correctly, test user experiences, and ensure that the process is technically done in a stable manner. This is why it’s so vital to collaborate with a trusted and experienced payment partner who can support, consult, educate, and test everything beforehand — ensuring a smooth and successful checkout experience for customers.
Security, ease of use, and speed are essential aspects of every payment method, as they cater to customers’ needs. However, merchants often neglect the end-to-end implementation of payment solutions, which can impact logistics cycles later on.
Therefore, merchants must focus on the end-to-end perspective of payment. Unknown anonymity is also important for many people, especially with Pay by Bank and A2A payment solutions, as it allows them to pay without providing sensitive data. Merchants must prioritise these aspects to retain customers and maintain a positive, seamless customer experience.
Lastly, merchants should endeavour to offer a good mix of payment options in their checkout and be quick to adopt new payment methods if and when they occur. According to one study, two out of three customers will cancel a purchase if their preferred payment option is not being offered — meaning that a wide variety of options is crucial to ensuring a positive consumer opinion of their checkout experience.
Why a Pay by Bank checkout option is perfect for optimising checkout conversion rates
For merchants struggling to streamline the payment experience, and achieve frictionless online payments, increasing the number of payment options available to customers can be a viable solution. One such checkout option gaining traction across Europe is Pay By Bank. Let’s briefly explore Pay By Bank further for those unaware of it.
What is Pay by Bank?
Pay by Bank refers to payment methods that enable consumers to make purchases directly from their bank account without needing to use a credit or debit card. Examples of Pay by Bank options can include direct bank transfers, A2A payments, and open banking-powered instant A2A payments, such as those offered by Brite Payments.
Pay by Bank enables customers to see the immediate benefits of a payment in their account — with more advanced options, this can also include an instant receipt of payment and the ability to track the payment process in real-time. 50% of our survey respondents indicated that they liked Pay by Bank as an option because there were no extra costs or fees, while a further 46% cited the high security as a factor in their adoption of it as a payment method. Potentially, they offer merchants the best chance of offering shoppers frictionless online payments.
For merchants, the rise of Pay by Bank at checkouts is driven by three core points:
- Security: Pay By Bank methods, such as A2A payments’ security ensures even more secure transactions and prevents fraudulent activities. For example, in Europe, all open banking payments made must use both Strong Customer Authentication (SCA) and their bank’s security options.
- Cost: Costs of providing payments are increasing due to card interchange, digital wallets, and the interest rates associated with Buy Now, Pay Later. Thus, e-commerce merchants are looking for ways to reduce costs while still converting payments into sales, and Pay by Bank payments are one such option with its much lower costs and ability to provide funds instantly both for merchants and consumers alike
- Growth: A Pay by Bank product at checokout offers merchants the opportunity to grow their business by widening the number of customers who can pay for their goods — allowing them to access new opportunities and leads. What’s more, it is perfect for businesses across Europe as it is perfect for cross-border payments and scaling.
Currently, Pay by Bank usage is increasing and is set to see growth in checkout pages across key European markets. Thus, merchants must understand the differences between providers and challenge providers to understand how money moves from A to B to C when trying to achieve frictionless online payments.
However, it’s important to remember a Pay by Bank option at checkout is just another string to a merchant’s bow. It shouldn’t replace other payment methods altogether. According to Luke: “Pay by Bank is a complementary method for merchants and consumers and not a functional replacement for other payment methods. It’s very much trying to give more optionality, which I do think helps with adoption.”
How Instant Account-to-Account Payments lead to frictionless online payments
Instant A2A payments are perfect in e-commerce because they use open banking APIs and proprietary networks such as Brite IPN, which dramatically boost transaction speed, efficiency, and security. They are the best available Pay by Bank option to offer at checkouts for frictionless online payments.
Open banking is helping make account data more accessible from banks, allowing merchants to achieve more streamlined and successful payments and better cash flow and reconciliation. This, in turn, helps streamline the payment process for those customers who choose to use the payment method.
Indeed, this is where partnering with a payment expert, such as Brite, can be undeniably helpful for merchants looking to get the most out of the unique possibilities open banking and instant A2A payments offer.
Brite’s proprietary instant payment network (IPN) helps it to differentiate itself in the market. It allows for faster transactions and convergence, as money from the consumer’s account typically lands in an account with the same bank or market. Additionally, Brite can root transactions smarter and quicker, providing merchants with control flexibility, transparency on costs, and a better understanding of where the money sits.
Conclusion: How to get frictionless online payments
Based on our findings, merchants must work hard to understand and react to consumers’ needs in order to stay competitive and offer frictionless online payments in the e-commerce marketplace. They must also try to embrace new technology and payment methods to cater to and reach new customers while making payments as quickly and conveniently as possible.
However, understanding those customers depends upon a proactive approach to ongoing learning and research. Brite Payments constantly shares insights on the state of the European payment landscape and the global payments industry as a whole. So, if you want access to more payment insights or explore how Brite Payments can support your payment needs, visit our resources page to learn more now.
