This document discusses creating frictionless payment experiences. It begins by discussing credit card tokenization and mobile wallets. Tokenization allows one-click payments by storing credit card details with an authorized third party. Mobile wallets take care of card storage and can provide user contact information. The document then covers opportunities from PSD2 regulations, including third parties initiating payments and accessing bank accounts, as well as increased consumer protection and authentication requirements. PSD2 could open opportunities for merchants to cut out middlemen by acting as banks themselves.

1. Matias Pietilä, Head of design
HOW TO CREATE
FRICTIONLESS
PAYMENT EXPERIENCES
FROM PAYMENTS TO BUYING
DIBS | 28.11.2018

2. NOW WE’RE SO MUCH MORE
WE WERE MOBILE FIRST
@QVIK
TALLINK SILJAWHIM ST1 ARKEN ZOOAURINKOMATKAT

3. MONETISE
THE CONSUMER’S
POCKET
DATA-DRIVEN
DESIGN
DELICIOUS
UX
FAST TIME-TO-
MARKET
BLEEDING EDGE
TECHNOLOGY
BETTER
BUSINESS
THROUGH DATA
HARNESSING
CLOUD & AI
EXCELLENCESENABLERS
MOBILE PAYMENT
EXPERTISE
WE WERE MOBILE FIRST
NOW WE’RE SO MUCH MORE

4. @QVIK
SWAP.COM
3X
CONVERSION
8X
MOBILE SALES
TALLINK SILJA
compared to web after 2 years
+60%
CONVERSION
AURINKOMATKAT
after 2 months
CREATING IMPACT
WITH DESIGN & TECHNOLOGY

5. OUR ROLE IN THE SCENE
‣ We help merchants find the best ways to do
payments in their selected channels
‣ We do design/development/consulting with
certain banks
‣ We are in talks with PSPs to help them
improve their solutions
‣ We are in talks with fintech startups to
understand what happens
‣ We want to stay on top of PSD2 development
to be able to advise our customers
@QVIK

6. THAT ESCALATED QVIKLY
@QVIK
BRINGING APPLE PAY TO SWEDEN & FINLAND

7. MOBILE DEVICES TEND TO CATER FOR THE
MAJOR PART OF BROWSING ON MOST
CONSUMER WEB SERVICES ALREADY.
MOBILE CONVERSION IS HARD
@QVIK

8. MOBILE DEVICES TEND TO CATER FOR THE
MAJOR PART OF BROWSING ON MOST
CONSUMER WEB SERVICES ALREADY.
MOBILE CONVERSION IS HARD
@QVIK
WHEN IT COMES TO SALES, HOWEVER, THE
SITUATION IS WORSE. WE OFTEN SEE MOBILE SALES
LAG BETWEEN ONE FOURTH AND ONE THIRD OF
TOTAL SALES.

9. SEAMLESS PAYMENTS
ARE ONE PART OF THE
SOLUTION
MOBILE CONVERSION IS HARD
@QVIK

10. @QVIK
TOKENISATION
PAST 2019
MIF/IFR
SWISH, VIPS,
KLARNA, PIVO,
MOBILE PAY,
SIIRTO,
MASTERPASS ETC.
APPLE PAY PSD 2
BLOCKCHAIN
(PISP & AISP)
(XS2A)
CASH WILL
DISAPPEAR
CARDS WILL
DISAPPEAR
FUTURE
GOOGLE PAY
PRESENT
PAYMENT TIMELINE IN NORDICS
PSD2 INTO FORCE
PISP & AISP
XS2A

11. TOPICS TODAY
CREDIT CARD
TOKENISATION
Enabling one-click
payments
MOBILE
WALLETS
Benefits beyond
payments
PSD2 & FUTURE
OPPORTUNITIES
…and threats
@QVIK
1 2 3

12. TOKENISATION
WHAT IS IS ABOUT?
‣ Making it easier to pay by credit card by storing
the credit card information
‣ Tokenisation is a way to externalise storing the
actual credit card information to an authorised
third party
WHAT SHOULD YOU DO?
‣ There’s no reason to put off implementing this: the
technology is mature and there are several 3rd
parties available for storing the credit card data
‣ In addition to commission levels, pay attention to
the fact if the supplier provides ways to customise
the payment experience to suit your needs (native
SDKs etc.)
@QVIK

13. LOOK BEYOND
COMMISSION LEVELS

15. OPPORTUNITIES
IMPROVED CONVERSION FRICTIONLESS
UPSELLING
RECURRING PAYMENTS
@QVIK
1 2 3

16. SUPPORT SAVING CREDIT CARDS
@QVIKSource: Nets 2018, https://www.paytrail.com/en/finnish-ecommerce-2018-report-download

17. RECOGNISING USERS
BASED ON THEIR CARD
‣ With tokenised cards it’s possible to
recognise users if they pay with the card
that is stored under their customer
profile
‣ This can be used to enable automatic
loyalty point collection
‣ Also omni-channel experience: buy a
ticket and a vending machine, get it sent
to your phone without ever logging in
@QVIK
OMNICHANNEL OPPORTUNITIES

18. TOPICS TODAY
CREDIT CARD
TOKENISATION
Enabling one-click
payments
MOBILE
WALLETS
Benefits beyond
payments
PSD2 & FUTURE
OPPORTUNITIES
…and threats
@QVIK
1 2 3

19. MOBILE WALLETS
WHAT IS IT?
‣ Mobile wallets take care of card storage
‣ Customers don’t need to store their card to your service
separately => less friction
‣ Certain wallets also deliver contact information to
merchant: no sign-up required => less friction
WHAT SHOULD YOU TAKE INTO ACCOUNT?
‣ In some markets there are clear winners (Swish in Sweden,
MobilePay in Denmark etc.)
‣ In some markets there’s a large number of operators,
availability in different channels varies, a messy situation
for consumers
‣ The level of integration defines the UX. The best
experience doesn’t always win, though (e.g. Apple Pay
adoption slowed down by limited bank support).
@QVIK@QVIK

20. SWEDISH EXAMPLE
‣ The Swedish train operator SJ reported
rapid adaptation for Swish payments
once they enabled that in their mobile
app
‣ 6 out of 10 users already paid with
Swish – after Swish had been supported
for a year in the app
@QVIK
STEP 2
Source: http://www.mynewsdesk.com/se/sj/pressreleases/miljardgraensen-spraengd-foer-swish-hos-sj-2462324

21. https://www.riksbank.se/globalassets/media/statistik/betalningsstatistik/2018/payments-patterns-in-sweden-2018.pdf

22. https://www.riksbank.se/globalassets/media/statistik/betalningsstatistik/2018/payments-patterns-in-sweden-2018.pdf

23. https://www.riksbank.se/globalassets/media/statistik/betalningsstatistik/2018/payments-patterns-in-sweden-2018.pdf
CARDS STILL DOMINATE IN THE PHYSICAL WORLD

24. @QVIK
SWISH IN ACTION

25. @QVIK

26. @QVIK
‣ Not available for foreigners
‣ Only debit payments
‣ Still rather many steps
‣ Requires several applications
‣ Won’t pass customer contact info to the
merchant
HOW TO IMPROVE IT?

27. OTHER MARKETS AREN’T QUITE AS FAR

28. OTHER MARKETS AREN’T QUITE AS FAR

29. https://www.clearhaus.com/
blog/mobile-payments-and-
digital-wallets/

30. https://www.clearhaus.com/
blog/mobile-payments-and-
digital-wallets/

31. @QVIK
APPLE PAY & GOOGLE PAY
‣ More integrated on-boarding
‣ Support for both digital and physical
environments
‣ Support for loyalty schemes (in theory)
‣ Deliver contact data for merchant
‣ Support for features not available for
third party solutions
‣ Market penetration still small in Nordics
due to limited bank support

32. @QVIK
APPLE PAY & GOOGLE PAY
‣ More integrated on-boarding
‣ Support for both digital and physical
environments
‣ Support for loyalty schemes (in theory)
‣ Deliver contact data for merchant
‣ Support for features not available for
third party solutions
‣ Market penetration still small in Nordics
due to limited bank support

33. APPLE PAY & GOOGLE PAY BENEFITS
@QVIK
PHYSICAL
WORLD
DIGITAL
CHANNELS
CONSUMER MERCHANT &
ISSUER
1 2
3 4

34. 1 CUSTOMER BENEFIT
IN PHYSICAL WORLD
‣ Payment without card
‣ Tight integration with the device/OS: no need
to open anything
‣ Near field payment without 25€ limit
‣ Safety and feeling of safety
‣ No need to remember PIN codes
‣ Safer than normal card: the number is not
passed for the merchant
@QVIK
1 2
3 4

35. 2 MERCHANT AND
ISSUER BENEFIT IN
PHYSICAL WORLD
‣ Works directly (hardware + software)
‣ Give customers their preferred way of
payment
‣ Faster transactions at POS (no PIN codes)
‣ Smaller fraud risk (issuer, not merchant,
pays a small commission for Apple)
@QVIK
1 2
3 4

36. 3 CUSTOMER BENEFIT
IN DIGITAL CHANNELS
‣ Effortless payment that works the same
way, every time
‣ No need to register
‣ No need to enter payment info during
onboarding
‣ No need for any extra app
@QVIK
1 2
3 4

37. @QVIK
PAYMENT
INSIDE AN APP

38. 4 MERCHANT BENEFIT
IN DIGITAL CHANNELS
‣ Apple/Google take care of credit card
tokenisations
‣ High conversion rates
‣ Anonymous payments (the wallet shares
customer contact data during payment)
‣ Easy to integrate
@QVIK
1 2
3 4

39. HOW MUCH WILL IT COST
FOR THE MERCHANT?
@QVIK
PHYSICAL WORLD
‣ Nothing! (No extra to standard card
payment)
‣ Issues commission isn’t public
information
DIGITAL CHANNELS
‣ Typically fully competitive compared to
standard credit card tokenisation

40. WHAT DOES IT TAKE?
@QVIK
PHYSICAL WORLD
‣ NFC capability for POS system
‣ No extra contracts
DIGITAL CHANNELS
‣ Compatible PSP (like NETS)
‣ Typically one-week development project

41. DON’T MAKE ME THINK
…PAVED WITH GOOD INTENTIONS

42. DON’T MAKE ME THINK

43. USE SMART DEFAULTS

45. COMBINING
TOKENISATION & WALLETS
‣ The food delivery app Wolt is a successful
example of providing a friction-free payment
experience
‣ From the very beginning they have supported
credit card tokenisation
‣ Once Apple Pay was launched, they quickly
adopted that.
‣ If the user has Apple Pay set up, Wolt uses that by
default, minimising the onboard hassle.
‣ If the user doesn’t have Apple Pay enabled, it’s
never mentioned to keep things simple but the
user is taken to Wolt tokenisation flow instead (i.e.
take a photo of your credit card).
@QVIK

46. WOLT STARTS
SUPPORTING MOBILE
PAY IN FINLAND
NEWS FROM 27.11.18 (YESTERDAY)
@QVIK

47. TOPICS TODAY
CREDIT CARD
TOKENISATION
Enabling one-click
payments
MOBILE
WALLETS
Benefits beyond
payments
PSD2 & FUTURE
OPPORTUNITIES
…and threats
@QVIK
1 2 3

48. CREATE MORE OPENNESS AND
FOSTER COMPETITION BY
INCREASING REGULATION
PURPOSE OF PAYMENT SERVICE DIRECTIVE 2
@QVIK

49. PURPOSE OF PAYMENT SERVICE DIRECTIVE 2
@QVIK
CREATE MORE OPENNESS AND
FOSTER COMPETITION BY
INCREASING REGULATION
(IT SOUNDS SO BIZARRE IT JUST MIGHT WORK)

50. PSD2
WHAT IS IS ABOUT?
‣ An EU initiative that aims to create more competition and
innovation
‣ Banks required to open APIS for payment access on
customers consent XS2A (access to account)
‣ Increased consumer protection and strong customer
authentication for (almost) all online payments
WHY IS IT RELEVANT?
‣ Increased consumer protection affects payment flows
‣ For big merchants, this makes it possible to cut the
middleman and act as a bank by yourself
‣ New players likely to emerge, traditional banks at risk of
losing their share
‣ Lower transaction costs and better services for end-users
‣ It will become effective on 13th of September in 2019
@QVIK
STEP 3

51. @QVIK
EXPERIENCE
Payment
Scheme
PISP
An updated inte
Third-party payment initiation
An updated payment model including a Payment Initiation Service
Provider (PISP)
PRESENT FLOW
FUTURE FLOW
PSD2 AND OPEN BANKING FORCES BANKS TO OPEN UP PAYMENTS, ACCOU
PARTIES
Customer’s
Bank
Merchant’s
Bank
Customer Merchant Custom
Custom
Bank
Third-party account access
An updated interaction model including an Account Information
Service Provider (AISP)
ation Service
PRESENT FLOW
FUTURE FLOW
KS TO OPEN UP PAYMENTS, ACCOUNT AND PRODUCT DATA TO THIRD
Merchant’s
Bank
Merchant Customer
Customer’s
Bank
Customer’s
Bank
Customer’s
Bank
AISP
API
Copyright © 2017 Accenture. All rights reserved
Source: Accenture
THIS MAY BECOME RELEVANT
FOR MERCHANTS AS WELL!

52. PSD2: CONSUMER
PROTECTION
WHAT IS IS ABOUT?
‣ PSD 2 will require strong customer authentication for
online payments
‣ Unconditional chargeback right for direct debits is
introduced to consumers (details still unclear)
WHY IS IT RELEVANT?
‣ Payment process will become more complex than
currently
‣ It becomes essential to provide the users with
effortless two-factor authentication services by fall
2019 to keep payments easy
@QVIK

53. SECURITY MEASURES MAY DECREASE
USER EXPERIENCE
REAL RISK
@QVIK

54. @QVIK

55. BUSINESS OPPORTUNITIES
IMPROVED
CONVERSION
SEAMLESS
UPSELLING
RECURRING
PAYMENTS
1 2 3
INVISIBLE
LOYALTY
4
@QVIK
FRICTIONLESS
SIGNUP
5
BEYOND CONVERSION OPTIMISATION

56. LET’S CREATE IT TOGETHER
www.qvik.com
@mpietila