Optimizing Mobile Checkout
Optimizing Mobile Checkout Glenbrook Partners | August 2014
Sponsored by
Can$you$hear$me?$
Can$you$see$me?$
Ques>ons$
About Moovweb • Founded:$2007$ • HQ:$San$Francisco,$CA$ • Offices:$New$York,$London$ • 25+'billion'mobile'pages'will$be$transformed$in$2014$ • 22+'channel'partners' • Fastest'growing'mobile'vendor'in$IR$500$(2014)$ • 120+'customers,'200+'producCon'sites$
[2]$
About Glenbrook •
Glenbrook is a strategy consulting firm specializing in eCommerce analysis and electronic payments
•
Glenbrook’s partners serve clients throughout the payments ecosystem, including: card networks, processors, banks, merchants, technology companies and payments services providers
Russ$Jones$is$a$Managing$Partner$of$Glenbrook$and$seasoned$ analyst$working$extensively$in$online$payments,$global$ payments$acceptance,$emerging$payments,$and$mobile$ technologies.$$ $ Follow$Russ'$wriBngs$on$PaymentsViews.com$
© Glenbrook Partners, LLC 2014
2
Mobile Checkout Agenda •
State of Mobile Commerce Market
•
Checkout Alternatives
•
Future Directions
© Glenbrook Partners, LLC 2014
3
State of Mobile Commerce Market • Alternative Checkout Momentum • Market Shift to Mobile Devices • Checkout Data Entry Challenge • Capturing Card Data on Mobile Device
Rise of Alternative Checkout Methods Alternative mobile checkout methods are defined as eCommerce transaction technologies allowing for abridged, secure, personalized checkout experiences from a mobile device
•
Global B2C eCommerce sales to hit $1.5 trillion in 2014
•
Alternative payment methods were used 43% of the time in 2012 and are projected to be used for 59% of all purchases by 2017
•
In 2012 digital wallets represented 18% of all eCommerce payment methods in the U.S., 23% in APAC markets (44% in China)
•
70% of digital wallet consumers utilize more than one digital wallet provider Sources: Statista, July 2014 2014 Digital Wallet Usage Study, Thrive Analytics, July 2014 Worldpay Alternative Payments Report, January 2014
© Glenbrook Partners, LLC 2014
5
Market Shift to Mobile Devices Global Mobile Commerce, eRetail Spending by Device Mobile$Commerce$
Desktop$Commerce$
89%$
79%$
73%$
66%$
59%$
56%$
53%$
2012$
2013$
2014$
2015$
2016$
2017$
2018$
Source: Goldman Sachs, Mar 2014
© Glenbrook Partners, LLC 2014
6
Checkout Conversion Rates by Endpoint Mobile Device Challenges
• • •
Slower load times Smaller screens Tiny keyboards
Checkout Conversion Rates Q1 2014
Desktop
Tablet
Smartphone
Source: Monetate, June 2014 © Glenbrook Partners, LLC 2014
7
Checkout Data Entry Challenge Digital wallets helps reduce checkout friction… Direct$Data$Entry$
Keystrokes$
Cardholder$Name$
15$T$20$
Account$Number$
16$
ExpiraBon$Date$
4$
CVN2$
3T4$
Billing$Address$
25$T$35$
Shipping$Address$
25$T$35$
Home$Phone$
12$ Total&
Digital$Wallet$or$Mobile$Checkout$Service$ User$Name$
Key$Taps$ 15$T$25$
Password$
6$T$8$ Total&
© Glenbrook Partners, LLC 2014
~100&&to&125+&
~21&&to&33+& 8
Capturing Card Data on Mobile Device
Card on File
• Works well with returning customers • Sensitive to username/password friction
Smartphone Camera
• Works well for first time customers • Complements card-on-file model • Captures card data, not ship-to address
Digital Wallet
• Eliminates reentry of payment data • Sensitive to username/password friction • Potentially can use existing login status
© Glenbrook Partners, LLC 2014
9
Mobile Checkout Alternatives • Who We’re Watching • Google Instant Buy • MasterCard MasterPass • Visa Checkout
Who We’re Watching •
Amazon Login and Pay
•
Apple iCloud Keychain
•
Facebook Autofill
•
Google Chrome Autofill
•
Google Instant Buy
•
MasterCard MasterPass
•
PayPal Express Checkout
•
Venmo Touch
•
Visa Checkout
© Glenbrook Partners, LLC 2014
11
Alternative Checkout Characteristics Similarities
Differences
•
Support for streamline handling of payment and ship-to details
•
Support for wallet-like features – offers, loyalty cards, receipts, etc.
•
Support for web, mobile, and in-app payment flows
•
•
Optimized user experience for various form factors
Payment integration model – one-time tokens, actual payment data, etc.
•
Single sign-on option to provide quick access to payment data
© Glenbrook Partners, LLC 2014
12
WHO WE’RE WATCHING
Google Instant Buy
•
Mobile checkout using Google Wallet payment credentials
•
Fast 2-click checkout for Apps and Mobile sites
• •
Lightweight integration Wallet Objects API handles offers, loyalty, and gift cards
© Glenbrook Partners, LLC 2014
13
Two Tap User Experience When logged into Google…
© Glenbrook Partners, LLC 2014
14
Google Instant Buy Results Illustrate the benefits of mobile optimized checkout “Newegg’s mobile web users convert an estimated 100% more often when using Google Wallet” “Google Wallet users were more than 4X more likely to convert than other Android shoppers” “Priceline.com customers who sign in with Google have a 71% higher conversion rate than those who book as guests” “Since Google Wallet implementation, conversion at checkout increased more than 70%” Source: https://www.google.com/wallet/business/payments © Glenbrook Partners, LLC 2014
15
WHO WE’RE WATCHING
MasterCard MasterPass
•
Designed to support checkout across devices
•
Stores payment data and ship-to data in cloud
•
Can be rebranded for use by banks, telcos, and merchants
•
Allows merchant to accept multiple digital wallets
© Glenbrook Partners, LLC 2014
16
MasterPass Merchant Checkout How MasterPass works…
• •
Merchant adds “Buy with MasterPass” inside their own checkout Using a traditional redirect flow:
Consumer logs into to wallet, select card and ship-to Merchant gets card data, bill-to, ship-to, and contact data Processes and settles card through their normal acquirer •
Draws on payment and ship-to data that has been:
Self-provisioned by consumer Directly provisioned by a MasterCard issuer •
Designed to be directly implemented by merchants or third-party platform providers
© Glenbrook Partners, LLC 2014
17
MasterPass Acceptance Network 40,000 active merchants around the world
© Glenbrook Partners, LLC 2014
18
WHO WE’RE WATCHING
Visa Checkout • Allows customers to pay
without leaving merchant site
• Enables customers to pay
using any major credit or debit card
• Uses device fingerprinting,
step-up authentication, and advanced risk tools
• Authenticates customers
before they make a purchase
• Creates a consistent shopping experience on desktop web, mobile web, and in-app
© Glenbrook Partners, LLC 2014
19
Visa Checkout in Context Card moves to cloud, Checkout connects it to merchant
Visa Checkout Source: Visa, July 2014 © Glenbrook Partners, LLC 2014
20
Visa Checkout User Experience Light-box experience keeps buyer on merchant site
Buyer taps on Visa Checkout button then securely signs in
© Glenbrook Partners, LLC 2014
Buyer swipes to choose payment card and ship-to address
Buyer confirms purchase details on merchant’s site
21
Visa Checkout Consumer-side considerations… •
Simplified checkout process designed to reduce friction and abandonment
Consistent light-box experience across all merchants Swipe across recognizable card art to select payment card Management of ship-to addresses independent of bill-to address •
Over 180 issuers are onboard to open Visa Checkout accounts and provision card data
Bank of America, Citibank, Wells Fargo, PNC, etc. •
Supports Visa, MasterCard, American Express, and Discover branded cards
•
Currently available to buyers in U.S., Canada, and Australia
© Glenbrook Partners, LLC 2014
22
Visa Checkout Merchant-side considerations… •
Lightweight implementation for merchants
Enabled through 10 lines of JavaScript in merchant checkout flow •
Access to full account number and expiration means:
No change to processing flow via gateway, processor, or acquirer No change to settlement reconciliation •
Advanced risk mitigation techniques utilized throughout lifecycle –– upon login, card enrollment, and handoff to merchant
•
Support for desktop, mobile, and in-app checkout flows
© Glenbrook Partners, LLC 2014
23
Future Directions • Apple Touch ID • PayPal Biometric Authentication
Mobile Checkout 2.0 "Mobile$users$staunchly$resist$authenBcaBon$ methods$that$were$tolerable$on$PCs$and$are$ sBll$needed$to$bolster$secure$access$on$ mobile$devices…Security$leaders$must$ manage$users'$expectaBons$and$take$into$ account$the$user$experience$without$ comprising$security.”$ $ $Ant$Allan,$Ph.D,$Research$Vice$President,$ $Gartner$Research$
© Glenbrook Partners, LLC 2014
25
Apple Touch ID Fingerprint identity sensor available on iPhone 5s
•
Touted as “one of the best passwords in the world”
• • •
Easy to setup, becomes better over time (multiple fingerprints, different orientations)
Two uses thus far:
• • •
Your own fingerprint + other users too (spouse, child)
Unlocking the phone (rather than a four-digit passcode) Authorizing purchases via Apple iTunes, the App store and the iBooks store
Touch ID will be available for third party developers in fall 2014 in iOS8
© Glenbrook Partners, LLC 2014
26
PayPal Biometric Authentication “Payment at your fingertips”
•
First payments enabler to embrace fingerprint authentication technology across merchants
•
Optimized for checkout in mobile commerce
•
Based on FIDO Ready software on the Samsung Galaxy S5
•
Launched globally in 26 markets
© Glenbrook Partners, LLC 2014
27
Mobile Biometrics Evolution The market gains momentum • Goode Intelligence reports that by the end of 2015, 619 million people will be using biometrics1 • Garter research projects that 30% of firms will use biometric authentication for mobile devices2
1994
Jan. 2011
Feb. 2013
May 2013
Sept. 2013
Jan. 2014
Apr. 2014
1 Goode Intelligence report Mobile Biometric Security Market Forecasts 2013-2018 2 “Good Choices for Mobile Authentication Must Balance Conflicting Security, Technical and User Experience Needs” by Ant Allan and John Girard. Sep. 2013
© Glenbrook Partners, LLC 2014
28
Mobile Commerce Recap • •
Online commerce is shifting from desktop to mobile devices Merchants are selling to consumers that are mobile –– but checkout conversion rates are not as high as desktop
•
Merchants are responding with mobile optimized checkout flows designed to reduce the data entry burden
•
Digital wallets and checkout assistants are the current “best practice” for reducing data entry of card and ship-to details
•
Federated login is sometimes used to eliminate entry of username and password
•
Fingerprint biometrics may someday eliminate entry of username and password altogether
© Glenbrook Partners, LLC 2014
29
Payments Consulting, Research, and Education
www.paymentsnews.com www.glenbrook.com
Ques%ons?) Jarret)Cuisinier) [email protected]) ) Russ)Jones) [email protected])
Sponsored by
Can$you$hear$me?$
Can$you$see$me?$
Ques>ons$
About Moovweb • Founded:$2007$ • HQ:$San$Francisco,$CA$ • Offices:$New$York,$London$ • 25+'billion'mobile'pages'will$be$transformed$in$2014$ • 22+'channel'partners' • Fastest'growing'mobile'vendor'in$IR$500$(2014)$ • 120+'customers,'200+'producCon'sites$
[2]$
About Glenbrook •
Glenbrook is a strategy consulting firm specializing in eCommerce analysis and electronic payments
•
Glenbrook’s partners serve clients throughout the payments ecosystem, including: card networks, processors, banks, merchants, technology companies and payments services providers
Russ$Jones$is$a$Managing$Partner$of$Glenbrook$and$seasoned$ analyst$working$extensively$in$online$payments,$global$ payments$acceptance,$emerging$payments,$and$mobile$ technologies.$$ $ Follow$Russ'$wriBngs$on$PaymentsViews.com$
© Glenbrook Partners, LLC 2014
2
Mobile Checkout Agenda •
State of Mobile Commerce Market
•
Checkout Alternatives
•
Future Directions
© Glenbrook Partners, LLC 2014
3
State of Mobile Commerce Market • Alternative Checkout Momentum • Market Shift to Mobile Devices • Checkout Data Entry Challenge • Capturing Card Data on Mobile Device
Rise of Alternative Checkout Methods Alternative mobile checkout methods are defined as eCommerce transaction technologies allowing for abridged, secure, personalized checkout experiences from a mobile device
•
Global B2C eCommerce sales to hit $1.5 trillion in 2014
•
Alternative payment methods were used 43% of the time in 2012 and are projected to be used for 59% of all purchases by 2017
•
In 2012 digital wallets represented 18% of all eCommerce payment methods in the U.S., 23% in APAC markets (44% in China)
•
70% of digital wallet consumers utilize more than one digital wallet provider Sources: Statista, July 2014 2014 Digital Wallet Usage Study, Thrive Analytics, July 2014 Worldpay Alternative Payments Report, January 2014
© Glenbrook Partners, LLC 2014
5
Market Shift to Mobile Devices Global Mobile Commerce, eRetail Spending by Device Mobile$Commerce$
Desktop$Commerce$
89%$
79%$
73%$
66%$
59%$
56%$
53%$
2012$
2013$
2014$
2015$
2016$
2017$
2018$
Source: Goldman Sachs, Mar 2014
© Glenbrook Partners, LLC 2014
6
Checkout Conversion Rates by Endpoint Mobile Device Challenges
• • •
Slower load times Smaller screens Tiny keyboards
Checkout Conversion Rates Q1 2014
Desktop
Tablet
Smartphone
Source: Monetate, June 2014 © Glenbrook Partners, LLC 2014
7
Checkout Data Entry Challenge Digital wallets helps reduce checkout friction… Direct$Data$Entry$
Keystrokes$
Cardholder$Name$
15$T$20$
Account$Number$
16$
ExpiraBon$Date$
4$
CVN2$
3T4$
Billing$Address$
25$T$35$
Shipping$Address$
25$T$35$
Home$Phone$
12$ Total&
Digital$Wallet$or$Mobile$Checkout$Service$ User$Name$
Key$Taps$ 15$T$25$
Password$
6$T$8$ Total&
© Glenbrook Partners, LLC 2014
~100&&to&125+&
~21&&to&33+& 8
Capturing Card Data on Mobile Device
Card on File
• Works well with returning customers • Sensitive to username/password friction
Smartphone Camera
• Works well for first time customers • Complements card-on-file model • Captures card data, not ship-to address
Digital Wallet
• Eliminates reentry of payment data • Sensitive to username/password friction • Potentially can use existing login status
© Glenbrook Partners, LLC 2014
9
Mobile Checkout Alternatives • Who We’re Watching • Google Instant Buy • MasterCard MasterPass • Visa Checkout
Who We’re Watching •
Amazon Login and Pay
•
Apple iCloud Keychain
•
Facebook Autofill
•
Google Chrome Autofill
•
Google Instant Buy
•
MasterCard MasterPass
•
PayPal Express Checkout
•
Venmo Touch
•
Visa Checkout
© Glenbrook Partners, LLC 2014
11
Alternative Checkout Characteristics Similarities
Differences
•
Support for streamline handling of payment and ship-to details
•
Support for wallet-like features – offers, loyalty cards, receipts, etc.
•
Support for web, mobile, and in-app payment flows
•
•
Optimized user experience for various form factors
Payment integration model – one-time tokens, actual payment data, etc.
•
Single sign-on option to provide quick access to payment data
© Glenbrook Partners, LLC 2014
12
WHO WE’RE WATCHING
Google Instant Buy
•
Mobile checkout using Google Wallet payment credentials
•
Fast 2-click checkout for Apps and Mobile sites
• •
Lightweight integration Wallet Objects API handles offers, loyalty, and gift cards
© Glenbrook Partners, LLC 2014
13
Two Tap User Experience When logged into Google…
© Glenbrook Partners, LLC 2014
14
Google Instant Buy Results Illustrate the benefits of mobile optimized checkout “Newegg’s mobile web users convert an estimated 100% more often when using Google Wallet” “Google Wallet users were more than 4X more likely to convert than other Android shoppers” “Priceline.com customers who sign in with Google have a 71% higher conversion rate than those who book as guests” “Since Google Wallet implementation, conversion at checkout increased more than 70%” Source: https://www.google.com/wallet/business/payments © Glenbrook Partners, LLC 2014
15
WHO WE’RE WATCHING
MasterCard MasterPass
•
Designed to support checkout across devices
•
Stores payment data and ship-to data in cloud
•
Can be rebranded for use by banks, telcos, and merchants
•
Allows merchant to accept multiple digital wallets
© Glenbrook Partners, LLC 2014
16
MasterPass Merchant Checkout How MasterPass works…
• •
Merchant adds “Buy with MasterPass” inside their own checkout Using a traditional redirect flow:
Consumer logs into to wallet, select card and ship-to Merchant gets card data, bill-to, ship-to, and contact data Processes and settles card through their normal acquirer •
Draws on payment and ship-to data that has been:
Self-provisioned by consumer Directly provisioned by a MasterCard issuer •
Designed to be directly implemented by merchants or third-party platform providers
© Glenbrook Partners, LLC 2014
17
MasterPass Acceptance Network 40,000 active merchants around the world
© Glenbrook Partners, LLC 2014
18
WHO WE’RE WATCHING
Visa Checkout • Allows customers to pay
without leaving merchant site
• Enables customers to pay
using any major credit or debit card
• Uses device fingerprinting,
step-up authentication, and advanced risk tools
• Authenticates customers
before they make a purchase
• Creates a consistent shopping experience on desktop web, mobile web, and in-app
© Glenbrook Partners, LLC 2014
19
Visa Checkout in Context Card moves to cloud, Checkout connects it to merchant
Visa Checkout Source: Visa, July 2014 © Glenbrook Partners, LLC 2014
20
Visa Checkout User Experience Light-box experience keeps buyer on merchant site
Buyer taps on Visa Checkout button then securely signs in
© Glenbrook Partners, LLC 2014
Buyer swipes to choose payment card and ship-to address
Buyer confirms purchase details on merchant’s site
21
Visa Checkout Consumer-side considerations… •
Simplified checkout process designed to reduce friction and abandonment
Consistent light-box experience across all merchants Swipe across recognizable card art to select payment card Management of ship-to addresses independent of bill-to address •
Over 180 issuers are onboard to open Visa Checkout accounts and provision card data
Bank of America, Citibank, Wells Fargo, PNC, etc. •
Supports Visa, MasterCard, American Express, and Discover branded cards
•
Currently available to buyers in U.S., Canada, and Australia
© Glenbrook Partners, LLC 2014
22
Visa Checkout Merchant-side considerations… •
Lightweight implementation for merchants
Enabled through 10 lines of JavaScript in merchant checkout flow •
Access to full account number and expiration means:
No change to processing flow via gateway, processor, or acquirer No change to settlement reconciliation •
Advanced risk mitigation techniques utilized throughout lifecycle –– upon login, card enrollment, and handoff to merchant
•
Support for desktop, mobile, and in-app checkout flows
© Glenbrook Partners, LLC 2014
23
Future Directions • Apple Touch ID • PayPal Biometric Authentication
Mobile Checkout 2.0 "Mobile$users$staunchly$resist$authenBcaBon$ methods$that$were$tolerable$on$PCs$and$are$ sBll$needed$to$bolster$secure$access$on$ mobile$devices…Security$leaders$must$ manage$users'$expectaBons$and$take$into$ account$the$user$experience$without$ comprising$security.”$ $ $Ant$Allan,$Ph.D,$Research$Vice$President,$ $Gartner$Research$
© Glenbrook Partners, LLC 2014
25
Apple Touch ID Fingerprint identity sensor available on iPhone 5s
•
Touted as “one of the best passwords in the world”
• • •
Easy to setup, becomes better over time (multiple fingerprints, different orientations)
Two uses thus far:
• • •
Your own fingerprint + other users too (spouse, child)
Unlocking the phone (rather than a four-digit passcode) Authorizing purchases via Apple iTunes, the App store and the iBooks store
Touch ID will be available for third party developers in fall 2014 in iOS8
© Glenbrook Partners, LLC 2014
26
PayPal Biometric Authentication “Payment at your fingertips”
•
First payments enabler to embrace fingerprint authentication technology across merchants
•
Optimized for checkout in mobile commerce
•
Based on FIDO Ready software on the Samsung Galaxy S5
•
Launched globally in 26 markets
© Glenbrook Partners, LLC 2014
27
Mobile Biometrics Evolution The market gains momentum • Goode Intelligence reports that by the end of 2015, 619 million people will be using biometrics1 • Garter research projects that 30% of firms will use biometric authentication for mobile devices2
1994
Jan. 2011
Feb. 2013
May 2013
Sept. 2013
Jan. 2014
Apr. 2014
1 Goode Intelligence report Mobile Biometric Security Market Forecasts 2013-2018 2 “Good Choices for Mobile Authentication Must Balance Conflicting Security, Technical and User Experience Needs” by Ant Allan and John Girard. Sep. 2013
© Glenbrook Partners, LLC 2014
28
Mobile Commerce Recap • •
Online commerce is shifting from desktop to mobile devices Merchants are selling to consumers that are mobile –– but checkout conversion rates are not as high as desktop
•
Merchants are responding with mobile optimized checkout flows designed to reduce the data entry burden
•
Digital wallets and checkout assistants are the current “best practice” for reducing data entry of card and ship-to details
•
Federated login is sometimes used to eliminate entry of username and password
•
Fingerprint biometrics may someday eliminate entry of username and password altogether
© Glenbrook Partners, LLC 2014
29
Payments Consulting, Research, and Education
www.paymentsnews.com www.glenbrook.com
Ques%ons?) Jarret)Cuisinier) [email protected]) ) Russ)Jones) [email protected])
