Card brands see 'click to pay' growth as answer to merchants' concerns

The card networks' single "click to pay" button — an implementation of Secure Remote Commerce — is drawing some negative attention from merchant groups and independent networks that see it as a way to steal volume from alternative payment providers.

The deployment of SRC is well underway, with Visa having already begun phasing out its old Visa Checkout brand in the U.S. in favor of SRC, and Mastercard having won the buy-in of major merchants last year.

SRC is not set up to favor any one card brand over the others. Instead, it's designed as a security overhaul for those brands, and an answer to merchant complaints that those brands have littered their checkout pages with distinct digital payment buttons over the years.

The single pay button made its debut last fall with Visa, Mastercard, American Express and Discover, all operating through EMVCo, announcing its use to streamline the checkout process at all participating e-commerce sites, regardless of size.

Because full security compliance through the Payment Card Industry security standards remains a tough climb for many merchants, the card brands perceive any process that takes the payment credentials away from merchant networks as narrowing the merchants' compliance burden.

"SRC removes the technology and security risk for merchants and service providers to store sensitive card information, which we know has become a pain point," said Rupa Krishnan, vice president and head of network products for American Express. "As the payments landscape continues to evolve, there is now a need for payment security solutions that can meet both merchant and consumer expectations."

From their perspective, Amex and the other card brands are moving forward on technology that merchants have consistently said they want and need.

"Compliance, simplicity and ubiquity are all equal in order of importance, and I think they all work together for the benefit of the merchant and consumer," said Thad Peterson, senior analyst with Aite Group.

The design of the click to pay button should also allay fears that merchants' checkout pages will morph into a competitive battleground among the major card brands.

"The SRC positioning of click to pay is generic for all brands and the network logos are evenly represented" on the checkout window display, Peterson said. "Also, the way it is structured, merchants will only display the logos for the brands they accept, and customers are most likely to use the payment card that they generally use for online purchases. So, I don't think that share shift is a likely outcome of the offering."

SRC's initial rollout includes businesses like Cinemark, Movember and Rakuten, which Mastercard declared late last year as the first merchants to adopt click to pay on their sites. Others who have followed include BassPro, JoAnn Fabric and Crafts, Papa John's Pizza, Saks Fifth Avenue, SHOP.com, Staples and Tickets.com.

Despite the buy-in of these major brands, groups like the Secure Payments Partnership, the Merchant Advisory Group and National Retail Federation view the technology as another power move by the card brands to assure transactions go to their networks.

EMVCo's only members are American Express, Discover, JCB, Mastercard, UnionPay and Visa.

As such, some merchants and independent networks seek more of a voice in how standards are developed and deployed, thus establishing a pathway that welcomes potential innovation beyond what the card brands can bring to the table.

In the same manner as Mastercard and Visa have tried to advance digital commerce on many fronts, Amex made it clear last week during its fourth-quarter earnings call that improving digital interaction with it customers was vital to fuel card adoption among younger consumers.

Amex's own 2019 Digital Payments Survey examining the current status of online and in-store payments in the U.S. revealed the "battle between convenience and security to be quite evident," Krishnan added. The study showed 80% of U.S. merchants said they would benefit from a technology that reduces the need to store customer payment data, and 79% agree that their online checkout experience needs to be simplified for customers.

In addition, more than two thirds of U.S. merchants, at 69%, reported that their companies spent a significant amount of time and expense dealing with payment fraud, while 77% of respondents noted their companies experienced some type of fraud since being in business and their efforts to manage security were impacting bottom lines.

If merchants are seeking more input, the card brands have generally voiced an openness for that process.

"Merchant input is critical to ensuring SRC solutions meet the needs of today's digital shopping environment," Krishnan said. "Both through our direct relationships with merchants and our participation in EMVCo, American Express has gathered and continues to gather feedback from the payment community that has already helped shape the approach to SRC."

As far as implementing SRC, the card brands have had the necessary infrastructure for the technology in place for some time. Amex was integrated into the solutions offered through Visa and Mastercard when the SRC rollout started.

"The evolution of SRC includes many opportunities to further integrate with things like voice-generated commerce and [internet of things] devices and smartwatches," Krishnan said.