Protecting consumers with ‘positive friction’ as they navigate Buy Now Pay Later

Neha Mittal
18 April, 22

Innovation in the retail and e-commerce space has been driven by the need to deliver seamless customer experiences. And while no one’s denying that improvements have certainly been made, it begs the question as to whether we want to strive for that completely frictionless journey, or if there is some value in keeping a few notches in the surface?

The focus in sales and marketing meetings has been on reducing friction in the customer journey at all costs. However, these strategies are often fuelled by needing to achieve business results over and above the needs of consumers. So, while a lot of drivers for achieving a frictionless journey are fronted with aims to improve the path for customers – which, in part, is true – they’re often underpinned with pushing profits. But this approach is fast becoming outdated, ignoring the needs of the consumer, and even negatively affecting the bottom line for many businesses.

Positive friction is extremely important. It forces customers to jump through necessary hoops and fully consider purchases before going ahead, as well as protecting them from exploitation, such as fraud. Barriers are normally put in place for a reason – so disbanding all of them could prove damaging to both sides of the transaction.

Adding friction at the point of sale

A lot of what we hear from the high street retailers we speak with is that they want some form of friction; and they want this market to be regulated. Not only because they don’t want their brand associated with consumer debt problems, but because a more sustainable client base leads to customers coming back time and time again.

There’s a big difference between positive and negative friction – and it’s important to distinguish between the two. If customers are merely required to push a few buttons to commit to a sizeable transaction without any form of interference from the brand, they could end up in a vulnerable position, with far greater repercussions than spending a little longer at the point of sale.

At the end of the day, friction safeguards businesses and customers against fraud, saving time, money, and reputation. Businesses should be monitoring consumer behaviours to understand how much positive friction is the optimal amount. Obviously, retailers should not be encouraging 20-minute delays in the payment process, plus forcing individuals to jump through countless hoops in the name of ‘safety’. But there are steps that should be taken. Even if it’s as simple as adding two-factor authentication to verify orders to help fight fraud. Sometimes the smallest things make the biggest splash.

The evolution of ‘buy now pay later’

The emergence of modern payment plans like Buy Now Pay Later (BNPL) has highlighted the importance of creating positive friction to better protect consumers from making quick decisions on big purchases.

Point of sale finance has existed for decades. Think of how easy it is to buy a kitchen on 0% credit, for example. The introduction of BNPL has simply digitised something with which we were already very familiar. But because of the ease associated with BNPL, there needs to be a sustainable proposition. For example, the FCA’s announcement back in February 2022 about changes to BNPL contracts represents the beginning of evolution in the BNPL regulation space.

Short-term interest free payment plans have caused some people financial hardship, and this is an unfortunate result of fintech trailblazers quickly gaining traction in an unregulated market. It’s a prime example of how a frictionless payment journey can end in disaster. BNPL has grown at such an exponential rate, and the high availability has made it easy for large numbers of people to quickly access BNPL services with minimal disruption to the customer journey.

We therefore believe in positive friction that forces consumers to take more consideration before opting to make purchases. It helps drive a consumer-centric approach that all firms need to be focused on rather than simply being profit-driven.

Driving BNPL with friction

At the moment, it’s too quick and easy to enter a BNPL agreement, so many consumers often don’t realise they are signing up to a loan that could have serious repercussions if they fail to adhere to it. Consumers need to be aware of what they are signing up to, and sadly that information is often hidden from them, whether deliberately or not.

Regulation of the BNPL space is welcome as it will help the sector grow in a sustainable way, while importantly providing greater consumer protection. The rule changes already witnessed will redistribute the balance of power between market disruptors, and banks and retailers, putting the interests of consumers firmly at the forefront of the BNPL market.

People hear friction and think back to an inefficient time with costly delays and frustrating consumer barriers. But this isn’t always the case. We all need a little friction in our lives – it’s simple physics!

Related posts

15 May, 24
Latest data from leading eCommerce provider Visualsoft shows the passion and enthusiasm Brits have for their home and gardens, with sales of home and garden products increasing Year on Year (YOY) during February-April 2024.

Latest posts

23 May, 24
With retail technology becoming more and more important vital to retailers across, cash handling experts Volumatic are preparing to showcase their intelligent cash handling solutions at ReTec Europe