Online and e-commerce payments are booming, growing five times faster than in-store payments. However, this dramatic shift brings challenges for merchants, issuers, and end users, including security concerns, higher drop-off rates, increased operational costs, and missed revenue opportunities for banks.
It has been estimated that 70.19% of online shopping carts will have been abandoned worldwide during the course of 2024. Key reasons include reluctance to create new accounts (26%), lack of trust in site security (25%), and lengthy checkout processes (22%). To address these issues, in 2017 EMVCo defined a framework for secure remote commerce and a unified secure checkout experience, supported by major payment networks like Visa, Mastercard, Amex, and Discover.
Introducing Click to Pay
Click to Pay has emerged from this framework as a solution that meets consumer expectations for easy and secure online checkouts. Based on the EMV SRC (Secure Remote Commerce) specifications, this online checkout option is as safe and straightforward as in-store transactions, allowing consumers to pay securely and quickly with just one click.
Users can store their payment credentials by registering with Click to Pay directly with their card issuer. During online shopping, merchants integrated with Click to Pay can recognise users on their trusted devices, enabling customers to choose from stored payment cards without having to manually enter credit card, billing, or shipping details.
Benefits of Click to Pay
Click to Pay transforms the online payment experience in much the same way that contactless has transformed in-store payments. Available to all cardholders, it offers end users a faster checkout experience, higher security through tokenization, and convenience across multiple channels.
For merchants, Click to Pay reduces abandoned carts, integrates smoothly with existing checkout pages, and can be a cost-effective alternative to other one-click options, like Apple Pay.
Issuers benefit from higher card authorisation rates, reduced fraud, and support for more tokenized payments.
The Future of Click to Pay
With mandates in place for issuers to implement Click to Pay and significant benefits on offer to merchants, this is set to be a hot topic over the next 12 months.
Mastercard’s recent announcement to phase out manual card entry for e-commerce transactions in Europe by 2030 in favour of tokenization represents a strategic move towards a secure, seamless checkout experience in which Click to Pay will play a major role. This development closely followed Visa’s announcement of its pioneering application of passkeys to enhance the Click to Pay experience, leveraging biometrics for password entry. Both payment networks, Visa and Mastercard, are working primarily with issuers, but also with merchants, to push the adoption of Click to Pay. In 2024 they issued mandatory requirements for issuers to implement Click to Pay with expectations to enrol all countries globally by 2025.
The Hurdles Facing Issuers Today
Alongside the potential benefits, issuers face several challenges when implementing Click to Pay solutions. One major pain point is the complexity of integration with existing systems, which often requires significant technical resources and expertise. Additionally, compliance with evolving industry standards and mandates can be daunting, as it demands continuous updates and adjustments.
Implementing robust security measures to protect sensitive customer data adds another layer of difficulty, requiring advanced tokenization and encryption technologies. But that’s not all. Issuers must balance the costs of implementation and maintenance with the potential benefits, and some are struggling to justify the investment. And all of this must be combined with ensuring a seamless and user-friendly customer experience, which can be challenging in itself as it involves optimising the enrolment and transaction processes to minimise friction and maximise adoption.
Issuers Must Address Short-Term Deadlines and Long-Term Goals
For issuers, the most pressing requirement is to accelerate Click to Pay deployment to meet the deadlines now mandated by payment networks. Looking further ahead, issuers must also ensure they can evolve to maintain compliance with major schemes such as Visa and Mastercard while de-risking their future strategies. Compliance is essential but must not compromise banks’ roadmaps for transformation and modernisation, which are key for competing effectively with fintech’s and neo banks.
Achieving these objectives involves multiple and complex challenges. Issuers need to optimise their strategies for prioritising and executing all the necessary actions by balancing internal capacity, external resources, and roadmaps that encompass compliance, technical evolution, and new projects. To take full advantage of investment in Click to Pay, issuers should also plan for accelerated deployment of further use cases such as virtual cards, dynamic CVV, digital PIN notifications, and tracking of physical card deliveries.
Thales D1: Your Partner in Click to Pay
Choosing Thales D1 as a modern card issuing partner ensures issuers meet the requirements and mandated dates imposed by payment schemes. Our ‘Plug and Play’ Click to Pay offering requires minimal investment and development effort, relieving issuers of stress and technical complexity.
Thales D1 provides a frictionless enrolment experience and ensures compliance with industry regulations now and in the future. Our modular platform also offers a range of digital and physical services, helping banks comply with mandates including Click to Pay and other regulatory requirements, while enabling new use cases in their modernisation roadmaps to compete with fintech’s. In addition, Thales D1 is scheme agnostic, simplifying maintenance and compliance for issuers with multiple schemes as adaptions can be replicated across providers without duplicating workload.
To hear more about how the Thales D1 platform can support your move towards Click to Pay, check out the links below.
