More than a buy button: How card brands are building the future of payments
The card networks’ new buy button, called "click to pay," is merely a stepping stone to providing a foundation for pervasive, invisible payments.
In its current form, the unified checkout process Visa, Mastercard, Discover and American Express introduced this week creates a streamlined guest-checkout experience for consumers who register their email and card details.
Over time, click to pay is designed to underpin a system for voice-controlled or internet of things (IoT) environments, that could include cashierless physical checkout in stores. The service is powered by EMVCo’s Secure Remote Commerce technology.
“Ultimately, SRC can be integrated any way a merchant sees fit for the IoT and other evolving forms where payment is needed,” said Brian Cole, Visa’s head of product for the North America region.
No matter which card networks merchants accept, click to pay will create the effect of instantly recognizing new customers that have already enrolled elsewhere, according to Cole.
“Customers arriving at a merchant’s site for the first time will be converted on the spot from an unknown to a known user, which sets us up for the world of IoT payments,” he said.
Many hurdles remain before click to pay is widely available on websites, and it's unknown whether enough merchants and consumers will sign on to create a critical mass of users.
One of the first three websites to launch click to pay is movie ticket seller Cinemark, which placed the click to pay icon first on its list of payment options, signified by an arrow pointing to small versions of each card networks’ logo.
An explanatory blurb says: “Set up once. You won’t have to remember a password, or enter card and personal info when you shop wherever you see this icon.”
First-time users must enter their card details, address, phone number and an email address; thereafter they only need to enter their email when they see the icon.
Click to pay isn’t Cinemark’s only payment option; the website also supports Chase Pay for online checkout, and customers may also pay by entering payment card credentials directly.
Because the card networks are relying primarily on processors and acquirers to promote merchant adoption — and most websites will continue to support competing checkout solutions — merchant onboarding will happen gradually in the coming months and years.
But Cole believes merchants weary of battling the higher fraud levels and friction around guest checkout options will eventually come aboard.
“This is a merchant solution, and with the networks coming together we have created a checkout approach analogous to a single POS terminal,” he said.
Click to pay will have plenty of competition, and will likely will operate alongside instant-financing and installment loan payment options on many checkout pages.
“We never expected to see only one online payment option at checkout,” Cole said, noting that Visa is developing its own installment lending solution.
Visa plans to migrate merchants currently using its Visa Checkout process to the new buy button, while Mastercard is doing the same thing with Masterpass and American Express is phasing out AmEx Express Checkout.
Merchants do have some latitude in how they present the new click to pay icon. They may choose the order in which network logos appear — left to right — on the horizontal click to pay icon placed on their websites, Cole said.
“It’s merchant choice, and depends on the participating payment networks in SRC, as well as those networks a merchant accepts,” he said.
In the rare case where a merchant who has enabled SRC accepts a single participating card network, only that card logo will appear on the buy button, according to Cole.
Analysts see mostly pluses, and some challenges, ahead for click to pay.
“Everything in payments is additive, so while click to pay may increase security without adding friction, it isn’t going to make card on file or other digital wallets or PayPal go away,” said Thad Peterson, a senior analyst with Aite Group. Click to pay must deliver at least as much value to merchants as other alternatives, or its likelihood of broad merchant adoption may be somewhat limited, he said.
SRC enables tokenized payments without exposing card details, but it doesn’t go any further than any other tokenized wallets in protecting against fraud, said Madeline Aufseeser, an independent payments analyst.
“I’m not convinced SRC will make a major dent in card not present fraud or synthetic fraud, as it’s only a two-factor based authentication solution with no third dynamic factor, and there are still plenty of gaps for fraudsters to crawl through,” she said.
To become invisible, payments technology must be flexible, seamless and globally interoperable, in the way consumers can pay with NFC contactless payment technology anywhere it’s accepted.
Click to pay is initially available only in the U.S., and no date has been set for expanding it to other regions.
“I fully expect SRC to be rolled out internationally, but there is a plethora of local payment methods, and its success will depend on how it compares with popular alternatives,” said Zil Bareisis, a senior analyst with Celent.