This article has been authored by NS8
The most common misconception merchants have about friction is that it’s terrible for the customer experience and that it negatively impacts conversions. But not all friction is harmful. In the digital world, we have to know with whom we are transacting. We also have to negotiate transactions across multiple forms of payment and sometimes across currencies, all of which introduce friction. However, the most significant factor adding friction is the need for security. Even though consumer appetite for a frictionless experience is growing, security still trumps convenience.
Negative friction vs. positive friction
Rather than thinking of friction as strictly harmful, it’s helpful to distinguish between positive and negative friction. Negative friction is anything that slows down your customers without offering a benefit to them in return, such as a page with sluggish loading or a lengthy and confusing checkout process. These things provide no value to customers, and instead, may cause them to become impatient, which drives them away. Negative friction results in lost revenue. Eliminate it.
On the other hand, positive friction is any measure that offers resistance against scammers by presenting an extra, but reasonable, step to genuine customers. Requiring a card verification value (CVV) code at checkout is a form of positive friction that poses little disruption for legitimate customers, but often prevents fraudsters from completing their scam. Purposeful, well-placed friction keeps the e-commerce ecosystem healthy and its customers safe.
How positive friction builds trust
Consumers don’t merely tolerate positive friction. Most actively endorse it. According to an analysis performed by Paysafe Insights, 56% of consumers are happy to accept measures that help eliminate fraud. Merchants who utilise positive friction indicate to their customers that fraud protection and security are priorities, which helps foster a relationship of trust and safety.
Positive friction safeguards a business and its customers against fraud, which not only saves time and money but also maintains the company’s reputation as a secure, reliable merchant. Furthermore, while this reputation is important to relationships with customers, it also ensures that issues won’t arise with payment processors. Positive friction prevents tarnished reputations and excess fees that processors impose on merchants with unchecked fraud problems.
The best strategy is to minimise negative friction and utilise the ideal amount of positive friction based on the platform, the risk tolerance, and the types of goods a business sells. A vendor who sells t-shirts may have a different experience with fraud compared to a vendor who sells diamond rings. Fraud prevention should fit the needs of each business because no two are the same.
What is the right amount of friction?
The perfect amount of positive friction varies from merchant to merchant, but even within a single storefront, positive friction doesn’t have to be applied unilaterally. By using behavioral data to track users, positive friction can be implemented dynamically for specific subsets of users.
Merchants can use analytic tools to measure the validity of users based on a variety of attributes, then selectively introduce additional positive friction to suspicious users without subjecting trustworthy users to unnecessary obstacles. Merchants should set up a process that adds the right type of friction at the right time to suit the risk of the customer and their business model.
Positive friction can also be introduced post-authorization by asking customers to verify their order with another method of authentication. It’s a form of dynamic friction to confirm orders of unclear validity. The process can be constrained to a select subset of customers and performed after they place their order, but before capturing the payment.
Like other forms of positive friction, customer verification provides minimal disruption for legitimate customers but presents significant resistance to fraudsters and bots. Someone who placed an order in good faith will have no issue providing their phone number to receive a two-factor authorisation code. However, an agent acting in bad faith will likely be unwilling or unable to comply.
The takeaway
Much of the fear surrounding friction in e-commerce is rooted in misunderstanding. By introducing well-placed, positive friction, while eliminating negative friction, businesses can increase revenue, reduce fraud, and establish trust between the merchant, its customers, and its payment provider. The right amount of friction can eliminate both the risk and fear of fraud.
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Source: https://www.fintechconnect.com/paytech/articles/why-not-all-friction-is-bad-friction
