The Evolution and Promise of Frictionless Payments

Cards, clicks and devices seen as building blocks of digitization

Friday, October 1, 2021

By Ed Whitehead


Editor's Note: Technology has been streamlining and accelerating commerce for decades, but the supporting payment systems have not quite kept pace. Efforts in the U.S. to implement real-time payments, mitigating credit risks and settlement delays and paralleling innovations in some overseas markets, were described earlier this year in Faster Payments Pick Up Momentum in U.S. Advocates of digital currencies argue that they are an ideal vehicle for taking friction - and costs - out of payment processes.

The following point of view from Ed Whitehead of Signifyd, a specialist in e-commerce protection, traces the historical context that has brought frictionless payments within reach.


Frictionless payments are essential for e-commerce platforms to reduce the barriers between online shopping and completed checkouts. The buying process needs to be easier for both the customer and the seller, because an enjoyable user experience leads to higher conversion rates and fewer abandoned shopping carts.

Effective frictionless payments are essential for both large and growing businesses. When done right, frictionless payments improve the checkout process by eliminating waiting times, which creates a faster checkout experience. It's all about simplifying the steps towards a completed sale. Ultimately, frictionless payments should feel like a natural part of the customer experience.

Understanding how frictionless payments have developed and reviewing the history of buying processes will help us understand how businesses will be able to continue their growth in the digital age. So, let's explore the evolution of frictionless payments and predict how businesses will drive higher conversion rates and create better customer experiences in the future.

Debit and Credit Cards

The credit card was developed in the mid-20th century, but it wasn't until 1973 that the card payments system was computerized. This type of frictionless payment reduced transaction times to one minute and gave rise to the era of electronic consumer payments.

Computerized payments would eventually allow for future online transactions, where e-commerce businesses could contact banks to finalize payments with ease. In 1994, Stanford Federal Credit Union in California was the first financial institution to offer online internet banking, leading the way for online transactions to begin in 1995.


Bookseller turned global conglomerate Amazon patented an online transaction process called 1-Click in 1999. This allowed customers to buy products with a single click of a button. Items could be purchased in a flash, at the product level, without adding to a shopping cart. Voila: no shopping cart abandonment.

With 1-Click, personal and bank account details are stored online, safely assuming that users are content with the same delivery address and bank account being used for every transaction.

The patent has since expired, meaning that businesses can commonly utilize this frictionless checkout method. Given the global average rate for shopping cart abandonment is 69.8%, skipping over the shopping cart means that e-commerce businesses can maximize their conversion rates and generate more sales through this simple process.

Chip, PIN and Tap

A more recent credit and debit card development contributed to the evolution of frictionless payments. In 2003, the introduction of “Chip and PIN” in the U.K. allowed cards to store data in a small chip on the face of a card. This data could then be accessed using a four-digit personal identification number to authorize the payment. The American conversion to Chip and PIN was announced in 2012 and completed in 2015.

Payments offer insight into business growth in the digital age, Ed Whitehead writes.

This process did not only increase efficiencies for both customers and businesses by automatically authorizing payments, rather than signing a receipt. It also curated a secure form of payment. Only those with access to the card and the secret PIN could access the account. The advance demonstrates how frictionless transactions can be made easier, but importantly more secure, at the checkout.

Contactless payments were introduced in 2007, making the checkout process even easier. Today, one in five card payments is contactless.

The Mobile Revolution

As mobile phones got smaller, they became as much an essential accessory as a wallet or purse. They're with us all the time. So it's not surprising that these handheld devices have become ingrained in the checkout culture.

Leading mobile manufacturers and developers Google, Apple, Android, and Samsung all launched digital wallets between 2011 and 2015, allowing users to complete transactions with them rather than their debit or credit cards.

These transactions had the added security benefit of authorizing payments through a fingerprint or facial scan. Furthermore, these digital wallets could be used in-store or online, storing personal data to automatically fill in those arduous forms with personal details, delivery addresses and billing addresses. The innovation helps further speed up online sales and transactions.

Now and the Future

As online transactions become easier and quicker on the customer side, some obstacles for businesses to achieve a completely frictionless payment remain. Businesses must ensure that they balance the risks and rewards that come with streamlining checkout and ensuring protection from fraud and abuse.

As the popularity of omnichannel sales, digital wallets and 1-click buying continues to develop, innovative ways to maximize sales without being affected by fraud and abuse have been developed. Commerce protection platforms such as Signifyd drive automated decisions on all transactions, approving more good orders and recovering lost revenue from chargebacks. This streamlines the customer experience, limiting the need for authentication forms and processes.

Overall, commerce protection feels like a natural part of the checkout process, going unnoticed by customers, and they can increase conversion rates by 4% to 6% on average.

Frictionless payments will continue to improve, creating better customer experiences and improving business performance. As more sales move online, and transaction speeds and efficiencies increase, it's important to tackle attempts at fraud and abuse. At every stage of the evolution of frictionless payment, new processes are helping to make every transaction safer and more worthwhile for customers and businesses.

Ed Whitehead is managing director, EMEA of e-commerce protection provider Signifyd.


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