Few markets face as much fierce competition as eCommerce. With giants like eBay, Amazon, and Walmart dominating the industry, companies need to differentiate themselves in ways that will not only attract customers but encourage them to buy more. Establishing customer trust and loyalty, creating a flawless user experience, fast online storefronts, and rapidly adopting new technologies are all a given necessity, not a choice.
One of the challenges online retailers face is transaction abandonment. 53% of customers abandoned a transaction in 2018, resulting in lost revenue in the billions for retailers. With so much at stake, it's vital that online merchants make their shopping experiences as easy and as engaging as possible.
So Close and Yet So Far: Losses Due to Transaction Abandonment
Abandoned transactions carry huge amounts of lost potential profit. 20–30% of eCommerce customers abandon the checkout process during the payment phase, even after providing personal and delivery information. For 36% of online retailers, at least 40% of mobile payments are abandoned during checkout. While the reasons for abandonment vary, nearly two-thirds of shoppers cited having to remember authentication details, like passwords, as the primary reason.
Online Payment Friction Points
Payment is a double-edged sword in eCommerce. On the one hand, customers need a variety of ways to pay for products securely. On the other hand, each payment method involves an intricate dance between your eCommerce platform, payment processors, credit/debit card vendors, and banks. Let’s not forget about compliance regulations that dictate the level of authentication needed. During this dance, customers are often asked to authenticate themselves multiple times. Each of these hurdles causes a break in the customer's purchase flow and is an incentive to leave the transaction for something easier.
Specifically, for mobile users, the process is (a) more frustrating and (b) vulnerable to more attack vectors. The payment process often bounces customers to different sites that are not optimized for mobile, slow to load, require some form of step-up authentication, require them to open an account or use a password (one of many) that the customer doesn't remember. Through no fault of the service provider, the customer gets too frustrated to follow through with the order.
Friction Point Walk-Through
To illustrate this problem, imagine Tim is placing a typical online order.
- When Tim clicks ‘Pay Now,’ he needs to authenticate himself. Many websites let users save their billing and shipping information, which usually means remembering a username and password.
- Tim enters his payment details and is redirected to a payment gateway, which verifies his payment info. This might require more information, often personal data, that Tim needs to remember - creating delays.
- Tim is redirected back to the service provider page where he is asked to confirm whether he wants to make this payment.
- If any errors occur or if authentication fails, Tim may need to authenticate again.
Poor experiences like this contribute significantly to transaction abandonment. Without even factoring in the customer's mood after the process, this negative experience influences a customer’s decision whether or not to revisit this website.
Passive Authentication - Reducing eCommerce Transaction Abandonment
Sharon Manikon, Managing Director of Customer Solutions at Barclaycard, emphasizes the importance of embracing new technologies: "Payment technology is continuing to evolve at pace and...small businesses who don't keep up with this rate of change are potentially missing out on both sales and customers."
Reducing friction means using an authentication method that doesn't require customers to jump over multiple hurdles. Making transactions as easy as possible can drastically reduce the abandonment rate. Fingerprints and facial recognition scans are a good start (AKA static biometrics), but merchants need to go one step further.
The chosen solutions must take securing against fraud into account. Cybercriminals have developed sophisticated methods of bypassing traditional fraud detection methods such as device fingerprinting and rule-based detection. Account takeover (ATO) fraud alone cost merchants and consumers $5.1 billion in 2017. In addition to offering a smoother experience, merchants need authentication solutions that aren't vulnerable to theft or copying.
For this reason, more apps are recognizing the value of behavioral biometric authentication, providing high levels of security while reducing friction and working seamlessly in the background. For customers, it's a no-brainer: instead of remembering dozens of passwords, simple combinations of a few gestures (a swipe, a tap, etc.) provide sufficient data to authenticate themselves. Furthermore, they do not need to provide any personally identifiable information, so they are more likely to want to complete the payment. The result is faster and safer transactions for both customers and merchants.