Payment is a crucial element of purchasing, and its main features–convenience and security– impact the overall retail experience and perception in use. Through interviews, surveys and focus groups, Rehncrona explored how consumers and retailers engage with various payment methods. Her thesis focuses on two key concepts: interdependence and friction.
– Digitalisation has accelerated the pace and possibilities of everyday transactions, integrating purchasing into daily life with ubiquitous access to digital devices and platforms. The digitalisation brings us further from the physical money and their value. Traditionally off-line payments have a higher threshold with more friction, but consumer perception also depends on habits and familiarity with the payment says Rehncrona.
If you use, I use
Rehncrona’s research highlights the importance of interdependence in the use of payment service platforms. Users don’t necessarily interact, but they are still interdependent on each other. Previous research has emphasized value creation in interaction. While in payment platforms value is formed in interdependence. If no one uses the platform, there is no value for any one other to join and use the platform.
– A payment service is valued by consumers based on its ability to fulfil the purpose of using the service. This includes the number of possibilities for interaction and transaction, thus the number of other users on the other side of the market for which consumers have some demand. Likewise for retailers, the value of accepting a payment service depends on how many of their potential customers are connected to that service, says Rehncrona in her thesis.
Friction: The Balance Between Convenience and Security
While convenience is a major benefit of digital payment systems, Rehncrona points out that friction can also play a valuable role. Friction, in her thesis, is defined as a form of cost–which can be a positive, for instance as an additional step in the transacting process or a well-known third-party seal.
“If making a purchase is too easy, the user may become uncertain, which can affect their trust for the retailer or the payment service. There is a trade-off between convenience and security: too much convenience can feel unsafe, while too much security can reduce convenience,” says Rehncrona.
This trade-off, she notes is also influenced by the social and institutional context surrounding the transaction. Past experiences with payment services and familiarity with the process also affect this trade-off.
– Consumers get wary when payment solutions are too easy, Rehncrona adds. For example, in one of the studies from her thesis, focus group participants discussed new payment methods (data collection in 2015)
“– Apple Pay, a payment function launched in the USA, where you just place your mobile at the counter and the payment is made. – That sounds life-threatening.”
– This quote shows how the ease of using this new technology carries an undercurrent of fear. For them, it is unknown how this new payment function works, yet it exists within a device they use every day. The fear of so seamlessly being deprived of one’s funds is imminent, says Rehncrona. While nowadays mobile payments such as Apple Pay is widely used, which show the pace of change and how interdependence overcome such concerns.
Conclusion: Friction Adds Value
In conclusion, Carin Rehncrona found that friction can enhance the value of a transaction by increasing consumer perceived trust in the seller and the payment system. Additional steps or friction in the payment process can also induce customers to reflect on their purchase, potentially reducing impulsive decisions and return rates.
Interdependence makes payment service worth having and using, both for the retailer and the consumer. As digitalization expands in retail with more actors involved, the complexities of these interdependencies grow and prolongs relationships between actors in the retail platform ecosystem.
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The introductory chapter of the thesis in Lund university’s research portal.
