Balancing UX and Security in Recurring Payments

Merchants wishing to offer secure payment solutions for customers may find themselves at an impasse: their payment flows may require additional steps to become compliant, but this is to the detriment of the user experience. Should they lean into more clunky “secure” flows and hope their customers will understand?

According to research in 2023 by the Baymard Institute, poor user experience can account for up to 17% of all abandoned online shopping carts. 

A 2022 Forrester Research report found that poor UX may cost businesses up to $2.8 trillion annually in lost sales due to checkout abandonment. Therefore, if the user experience is less than ideal for alleged “security and compliance” reasons, merchants should rethink their approach.

Here are tips merchants can use to balance user experience and payment security.

Reduce Unnecessary Steps in the Checkout Flow

We’ve all been there: a checkout experience that asks far too many questions and has overcomplicated options to complete the purchase. Subscription merchants may feel especially pulled into doing this as the customer will only have one card-entry opportunity, which leaves only one opportunity to gather all the information they’d like from this person upfront.

However, merchants should consider simplifying their forms to include only the fields necessary for account creation and transaction processing upfront. This will speed up the checkout process (likely increasing the number of successful signups), and deliver a more positive experience for the customer. Merchants can learn about their subscribers through various other means after they’re on board, like monitoring their interactions with the product or conducting surveys in the onboarding flow.

An essential but tangential benefit to simplifying data collection during checkout is that it also follows a best practice of data security: only collect necessary data. The fewer data points you store, the less tempting it is for any potential hacker to attack.

Offer the Right Payment Methods

A quick way to overcomplicate checkout flows and frustrate would-be customers is to offer the entirely wrong payment methods for purchase. 

By default, every merchant should offer the top payment methods today, which are:

• Credit cards
• Debit cards
• ACH (bank) transfers
• Digital wallets (Google Pay, Apple Pay, Venmo)

April 2024 reports estimate that those four methods cover about 90% of all payment methods used in e-commerce transactions in the United States. 

If the purchases are exceptionally large, consider offering Buy Now, Pay Later (BNPL) so customers can break up the purchase into multiple payments. 

Otherwise, reviewing emerging technologies and payment methods is important to ensure you offer the options your customers demand.

Leverage Multiple Payment Processors

Simply put, leveraging more than one processor in your payments stack can assist in two areas: reducing risk and lowering fees. 

The best way to prevent a single-point-of-failure risk is to build a backup payment processor into your payment flow through a third-party token vault. Should your provider’s service be unavailable, or you account close for any number of reasons, you’ll have ownership over your payment tokens, meaning you can quickly shift your payment processing to your backup payment processor.

Likewise, most payment processors often have wildly divergent pricing schedules. As a result, merchants seeking to optimize their payments and their business operations find that implementing an intelligent payment routing strategy - in which payments are routed to different payment processors, based on an intelligent decisioning process - is a highly valuable strategy for optimizing their total processing fee outlay.

Implement Seamless Security and Compliance Processes

While all-in-one payment processors usually offer a full suite of compliance tools, specialized PSPs may not. Many merchants leveraging a multi-processor approach choose to manage compliance through a trusted third-party solution.

Third-party tokenization providers like Basis Theory can assist merchants wanting to secure their payments, achieve PCI compliance, and maintain ownership over their payments data. These solutions not only take away a significant portion of the burden to maintain compliance, but they also provide freedom in the form of network-agnostic tokens that growing merchants can use with any PSP, partner, or network.

Leveraging the token vault, merchants can send their tokenized data to any fraud prevention, security, and compliance partners that best work with a merchant’s payment stack.

Lean into Innovation

As AI continues to expand within payments, and technologies innovate faster, merchants and subscribers can benefit from the enhancements. Adopting new technologies can improve payment effectiveness and overall UX.

Notably, 3D Secure (3DS) was once a clunky, heavy-friction authentication solution mandated in the EU. However, 3DS 2.0 was recently released which eliminates the need for full-page redirects, adds mobile payments functionality, and sends more information to the issuing bank. This innovation makes 3DS more effective while also improving the experience for customers. 

More UX Tips to Build Top-Tier Payment Flows

We developed a comprehensive visual guide that covers user experience best practices, checkout flow examples of top retailers, and small changes you can make today to increase conversion and grow revenue.

Download the complete Payments UX Best Practices guide today.