How frictionless payments are changing consumers’ lifestyle

Businesses have been incorporating the use of technology to provide seamless services to their consumers.

By Isabel Yeo

Over the last decade, a digital revolution has been gaining ground in the business world. While physical credit cards and cash have been the dominant methods for transactions, new payment methods via QR and Near Field Communication (NFC) technology have followed. Dubbed “frictionless payments”, these digital payment methods have the potential to become a mainstay in global businesses.

Source: Statista

Digital revolution enabling seamless lifestyle

This revolution is just beginning. Increasingly, mobile payments and a myriad of similar digital commerce options will be available to consumers. Alipay already has approximately 1 million merchants accepting QR code payments in China alone. Alibaba’s Tao Café is one example of Chinese innovation. With just a scan of a personalised QR code, consumers in China can enter Tao Cafe, pick up items and simply walk out while the items are automatically charged to their payment accounts.

From mobile payments to delivery services and order tracking, digital seamlessness allows consumers to have a frictionless lifestyle where they can carry out their daily activities, both online and offline, in a much more convenient manner.

The frictionless lifestyle for consumers   

E-commerce giant Amazon is one company that has embraced frictionless payments, allowing their customers to experience the frictionless lifestyle via their brick-and-mortar Amazon Go stores. Amazon Go is a grocery store that offers “a check-out free shopping experience” – customers simply walk out of the store with their chosen items, charged automatically to their Amazon account. This experience is made possible by Amazon’s ‘Just Walk Out Technology’, which tracks chosen products via the customer’s mobile phone.

Similarly, transport companies such as Uber and Grab Car have adopted digitised payment methods, providing their customers with hassle-free transport experiences. Customers who ride with Uber or Grab Car can link their credit card accounts to their Uber or Grab mobile applications. These mobile applications then track the ride and automatically charge the required fare to the rider’s account. Riders can exit the vehicle immediately upon arriving at their destination, avoiding the usual process of rummaging for cash at the end of the trip and waiting for the driver to produce the correct change.

Beyond payments, similar technology has been used to expedite immigration clearance procedures in various countries. One such country is Singapore, where all citizens hold biometric passports. At immigration checkpoints, citizens skip the traditional immigration queues where officers manually check and stamp passports. Instead, they head to automated gantries, scanning their passports and their fingerprints to clear immigration procedures quickly. Singaporeans are avid travellers, making 8 million trips in 2012 alone. Thus, diverting them to automated immigration counters is a strategic move by the Immigration & Checkpoints Authority of Singapore to manage the influx and efflux of travellers at airports and checkpoints. Non-Singaporean travellers’ immigration clearance procedures in Singapore also benefit from the shorter queues at traditional clearance counters.

Online shopping made easier

Frictionless payment also supports the e-commerce industry, enabling consumers to shop from the comfort of their own homes. Typically, customers key in their credit card details at the virtual checkout counter of the online shopping website to facilitate payment and complete the shopping experience. The company subsequently delivers the purchased items to the customer’s doorstep.

E-commerce giant, the Alibaba Group, has even developed its own digitised payment system – Alipay, which enables more seamless transactions. Alipay’s 520 million users first store their credit card details on the Alipay Wallet platform and after shopping online, merely need to use their mobile phones to scan the QR code that appears at checkout to pay.

Seamless merger of offline and online transactions

Touted by Alibaba’s Executive Chairman Jack Ma as the model for ‘new retail’, Alibaba’s Hema market embodies the smooth merger of online and offline shopping. Supported by frictionless payment platform Alipay and a mobile application, customers can shop for groceries and fresh food from Hema Supermarkets and have it delivered to their doorstep within half an hour. Customers even have the option of getting Hema’s in-store chefs to prepare a meal for them using their purchased grocery items. The freshly cooked meal would be delivered to the customer within the same 30-minute window.

Seamless delivery and logistics 

Building on digital payment services, delivery services enable customers to track their orders in real-time. Food delivery services such as Ubereats and Deliveroo have mobile applications that allow customers to be updated at each stage of the delivery process. Customers would be informed when the food outlet has received their orders, when their food is being prepared and when their food has been picked up by the delivery courier. Subsequently, customers can also track the delivery courier’s movements, allowing them to know exactly when their food will arrive.

A similar service is offered by Singapore shipping and delivery company Ninja Van. Dubbed as a “game changer” in the logistics and delivery industry, Ninja Van allows customers to track the delivery process of their goods. Customers no longer have to be stuck at home waiting for parcels, wondering when they would be delivered. If there was any mistake in the delivery process, customers could reach out to their exact courier to rectify it. No longer would there be any missing deliveries. With its innovative use of technology to provide seamless delivery, this new company has already netted US$33 million in investments.

A personalised experience 

Beyond seamless, quick and hassle-free, the frictionless shopping experience is also a personalised one. Due to the digitised nature of payments, businesses can register each customer’s purchases and preferences and subsequently offer personalised product pages, discounts and offers. Other functions such as customised rewards systems and perks have also been made possible through digitised payments. From Alibaba to Starbucks, businesses that offer digitised payments have maximised customer data to enhance their customer’s experience in the ways above.

The digitisation of a consumer’s purchasing history can also help service staff in physical stores assist customers more strategically. Currently, stores like Alibaba’s Tao Café use facial recognition software to identify each customer that enters the café for payment. Further more, combining with the customer’s purchasing history allows service staff to guide the customer to particular merchandise he or she is looking for.

The frictionless future  

While frictionless payments have made transactions faster, smoother and more efficient for the customer, we have only scratched the surface of its potential. With companies like Ant Financial developing avenues for frictionless payments in other industries such as healthcare and education and cities like Hangzhou attempting to go completely cashless, it is clear that digital payments are here to stay. The physical wallet might one day be obsolete, and our lives might just be made easier for it.