The 5 levels of frictionless payments

Dec 22 2021 | PayPal Editorial Staff

Payments technology is moving forward at an astonishing pace. The right partner can help enterprises ride the express elevator to a streamlined, global checkout experience.

Skip the stairs. Take the elevator to frictionless checkouts.

Payments technology is moving forward at an astonishing pace. Alternative payment methods like mobile wallets are on the rise.1 Integrations and APIs add even more options to packed tech stacks. Data security and fraud detection are becoming more sophisticated. Enterprise organizations have unprecedented opportunities to take their payment systems to new heights.

The right partner doesn’t just show businesses the steps they can take to fix payments platform problems. They have the tools enterprises need to help upgrade their payments process quickly and with confidence. They’ll make you feel as if you’re riding the express elevator to success instead of taking the stairs. What’s at the top? A fully streamlined, global checkout experience that will help drive conversions and increase revenue.
 

Level 1: Optimize and increase conversions

Conversions are the foundation of frictionless payments – the first step to creating the perfect purchase experience. Think of the shopping cart as a lobby: it welcomes customers to the purchase phase. But if they get to that lobby and find there’s no one at the front desk, they may turn right back around. Outdated payment methods and convoluted checkout processes can lead to abandoned purchases and increased cost of acquisition. The first step is updating them.

In today’s ultra-connected world, consumers want more options. 46% of smartphone owners use peer-to-peer payment apps like Venmo (US only) regularly.2 Use of digital wallets is also growing worldwide, with young consumers leading the charge.3 Yet only 29% of online merchants accept mobile wallets.4 Savvy enterprises can use this as a way to get ahead.

Offering the right payment options can also reduce the number of clicks required to make a purchase. Just as consumers aren’t going to wait around at the front desk, they’re not going to waste time filling out inconvenient forms. Fewer clicks can equal more conversions – and just one click is the ultimate goal. 

Master Level 1 with PayPal for Enterprise

  • Don’t make customers wait. Speed up transactions with PayPal Checkout and PayPal One Touch and you could capture more conversions.
  • Offer the latest payment methods. We’re the only platform that offers credit and debit, PayPal, digital wallets like Apple Pay and Google Pay, and Venmo.
  • Help lower cart abandonment and increase conversions by offering PayPal Store Cash to reconnect with buyers who leave without making a purchase.

 Check This Out:  Businesses have seen a lift in their PayPal sales when they offer Store Cash via email and in-app.5

 

Level 2: Improve customer LTV

With the checkout experience optimized, enterprises can capture net new customers every day. They’re ready to take payments to the next level and keep those customers coming back. It’s a common adage in business that it takes five times more money to acquire a new customer than it does to keep an existing one. Additional functionalities like card-on-file capabilities, real-time updates, and customer credit options can help enterprises win that repeat business, increase purchase size, and maximize LTV.

Repeat customers have moved beyond the lobby – they want the VIP lounge. Brand loyalty often depends on convenience: If they need to re-enter payment information or log in to make monthly payments, their LTV may decrease. Enterprises with flexible payment platforms that securely store customer data, enable recurring payments, and automatically update card information can send customers straight into VIP, where they may make more purchases.

Seamless repeat purchases are only part of the LTV equation. The smartest enterprises don’t just focus on the number of purchases – they focus on the value of each purchase. And they offer short-term financing options that provide the flexibility and confidence consumers need to make that larger purchase, guilt-free.

Master Level 2 with PayPal for Enterprise

  • Take advantage of PayPal Credit* to help increase customer lifetime value. 56% of PayPal Credit users say they are more likely to shop at a retailer again if they offer PayPal Credit.6
  • Leverage PayPal’s real-time account updating to automatically update card information at the time of purchase.
  • Store card information in our secure Customer Vault to enable card-on-file transactions and recurring payments and subscriptions.

Check This Out: Customers with a card on file order 51% more frequently from food-service platform Olo.7
*PayPal Credit is subject to consumer credit approval.
 

Level 3: Audit your security

If it was easy for enterprises to go from the ground floor straight to the penthouse, everyone would have done it by now. But the fact is that the staircase to the top is beset on all sides by fraudsters and cyberthieves. Fraud, chargebacks, and PCI exposure can affect customer trust – and revenue. Enterprises need to minimize risk and maximize compliance. A payments platform that uses the latest security tools can be an express elevator that helps bypass bad actors and increase costs.  

Fraud is a serious issue for enterprises. Excessive chargebacks can cause card associations to shut down transactions – and threaten viability in the online marketplace. Fighting CNP fraud seems to be a never-ending battle. And there’s nothing friendly about “friendly” fraud. Last year, 57% of businesses experienced rising fraud losses compared to the previous year.8 Those are resources they would prefer to spend on customer acquisition and retention.

Fraud eats up resources one incident at a time – but data breaches can access millions of customers’ information. The 2017 Equifax breach exposed the data of 147 million people. In 2019, hackers accessed 383 million Marriott guest records, which included card information and passport numbers. The danger to reputations is real: 20% of consumers wouldn’t provide data to a retailer who disclosed a hack.9

Master Level 3 with PayPal for Enterprise

  • Leverage 3D Secure, CVV checks, and other PayPal tools that identify user behavior patterns to help increase auth rates and lower fraud rates.
  • Help reduce reputational risk by using the latest encryption, network tokenization, and monitoring techniques to manage customer data.
  • Always review transactions for indications of fraud. Get help from Simility, a PayPal Service, which uses proprietary Adaptive Decisioning to make dynamic, AI-informed decisions about fraud risk.

Check This Out: Hype DC reduced chargebacks by 50% just six months after integrating with Braintree, a PayPal Service.10
 

Level 4: Improve your back end

The rising cost of doing business can sometimes make it feel like the more stairs you climb, the bigger the stairs get. Every step forward comes with two steps back thanks to changing regulatory and compliance rules, chargeback disputes, and outdated legacy technologies. By streamlining internal operations, enterprises can stop wasting resources and ride the elevator to the top instead.

Managing multiple integrations for different payment methods, partners, and vendors can be complicated and time-consuming. Every time regulations change, each one needs to be manually updated. Separate reporting for each vendor – or no reporting at all – can be confusing and leave companies in the dark about how to fix back-end issues like high decline rates or system outages. All of this can eat up time and resources and may ultimately affects sales conversions.

Leading enterprises must have tools that maximize their ability to accept payments while minimizing the resources invested: One payments platform that can not only handle multiple functions, but is agile and scalable to respond to changing customer demands. A single, accurate dashboard that shows them what’s happening in their gateway, so they can get to the bottom of high decline rates and capture more sales. And an excellent uptime to help them mitigate unexpected outages and be there for consumers when they’re ready to buy.

Master Level 4 with PayPal for Enterprise

  • Harness the power of a single platform for payment needs: PayPal for Enterprise is built to be dependable, yet agile, ready to deploy customized solutions for nearly any market.
  • Use comprehensive unified reporting to analyze decline rates, examine fees, see transaction summaries, run settlement batch summaries and create custom reports.
  • Save time and minimize operational burdens with our consolidated reporting and disputes API.

Check This Out: Jane.com took advantage of our flexible Mobile SDK in their new mobile app. 35% of overall revenue now comes from the mobile app.11
 

Level 5: Scale across markets

The penthouse is within reach. But any enterprise business knows that the journey doesn’t end here. There are always new global markets to enter and new challenges to overcome. Global businesses must manage risk, cut costs, and navigate different regulatory environments, all while providing the same seamless experience customers expect. The right payments platform helps enterprises scale across markets – without ever leaving the top floor.

PCI. SOC2. PSD2. 3DS1. Major compliance standards change from market to market – but a worldwide payments platform changes with them. Local partners offer on-the-ground insights that can allow enterprises to stay ahead of regulatory shifts and help them alleviate some of the inherent risks in the global market.

ACH. Giropay. Bancontact. UnionPay. JCB. And PayPal. It’s no longer enough for enterprises to accept local currencies – although that is still essential. For seamless new market entry, they must also offer relevant local payment choices as well as globally recognized digital wallets. That’s how modern enterprises can build relevance and increase customer LTV on a global scale.

Master Level 5 with PayPal for Enterprise

  • Give customers a trusted way to pay – PayPal – plus their favored local payment methods, all through a single integration.
  • Get access to a built-in network of 281+ million consumers worldwide who use PayPal.12
  • Benefit from local support teams and global knowledge to help navigate changing regulatory and compliance landscapes without friction.  

Check This Out: Casper expanded into four new markets (the UK, Austria, France, and Switzerland) in a short timeframe by adopting the most relevant payment methods.13


Put your organization on the express elevator to success with PayPal for Enterprise. We do much more than process transactions and collect fees. We’ll help you examine every part of your payment strategy to discover areas for improvement you never knew were there. Learn more about Navigating the New Era of Payments and get ready to reach the penthouse and beyond.

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The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.

Sources:
1 Mobile POS Payments Worldwide, Statista, November 2019.
2 How Consumers Use Peer-to-Peer Mobile Payment Apps, The Manifest, June 2018.
3 The Rise of Digital & Mobile Wallets, Merchant Machine, November 2018.
4 Mobile Payments in the United States: Statistics & Facts, Statista, October 2019.
5 PayPal analysis of enterprise merchant in the period 03/08/2019–11/14/2019.
6 Online study commissioned by PayPal and conducted by Logica Research in November 2018 involving 2,000 U.S. consumers, half were PayPal Credit users and half were non-PayPal Credit users.
7 Olo Case Study, Braintree Payments. Data based on the business’s own internal analysis. Results may not be typical and may vary substantially by business.
8 2020 Global Identity and Fraud Report, Experian, January 2020.
9 Consumer Loss Barometer, KPMG, 2019.
10 Hype DC Case Study, Braintree Payments. Data based on the business’s own internal analysis. Results may not be typical and may vary substantially by business.
11 Jane.com Case Study, Braintree Payments. Data based on the business’s own internal analysis. Results may not be typical and may vary substantially by business.
12 PayPal Q4 2019 Quarterly and Year End Report.
13 Casper Case Study, Braintree Payments. Data based on the business’s own internal analysis. Results may not be typical and may vary substantially by business.

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