It’s odd to think that it was only one generation ago that consumers would walk into a store with a wallet full of cash to make their everyday purchases. Today, it’s rare to see a shopper pay with cash or even carry money in their wallet.
The growth of payment platforms and gateways has paved the way for streamlining the ecommerce and in-store payment experiences and served as a catalyst for the popularity of peer-to-peer payments, mobile banking, and digital wallets. Research predicts payment software could net over $500 billion in payments by 2020, equivalent to about 80% compound annual growth.
Mobile wallets are now a common feature on most popular smartphones—iPhones have Apple Pay and Androids have Samsung Pay. Researchers agree that features like mobile wallets and quick checkout or one-click payment buttons will make it easier for customers to pay on their phones and tablets. Mobile web design is nothing new, and many retailers have been creating custom mobile experiences for years. That said, conversion rates on mobile are roughly half or less than those on desktop. PYMNTS.com’s January 2018 Checkout Conversion Index report estimates that $200 billion in sales are lost each year due to friction in the checkout process.
Consumers want a mobile payment process that is seamless, easy-to-use, and personalized, but, based on the data, online retailers are not living up to their shoppers’ expectations.
Complex Online Checkout Process
Consumers spend 51% of their time with digital media through mobile, as opposed to desktop, but smartphones consistently receive fewer conversions. Experts say the payment process is the number one factor contributing to this. In a recent article, Andy Baker, senior director of strategy and growth, global payments at Magento, says, “The majority of cart abandonment occurs during the payment phase because the process is too lengthy and complicated, which can deter customers from following through with their original purchase.” He continues, “Difficult mobile experiences drive poor conversion rates and encourage customers to go to the competition that have easier checkout processes.”
In the typical online checkout flow, customers are asked to provide various information through a form. While forms are widely used, it is still seen as a painful process for most mobile shoppers when checking out. On average, it takes 22 clicks to check out online, which is likely why one in four customers indicate a long or complicated checkout process as a reason they didn’t complete their purchase. 22 clicks would be tedious enough on desktop, and even trickier on mobile. The screens are smaller, making it easier for a shopper to make a mistake or click on the wrong button when checking out or inputting their payment information.
There has also been significant research on how users hold their mobile phones. Most users use their thumbs—only 28% use their index finger. For thumb users, the ideal location for form fields is just below the middle of the screen. This makes it easier for consumers to input their credit card information if they didn’t set up their mobile wallet or are not using a payment app.
With mobile wallets and quick payment buttons, shoppers can store their credit card and shipping information, so they only have to remember a password or tap their fingerprint at checkout. There are now several payment tools for this solution: PayPal, Masterpass, Visa Checkout, Apple Pay, Google Pay (formerly Android Pay), Pay with Amazon, and Wallet in the Target app. Each promises to make the mobile payment process quicker. These types of tools are estimated to expedite the checkout process and increase mobile conversion rates.
For example, when US Polo Assn. implemented a quick payment method, they doubled their mobile conversions. The online brand offers their shoppers both PayPal and Amazon Pay, making the checkout button the width of the screen so customers could easily tap the button with their thumb. 25% of their mobile purchases go through PayPal versus 10% through Amazon Pay.
The Hassle of Getting Your Credit Card Out
How many times did you find yourself shopping online while in bed, only to proceed to the checkout and realize your credit card is in your wallet downstairs? And how many times did the hassle of getting your card stop you from making that purchase? For some of us, it can sometimes be a good excuse to avoid late-night purchases. But for businesses, this friction only increases their abandonment rate.
In a recent study, Visa found that 59% of respondents abandoned online transactions because their credit or debit card wasn’t close by. Features like autofill and mobile wallets help alleviate this friction, but this still requires consumers to initially set up their mobile wallet or save their information from a previous online purchase.
A recent survey found that two-thirds of US shoppers appreciate security protocols during online transactions. However, 42% of millennials would engage in more online transactions if there weren’t so many security hurdles, such as inputting a password, verifying billing information, or creating an account.
Consumers may not want to be required to jump through a series of security hoops, but, not surprisingly so, consumers want to be able to trust the brands and retailers they shop with and feel secure making a purchase on their site. A report found that one of the top reasons mobile users did not convert was due to security reasons. Shoppers are more likely to be swayed to complete their transaction if they recognize the payment gateway brand. For example, most consumers trust payment brands PayPal and Apple Pay according to Blue Acorn’s Head of Sales, David Shuford. Sprinkling their logos and copy regarding security throughout the entire shopping experience will put the customer at ease to complete their purchase.
Another stomach-dropping fear many consumers have around mobile wallets is losing their phone. In addition to losing photos, contacts, and messages when your phone is lost or stolen, you now have to worry about your debit or credit card information and falling victim to identity theft. Luckily, personal information on mobile devices are usually secured by a PIN or biometric data, but it’s never 100% foolproof.
For in-store payments, mobile wallets alleviate the need to pull out your card in public places and reduces the risk of skimming. Contactless payment terminals are becoming more widespread in brick-and-mortars. When a shopper holds their smartphone near a checkout terminal, the NFC (near-field communication) chip in the terminal subtracts the amount of the purchase from the card tied to the smartphone. The smartphone then uses that one-time code in lieu of the actual credit card number to add an extra layer of security during the account verification process. As a result, the actual credit card is never exposed.
Lack of Mobile Payment Options
Today, consumers want to dictate their own buying journey, including how they pay for their purchases. Ten years ago, an ecommerce site would only need to build one framework tunnel for credit or debit cards, but now stores need to accept a multitude of payment types. According to Shuford, most retailers want to integrate Apple Pay, Android Pay, and Microsoft Wallet, but not many people know how to implement them or have the resources to do so. Shuford says, “The issue many retailers face is being able to roll out additional payment methods on a tight budget, but fortunately, the integration is very similar for most payment gateways.”
It’s important for retailers to keep in mind that what will work for one consumer, won’t necessarily work for another or the majority. For example, Apple Pay is the second most used quick payment method, but the problem is you can only use Apple Pay if you have an iPhone and an updated version of the Safari browser. Fashion e-retailer Touch of Modern believes this is the reason less than 1% of their mobile site transactions go through Apple Pay, compared to over a third of transactions via PayPal.