Mobile Payments - Judopay

Mobile Payments

Written by Jeremy Nicholds, CEO of Judopay.

Judopay is a ‘mobile-first’ payments solutions provider and processor. We help businesses in multiple sectors and multiple markets to provide a best in class checkout experience for their customers. Whether this is traditional e-commerce, mobile web or increasingly via in app payments on your mobile device which is becoming ever important.

My topic today is that of mobile payments.

Mobile payments is a broad subject area covering a range of different payment types. From forms of mobile money such as M-Pesa used in developing countries, to mobile form factors using NFC technology such the ‘Pay’ programmes, QR based applications such as Alipay or Yoyo Wallet, to mobile banking app facilitated payments and transfers using faster payments or ACH type rails, and more. There are enough alternatives to focus a whole conference on, and each payment type will continue to grow and become more mainstream, but today I’m going to talk about mobile commerce in the form of mobile web or in-app payments which we believe will be very significant indeed.

The demands of a consumer are changing. People are increasingly buying on the move and we’re constantly connected through our devices. Where not so long ago you used to have a computer in the corner of a room, we’re now always online, and our handsets hardly ever leave our hand or person.

We order food in the office to arrive at the same time as we get home, in a cab that we order and pay for through our mobiles.

We book flights from our mobile, train tickets from our mobile – and in fact do every kind of shopping from our mobiles.

We even go to the pub, and order drinks and food through an app to the table, paying by app and splitting the bill there and then with friends.

As time goes on we’re getting increasingly used to this. Helped along of course by the tech giants of the world resetting consumer expectations, making their particular checkout or purchase experience super quick, simple, seamless and safe.

Rarely do people think about how clever the Uber experience is. It’s becoming a consumer expectation that transport should be that easy and expect transport to be readily available when they need it. They expect it to know where they are, and where they are likely to be going and expect the payment to just happen, to be almost subliminal, automated and instantaneous.

Other companies are following suit and for good reason. That’s because time spent in apps grew across the globe from 2016 to 2018 by 50%. Companies without apps or without a really slick web presence are beginning to be disadvantaged.

Whether it’s to enable the crossover of a branded instore or online experience, for simply ease and accessibility, or to engender increased customer loyalty, apps are becoming a required feature for businesses across the globe.

For generation Z, who have grown up with social media at their fingertips, apps seem like an obvious way to win market share. But it’s not just about Generation Z.

There’s a shift across the market, 1 in 5 google searches are now done by Voice. More and more people are engaging with mobile technology of one sort or another and the internet of things is starting to take shape. All powered by mobile technology.

We’re not quite there with fridges ordering milk when you run out or your car automatically buying petrol when you fill up in a station, but we’re getting there.

So how best to prepare as a retailer or merchant for this mobile age?

And how to make sure that your payment experience is fully fit for purpose.

As always it is vital to see things through your customer’s eyes. To understand the context and environment in which they are making a transaction, and then to experience their customer journey with your brand for yourself.

The environmental factors are key in mobile commerce.

Making transactions on the move means that a consumer is potentially faced with more noise and interference, more interruptions including a potential loss of signal.

We therefore have shorter time windows to conclude a transaction satisfactorily.

Remember also the limitations of a 6”x2” screen in possibly poor light conditions for data entry, not great.

So be clear on what information you’re seeking to collect or rather needing to collect? How many data fields do consumers need to complete, how many clicks end-to-end and therefore how long does a purchase typically take?

The average checkout journey is 2.25 minutes with 22 being the average number of clicks. Hardly a one-click checkout!

No surprise then that worldwide cart abandonment is around 69%, measured by Baymard. There are of course a range of different reasons for this but a number of factors are fully avoidable.

A poor guest checkout experience – or indeed an absence of one – is a key reason for abandonment, especially with long complicated processes.

A significant amount of sales lost each year then by merchants who have introduced or allowed friction into their checkout flow, and aside from the immediate economic impact additionally there is ultimately a loss of trust in the brand.

Typically customers remember the beginning and end of the journey and these are the 2 areas which have the biggest dropout – so sign in / create an account and then the payment piece – which is why it is so vital especially to have these 2 parts as frictionless as possible.

So how do you take friction out of the process? A somewhat trite answer would be to make sure that you are working with a payments processor whose tech solutions are fully native and build for the mobile age. I can think of a couple!

Some other thoughts – focus on removing steps.

  • Remove select card type if you have this. It’s not necessary and the customer has to do the process again if its wrong.
  • Include card image – it gives customers reassurance.
  • Limit the number of characters in card field and auto space.
  • Provide guidance on errors to minimize the chance customers that have to go through process again.
  • Autofill card name based on previously filled details or even better remove unless you’re using this.
  • Autofill addresses.
  • Include card scanning as a feature – where you’re putting a card on file.
  • Utilize card digit checking to ensure the correct number is entered.

There are a range of improvements you can make.

One key one being to include Apple Pay / Google Pay or other APMs if you can. They solve a number of issues and there is a significant improvement in abandonment rates.

On the subject of friction, a key point to mention is in relation to the mandated introduction of Strong Customer Authentication or SCA by the various European authorities as part of the second payment directive. This new regime comes into effect on the 14th September 2019 and will have a significant impact on the consumer shopping experience, in that once SCA comes into effect, for online/remote payments there will be a requirement for additional authentication in the checkout flow.

SCA requires authentication to use at least two of the following three data points:

  • something the customer knows (e.g. password or pin)
  • something the customer has (e.g. phone or hardware token)
  • something the customer is (e.g. fingerprint or face recognition)

Whilst there are a number of exempted transactions where SCA will not likely be required, such as low risk transactions below 30 Euro, or customer white listed merchant transactions, or transactions scored with risk based authentication by acquirers with low fraud rates – the fact is that most transactions will be impacted.

It is thought that following the introduction of Strong Customer Authentication (SCA), at least 60% of transactions will go through 3D Secure authentication filters, compared with something like 25% today, and that up to 50% of transactions will require ‘Step Up’ Authentication compared with roughly 2% today. A very significant increase indeed, which will inevitably add friction into the consumer shopping journey.

All payment schemes are concerned by this of course, and doing their best to make available solutions that meet the SCA requirement without destroying a great checkout experience. In terms of 3D Secure, the new version 3DS 2.0 is much more geared to today’s demands for mobile commerce.

There is much work to do, and merchants need to be engaging with their PSPs and acquirers to ensure that they are well prepared, and not facing a situation where levels of declines dramatically increase.

Also look at solutions like Apple Pay which meets the criteria whilst offering a frictionless payment experience.

What’s the best way to prepare – is a question we get asked a lot?

  1. Make sure you have 3DSecure (1.0 or 2.0) as part of your payment flow.
  2. Evaluate solutions like the ‘Pay’ programs as I’ve just mentioned.
  3. Improve your fraud controls with your PSP so fewer transactions require additional authentication.

Remember though that SCA is being introduced to create a safer experience for your customers and to reduce fraud to your business.

As mobile payments become more of an everyday occurrence. It’s expected that the UK will be cashless by 2024. Creating a better, easier, safer customer experience. I’ve personally been cashless for all of 2019 and seen no problems.

I fully believe that transacting on mobile allows for a better and a more personalized experience. Companies understand better your purchasing experience and can tailor shopping to meet your individual needs.

But it’s understood that’s not without its issues.

Not everyone is comfortable with data sharing – some people feel that it could feel like machines are making decisions for us, or that corporations have more power than politicians, if they are holding more data.

These could all be explored as presentations of their own I think.

For those who want to share their data, Which is many people… Not just your native Gen Z… although 28% of gen Z would give up friends or money to keep their mobile.

But cross-generationally, people are already benefiting from customized experiences.
For example Yoyo is a client of ours that is working to create a more rewarding shopping experience – where retailers will be able to reward their customers in a better way and provide benefits that are.

  • relevant to a particular consumer.
  • fully contextual – all informed by fully permissioned consumer basket data.

And with the new open banking freedoms such as access to account– used properly – I think that we’ll be seeing more offerings and a much greater use of data for the consumers benefit.
But whilst this move to cashlessness has many advantages.

We must not leave anyone behind! Including older generations, and those who do not have ready access to bank accounts.

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