Click to Pay is a new standard for online payments. Led by the major card issuers, the technology is intended to make the shopping process easier for consumers, and more efficient for merchants - including those in the fintech sector.
Until now, Click to Pay has only been available in the US. However, in July 2020 it was announced that the standard would be rolled out globally. This news has implications for every merchant doing business online.
But what is the Click to Pay standard, and how will it affect businesses in fintech and beyond? What are the advantages and disadvantages of Click to Pay, and where does it sit within the wider landscape of identity management technologies?
What is the Click to Pay standard?
Click to Pay is a new payment process for online retailers. It has been developed by EMVCo, the partnership between Europay, Mastercard, and Visa, and is intended to provide a more seamless checkout experience for consumers.
For consumers, Click to Pay is available as a single-click payment option similar to PayPal’s checkout process. Shoppers can enrol in Click to Pay through their existing bank, and they are then assigned a single set of Click to Pay credentials. At the point of sale, the consumer doesn’t need to enter their credit or debit card details; instead, they log in through Click to Pay and payment is taken from their account.
Click to Pay has thus far only been available in the US, where it has attracted around 10,000 users. However, American Express, Visa, Mastercard, and Discover are now preparing to roll the scheme out globally. The first wave of expansion will see the standard become available in Australia, Brazil, Canada, Hong Kong, Ireland, Kuwait, Malaysia, Mexico, New Zealand, Qatar, Saudi Arabia, Singapore, United Arab Emirates and the UK. It is thought that further territories will follow later.
The roll-out of Click to Pay has involved dozens of different parties, including acquirers, payment gateways, and PSPs, and the standard is gaining traction throughout the payments industry.
What are the advantages of Click to Pay?
There are several key advantages to Click to Pay from both a consumer and a retailer’s perspective.
The standard is intended as a simpler way for consumers to make purchases. They no longer have to find their debit or credit card, or even have their details saved in their browser. They don’t need to fill in registration details at the point of sale; instead, all of this information is held by the Click to Pay card provider. It is hoped that this will provide a more seamless shopping experience.
In addition, Click to Pay restricts the number of parties that have access to the consumer’s payment details. Retailers do not have access to card details, which remain stored only by the consumer’s bank. EMVCo hope that this will provide much higher levels of security and trust to shoppers.
For retailers, Click to Pay’s single payment process represents a potentially important new way to reduce cart abandonment, speed up transactions, and build trust and goodwill with customers. The standard has been developed as a method for reducing friction in online payments, with a smoother checkout process for consumers resulting in better sales metrics for merchants.
In addition, there may be future developments that build on the same technology; Click to Pay is based on the EMVCo’s EMV Secure Remote Commerce (SRC) standard, which provides the building blocks for new payment methods. EMVCo were also responsible for the introduction of 3DSecure and chip and pin, both of which have caused sweeping changes in consumer behaviour in the past.
Are there any disadvantages to Click to Pay?
From a retailer’s perspective, the advantages of Click to Pay are clear. However, there are some potential drawbacks, especially in its early stages of adoption. Primarily, there will be a knowledge deficit amongst consumers, with it potentially proving difficult to persuade shoppers that the standard is safe - and, indeed, many will simply not know that it exists. However, the partners in EMVCo are committed to educating consumers, and all have begun their own marketing campaigns.
The other potential issue is the cost of implementation. To date Click to Pay has been rolled out on an invitation basis, with partners onboarding merchants individually. As the standard goes global, merchants will need to invest in the implementation of the standard on their apps, sites, and other properties, in order to take advantage of it.
How will Click to Pay affect the world of fintech?
Click to Pay has some implications for the world of fintech at large, too. It’s a symbol of the rapid pace of change in the payments landscape, and looks set to represent the next big shift for both merchants and consumers following chip and pin and 3DSecure. It is also representative of the power of the major card issuers; even though the fintech wave has caused a high level of fragmentation in the financial services industry, the introduction of a new standard like Click to Pay underscores the dominance of a few huge players and their influence over consumer behaviour.
Click to Pay should also be seen within the context of broader ongoing attempts to introduce new identity standards for the web. Many companies and organisations are experimenting with new sign-in standards, and there is a growing consensus that passwords and manual key-entry of data will soon be a thing of the past. There is a host of fintech companies building products that do just this, with some, for example, looking to blockchain technology as the most useful way to prove identity online. Click to Pay should therefore be considered as a major step within the transformation of identity management, but perhaps not the only one that the fintech industry should be prepared for.