Swipe, Tap, Tweet. The New UX of Payment
All over the world, paying for things has been woven into the fabric of society for many years. Forms of payment have been a fundamental part of the human experience since bartering systems. The way in which we pay for goods and services has gone through many iterations. To begin with, the user experience was a physical one. Physical goods were traded and following that, proxies for value came into being – starting with tokens like livestock or shells and evolving to coins and notes. Crucial aspects of payment have always been trust, convenience and speed.
“In the London Underground, rather than queuing up to buy for a ticket or to top up an Oyster Card, I just tapped my contactless bank card on entry and exit. The interesting thing was there was not a screen or app required for any of this. It’s making what’s gone before it redundant – the Oyster card, cash, the paper ticket,” said Laurence Veale, Head of UX, Each and Other.
The UX of payment started as a physical, in person transaction. Currency was designed with physical affordances of value – being made from precious metals, bearing symbolic reference to nation states, or having a specific weight. The experience of paying for something often involved counting out the currency. A tangibility of experience played a fundamental role.
The rise of frictionless payments
“This trend is all about reducing the effort and the number of steps of a financial transaction – to the point where it happens without you even having to tap, swipe, or reach for your wallet. Like when your Uber ride ends and you simply open the car door and hop out. The financial transaction is essentially non-existent from the customer’s perspective,” said Nick Crampton, Experience Designer at Adaptive Path, Capital One.
Banks have long been a trusted and secure broker of payments, but these systems have created friction and failed to innovate on ease. Banks profited by locking out competitors and charging large commissions. Digital technologies brought new considerations – for example the possibility of purchasing things online. Suddenly UX designers had a new challenge – creating usable and trustworthy e-commerce experiences.
Making payments faster and easier is in the interests of retailers, and the broader capitalist economy as a whole. The idea is that if you make payment fast and seamless, you increase people’s spending as you remove delays or time for thinking at point of sale.
Amazon 1-click purchasing was patented in 1999, and represents the rise of digital, frictionless payments. E-commerce necessitated finding new ways to pay for things, and UX responded by focusing energy and efforts on increasing conversion rates by optimizing form design, storing information, pre-filling forms and generally doing everything possible to reduce the irritation and risk of error associated with typing in a 16-digit credit card number.
Other online commerce systems such as eBay led to innovations like PayPal.
“PayPal made it easy to pay merchants on eBay initially and introduced trust to a large marketplace. What’s interesting is that they went into person-to-person, a logical extension and now in person to offline merchant with their Beacon technology,” said Veale.
Along with the web, the device we use have changed how we pay for things. The widespread adoption of mobile devices in Africa has greatly changed the UX of payment there, where many people do not have traditional bank accounts. In Kenya, M-PESA, which launched in 2007, allows people to transfer money using their phones. The advantages of these systems are in the security of not carrying cash, the convenience and ease of use, and in by-passing banking fees.
In the west, innovations in mobile payment were driven by companies like Starbucks, who leveraged their loyalty program and app to create an ecosystem that supported mobile payments. Already in late 2013 they reported that 11% of sales were being paid for with their mobile wallet, using customers’ smartphones. Considering that this was a year prior to the initial launch of Apple Pay, Starbucks were certainly leaders in innovating the way consumers pay for purchases. Now, customers could go on their morning run with just their smartphone, and pick up their Starbucks on their way home, no wallet needed.
We are now seeing a huge proliferation of fintech startups. Square have worked to make it easy for small businesses to take credit cards, and have also moved into the person-to-person space. Apple Pay works with Apple’s Touch ID to enable quick and easy payments from a compatible device. Stripe enables payments online, on mobile, and have recently introduced Relay for in-app purchases.
“The social web’s impact on our societal norms of what is private and what is public is now extending to our finances. Spending and transactions are becoming increasingly ‘social’ activities,” said Crampton.
Payments, money and finance have historically been a private and personal activity, so much so that money matters are sometimes considered ‘the last taboo’. Enter the social web, and we are seeing a trend towards ‘social’ payment systems.
A further aspect of money is the ‘theatre of payment’ where payment is an opportunity to play out social norms, for example whether you should go dutch on a first date, or paying for a business dinner with a client. These social aspects of paying create interesting challenges around how to split the bill and square transaction with friends, like paying for a shared taxi.
Apps like Venmo allow for free person-to-person payments with an account linked to your credit card. The app leverages your Facebook network and is set to share your transactions and the corresponding notes (with the actual dollar cost removed) by default. This social aspect has lead to creative use of emoji and notes, with an analysis by Quartz of a week’s worth of Venmo data showing that the pizza emoji was most popular.
Square Cash is another player in the social payments space, and they are pushing the idea of ‘cashtags’ – a user specific name which allows other to find them and pay them through the service. The experience of receiving money has evolved from having a bank account number or IBAN number to being able to choose a tag which is directly linked to you. The idea of a branded identity as central to our new payments experience is gaining traction.
This convergence of identity and payment can be seen with the addition of payments via Facebook messenger. By connecting a US debit card to your Facebook account, you can create a PIN and send money to other users in a messenger conversation. The ‘easy, secure, free’ nature of the service is highlighted as the key benefits.
The new frontier
So the way we exchange value has evolved to state where paying can take place with the tap of a card, the scan or swipe of a phone, or in some cases the flick of a wearable device-wearing wrist. What are the implications of this shift?
“As Stripe eloquently put it, to ‘increase the GDP of the internet,’ to literally enable payments where they were impossible, difficult or dangerous before,” said Veale.
We are now entering a ‘payment everywhere’ model, where it is possible to embed payments in many parts of our physical and digital experiences. This leads to much economic opportunity, and opens doors for small and medium business owners. Coupled with services like Shopify, it is easier and easier for people to set up their own businesses and find new revenue streams.
Payment everywhere, and the linking of social and mobile account with credit cards and bank account lead to questions around security and privacy. Spreading our financial data leads to increased risks of fraud, and trust will be a crucial challenge both technologically and in the design of interactions. Technologies like Blockchain, on which Bitcoin works, look at ways to build security and permissions in a distributed manner. There are also questions about how payment data is tracked and visible. One of the advantages of cash is the privacy of the transactions. The more digital we are, the more trackable we are.
A huge advantage of the innovations we are seeing is the seamless way in which they can make payment fade into the background. The possibility of designing smooth experiences which eliminate the step of paying is now a reality, which services like Uber use to their advantage. For those who can afford it, being able to fade the payment step into the background brings a level of ease and convenience into everyday life. These experiences can have a magical quality, such as the Disney Magic Band. The band, linked to a credit card, eliminates the need to ‘pay’ for anything during your trip to Disneyworld.
“I’ve often marvelled at how easy Uber makes spending money feel when you don’t even have to reach for your wallet to get where you need to go… it almost feels like it’s free. Perhaps we need just the right amount of friction to keep us cognizant of the money that’s changing hands when we make a payment,” said Crampton.
There is a risk that increased speed and ease of payment may do consumers a disservice. When payment is so easy, is there a risk of thoughtless purchasing. How we spend our money is a tacit representation of our values and hopes and dreams. The question is how we might design ‘frictionless payments’ that don’t reduce intentionality? Spending money is about our implicit and explicit priorities. Designers have a delicate balance to strike between facilitating a smooth and fast payment experience and making sure users are making informed choices. The tangibility of physical money, the smell of cash, may play a role that we need to reexamine in the new user experience of payment.
A further concern is the ability to verify payments. When payment happens in the background, and we don’t hand over physical money or get a receipt, it may be easier for mistakes to go unnoticed. How are people alerted that a payment has taken place? How do they verify that it was for the correct amount? The idea of ‘please check your change now, as mistakes cannot be rectified later’ needs to translate to digital payments, or evolve to support customer complaints or misgivings.
From physical to digital and beyond
“Many of the Fin-Tech startups are challenging the traditional big players in the financial realm to be more nimble and offer people more value and better experiences, for example making it free and simple to send money or split a bill,” said Crampton.
Payment systems and experiences have changed incredibly rapidly over the last 10 years, and we are just getting started. There are disputes over whether we will ever be completely cashless, and the implications of such a shift. It is clear however, that the new user experience of payment comes with many risks and many opportunities. For consumers and companies alike, the value proposition of how we exchange money is evolving.