The mobile online checkout gets an express lane

Deloitte predicts that in 2016, the number of individuals who use a third party touch-based payment service to make a purchase on their mobile devices (smartphones and tablets) should increase 150%, to reach 50 million regular users.

What is touch commerce?

Touch commerce enables a customer to make a secure first-time or subsequent payment on any merchant’s website or app without having to provide registration or log-in details either to the merchant or to the payment service. Authorising the transaction on a mobile device simply requires the application of a fingerprint or a few touches of a screen, significantly reducing the time taken from browsing to transaction from tens of seconds, or even minutes, to mere seconds.

Touch commerce enables retailers to exploit shoppers’ increasing use of mobile devices to browse retail sites and apps. Transactions on sites and apps remain scarce, with laborious payment processes often to blame. Indeed cart abandonment in mobile commerce can be as high as 80%. Easier checkout has been identified as a key factor/key requirement for increased mobile buying.

Touch commerce: how does it work?

There are likely to be two principal types of third-party touch-based mobile payment services in 2016:

1. One is linked to the device’s operating system (OS). Shopping applications can use existing information associated with the OS, including payment card details and home address. Deloitte expects this category should represent the majority of touch-based payments made in 2016: there are billions of smartphones that have payment card and home address information associated with them. Additionally, the base of fingerprint reader-equipped devices is steadily rising, with more than 450 million forecast to ship this year, adding to the existing base of hundreds of millions’.
2. The second type of third-party touch-based mobile payment service is linked to existing payment service providers. Prior to being able to make purchases by one or two touches of the screen, the user would need to have opened an account with the payment provider and elected to stay logged in for future purchases. Once this feature is enabled, the user simply has to press ‘buy’ and ‘confirm’ buttons. Confirmation can be via a fingerprint with some devices.

These payment services enable retailers to outsource mobile transactions to third parties, and by doing so, convert payment from a frustrating to a friction-free experience. One merchant reported that the checkout process via their legacy app required 103 seconds for customers to type in their full credit card and shipping information; third-party touch payment reduced this to just 17 seconds.

Looking forward...

Other payment services may emerge soon, for example, some large retailers could enable their customers to use pre-stored payment data to validate purchases made on other retailers’ apps.

Today’s consumers are constantly connected to their smartphones, from the early hours in the morning to late at night, when at work, while spending time with family and friends or while commuting. Touch commerce provides opportunities for converting browsing into purchases with a simplified payment process.