The AI Book

CHAPTER 29Frictionless Payments: If or When?

By Theodore Lloyd¹

¹Innovation Consultant, , Axis Corporate

Amazon Go represents a step change in how payments are handled at point of sale, and provides a revolutionary customer experience. You can enter the store, pick up any product and leave, knowing your account will be charged. No need to fumble with cash or cards. The payment is entirely invisible. Invisible payments as a business model are expected to be worth $78 billion by 2022,¹ but to achieve this – and to truly impact the payments market – the key issue of security needs to be overcome. Customers’ primary concern when making payments is ease of use (the reduction of friction) as we have witnessed by the rapid increase in contactless payments. Security is certainly a major concern, but it consistently comes afterwards. It is the payments providers that face the regulatory burdens, thus bearing responsibility to maintain security. Truly frictionless payments require advanced security systems, systems that can authenticate a customer and their payment method without causing friction in their customer journey. This requires a fundamental rethink in how we authenticate and secure payments, moving from static to dynamic data, and from event-based authorization to continuous assessment.

Today’s Security Paradigms Will Not Suffice Tomorrow

Security systems for payments are built around the concept of multifactor authentication. The user needs to combine two of the following: ...