In the coming years, healthy friction will become a normal and expected part of the checkout process.
From Amazon’s one-click checkout to an increase in the availability of subscription goods, merchants are going above and beyond to create a frictionless checkout process. But what if some friction isn’t a bad thing? What if there is actually a healthy amount of friction at checkout? Take a look at the pros and cons of friction at checkout and how the customer mindset is changing.
What is Friction?
Friction during checkout is when obstacles slow or prevent a customer from completing a purchase. Examples of friction include a confusing checkout process, too many fields to fill out, or certain payment options not being provided. Usually, ecommerce merchants try everything they can to cut down on friction.
Merchants wage a constant battle between security at checkout and the friction that security causes. Too much protection may cause shopping cart abandonment and loss of sales. Too little security and merchants can end up with true fraud disputes and fraud loss.
Is Some Friction a Good Thing?
Anything stopping a customer from checking out must be bad, right? In a recent article, payment experts have started to notice a friction evolution and an attitude shift among customers. Over the last few years, respected and trusted companies have experienced data breaches. These breaches were highly publicized and made customers aware of the data they were handing over to merchants. The other effect of the breaches was that customers were worried that a fraudster would use their payment information. Because of this customer education, instead of security at checkout causing a bad customer experience, it can actually gain trust with your customer.
As a result, there are two types of friction: destructive friction and healthy friction.
Destructive friction includes:
- A confusing checkout process
- Making a customer sign-up for an account
- Lack of payment options
- Fees not being upfront (such as shipping costs)
- Too many redirects
Healthy friction includes:
- Offering stepped-up authentication (such as an in-app push notification)
- Participating in Visa 3D Secure or similar programs
- Any authorization that is fully anticipated and acknowledged by the cardholder which gives them control over their authorization
The acceptable level of friction for customers may change based on the cost of the purchase. If a transaction is $10, customers will expect a low level of friction or authorization compared to a $250 purchase. Even though customers are starting to appreciate and expect some level of healthy friction, merchants should still balance friction and the ease of check out.
The Shift of Friction with PSD2
PSD2 is an EU initiative with the goal of making a single integrated market for payment services. The second Payment Services Directive (PSD2) was implemented in January of 2018, with the expectation of member states to have Regulatory Technical Standards starting in August 2019. While PSD2 includes 112 articles and 11 mandates, we will focus on SCA and how PSD2 requires merchants to have healthy friction.
SCA, otherwise known as Strong Customer Authentication, will require merchants to have a more secure checkout process. The goal of SCA is to improve the security of ecommerce transactions and reduce fraud. To accept payments affected by PSD2, merchants need to build in additional authentication. SCA requires that merchants have two of the following three verifications:
- Something the cardholder knows (a password or PIN)
- Something the cardholder has (a phone or hardware token)
- Something the cardholder is (a fingerprint or facial recognition)
For EU nations, SCA will be required on most card payments and bank transfers. This means that European customers will be accustomed to receiving this level of security behind every transaction. In the coming years, healthy friction will become a normal and expected part of the checkout process.