Invisible payments and the race to remove the money last mile
Uber lost $1.2b last year, or so it has been reported. Its critics have once again come out of the woodwork to suggest its model is unsustainable and that Uber is doomed.
I’m no financial analyst, nor am I prone to criticising $60billion startups. But what I do know, is no matter what Uber’s future holds, it has changed the world in a whole lot of ways. And in particular, changed the way consumers think about money.
Let me explain.
Uber, for all its critics, provides a service that users don’t just like, they love. Like Apple fanboys and girls, Uber transforms customers from simply riders to advocates. For some, it’s the predictably of the car’s arrival time or the estimated fare, for others it’s the mints and water. But the real “wow factor” that confirms Uber delivers on its ‘everyone’s private driver’ proposition is the fact you don’t pay.
What? Uber is free? Of course not, but at the end of the trip you simply get out and walk away, and, like a boss, you don’t even touch your wallet. Money automagically changes hands yet you don’t think about money at all.
Like many other Uber users, I now constantly fantasize about removing that last mile of payments — the credit card swipe, cash payment or, unbelievably still, sending a check — from all kinds of situations. If it can be removed from ride sharing, what about flights? The grocery store? Concert tickets? Dry cleaning? Plumbers? Rent? Or even buying a car? Imagine the time and energy we would save if we simply didn’t need to pay.
From a customer experience perspective, it’s nirvana, but for the company providing the service it’s a potential holy grail.
Apple and Google have taken great strides to remove the friction from payments via mobile payments, while Square and its card reader has done the same for the cash register. In many ways though, these have all just made swiping a card easier, or transferred card swiping into phone swiping. But what if we could remove the payment all together?
From a customer experience perspective, it’s nirvana, but for the company providing the service it’s a potential holy grail. What if your customers could simply take your products or enjoy the service you offer and walk away without paying? Imagine the efficiency, the improved customer experience, the reduced purchase abandonment, transfer of focus away from price, and the list goes on.
But it won’t be easy — it takes more than technology to make it work in practice.
Now that there is true integration between online, mobile and the real world, there’s no reason we can’t make payments invisible. In project management speak, it’s simply about triggers and permissions. So for Uber, permission is given the first time someone enters their card details into the app and then again every time a car is called. The trigger occurs at the end of the journey when the driver swipes the job as complete. iTunes operates on a similar basis — card details stored within the system followed by a “do you really want to download that song or movie” prompt?
On-demand services and marketplaces are an obvious environment for this, and as companies race to emulate the ‘Uber experience’, we’ll see plenty of platforms head towards removing the last mile of payments over the next 12 months. But it won’t be easy — it takes more than technology to make it work in practice.
The final frontier: trust
There is no opportunity for true invisible and frictionless payments unless users can trust both the platform and the marketplace community. To do this, every company will have to consider a few fundamental issues:
Credit card entered once: whether online or on mobile, the mechanism to enter and verify payment information is obvious. Companies must consider when in the process that occurs — at sign up? First purchase? Giving people options beyond credit cards, such as direct money transfer and PayPal has proven to engender trust and reduce abandonment. Critically, customers must be aware their information is being stored for re-use, so legals must be addressed clearly.
Secure storage: having custodianship of someone’s payment information comes with significant responsibility. In the era of hacking and fraud, people expect that not only will their data and transactions be transmitted securely, it will also be stored and protected appropriately out of harm’s way.
Ability for recourse: while we all hope and strive for a perfect service, the reality is things will sometimes go wrong — the Uber driver may forget to swipe the job to completion, an Airbnb loft may be ransacked. Customers must have the ability to dispute a payment and, more importantly, they must know they have that ability.
Permission or no permission: there is a fine balance between removing friction and removing control. No sane person will give you the ability to take money whenever you want, so they must feel comfortable with the checks and balances in place. For smaller payments it’s easier, larger amounts require more assurance. Adding in permissions and approvals at the appropriate time gives customers genuine control and reinforces trust in the platform and the process.
As we edge closer to making payments invisible, we can start to think of the checkout as a positive part of the overall customer experience. It’s really not hard work to swipe your card or type a few numbers, but there a huge benefits when you take it away.
As every platform strives for that wow factor that takes their service from “that’s cool”, to “I love it and can’t live without it,” it’s worth considering what happens when you don’t ask your customers to pay.