Since the advent of the internet, everyone has obviously been used to card payments. However, in 2022 we’ve seen that card payments were not built for the online world, they are inefficient, inconvenient, and very expensive for businesses. To understand the significant shift towards direct bank payments powered by Open Banking, it is important to have clarity on the working of the payment cards first.
The payment card, essentially, is a token backed with a unique PIN or customer’s signature as authentication, which helps in identifying both the payer and the source to process any payment. Remember the last time you were shopping online, and you had to get out of bed to look for your bank card to complete payments? Yes, that weird experience! And then you had to manually type in 16 digits with the expiring date and CVC or CVV.
It has even gotten worse since the 14th of March 2022, when strong customer authentication (SCA) was introduced to reduce card fraud but consequently added additional friction to card payments. Shoppers now need to enter their address, a card number, CVC code and name and click pay. An iframe opens up, and they fill out their mobile number or email. They get a one-time passcode sent to their phone or inbox to confirm in the iframe. Once confirmed, they’re sent back to the checkout to fill out any eventual additional details before finally making the purchase. To pay via card, consumers must complete additional steps, making online payments more prone to errors and increasing the time spent in the checkout.
Here are some examples of the challenges shoppers face when using card payments:
1). High cognitive load
Shoppers typically ask themselves a lot of questions in other to complete card payment, this requires a lot of mental efforts and somethings might make them overwhelmed by the different fields:
– What cards are accepted?
– Do I need to enter my card number with or without spaces?
– What’s the expiry date format? (Some cards include the format MM/YY while others include the full year YYYY).
– Is this form secure? How do I trust this merchant?
Users need to fill in at least 5 inputs before proceeding and double check that the information is correct. 53% of sites don’t auto format spaces in the credit card number field, which increases the chance of errors and makes it hard to check the number.
3). Clunky mobile experiences
More people than ever are making payments on their phones. Most merchants don’t offer quick, easy mobile payment options, which leads to customers being forced to type a long string of numbers into a tiny screen.
4). No standard form input
Security codes are often not standardized. Every card brand has their specific convention (CVC, CID, CSC etc) and it can be 3 or 4 digits. The same goes for postcode entry as well as the expiration dates, which often use different formats.
Card details are relatively easy to hack. More than 23 million card details can currently be bought on the dark web for anyone to buy. Resulting in card not present fraud being 81% more likely than point of sale fraud.
6). Error handling
When there are mistakes in the data, typos and missing data, this translates into system errors, invalid information and card errors. In fact, 53% of sites don’t use Luhn validation, a very simple tool to determine whether a credit card number is correctly typed in. All these errors make it very easy for a customer to abandon the checkout page.
Here are some benefits of Account-to-Account (A2A) payments to shoppers:
1). Fraud resistant: say goodbye to card fraud since no one can steal your card to make purchases with A2A payments, customers approve payments within their own banking app. Account-to-account payments use the banks’ APIs to transfer money safely.
2). Better experience: Most importantly of all, A2A payments are made for digital and can be easily and smoothly integrated into the checkout process.
3). Control: Keeping the end-user in the driver’s seat – payments can only occur when the user consents to a connection and authorizes a payment transaction, users can initiate payments from within their ecommerce environment, with flows automatically redirecting users to where they need to be to authorize and effect the payment instruction without interfacing with any payment intermediaries.
4). Higher success rates: A2A payment success rates are better than traditional payment methods in many countries.
5). Fast, easy & convenient checkout. Shoppers can pay easily and quickly with their mobile banking app, without having to get out their card. Buying their favorite products from their mobile or laptop has never been easier.
6). More payment options. Shoppers are looking for more payment options when shopping online. Using their card or PayPal is not always convenient, so giving more ways for your shoppers to pay you, will not lead them to drop the purchase and move to a competitor that offers them a variety of payment methods.
7). Embedded rewards. Starting from Q3 2022, ShoppingOS is launching its new reward scheme, which provides loyalty points whenever a consumer uses “Pay with Bank” to complete purchases from our merchants app or webstores. We know it’s hard to encourage people to change their habits, so ShoppingOS will be rewarding shoppers with a range of exciting benefits.
ShoppingOS is a no-code Open Banking payment platform for e-commerce merchants looking to reduce their overall fees related to payment processing – sign up as a merchant today
Contact us if you’d like to know more about how it works.