Online Payments, Friction and the Downside of Diversity

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My homeboy Chris Dixon wrote a thoughtful post entitled: "Are people more willing to pay for digital goods on mobile devices?" The heart of his argument: 

I think we are in the AOL “walled garden” days of the mobile internet. Demand is far outpacing supply, so consumers are paying for digital goods. I don’t pay for news or simple games on the desktop internet because there are so many substitutes that my willingness to pay is driven down to zero.

On this point regarding the walled garden days, he may in fact be correct. However, this walled garden has some lessons to teach us. In the comments, someone brought up the point that making purchases in the iPhone garden is just a helluva lot easier than making them on the desktop web. Chris replied and so did I

chris dixon 24 minutes ago in reply to petekazanjy

I agree making payment more convenient helps. Its no coincidence the biggest mobile content sellers also have credit card #'s on file (carriers, Apple, Amazon).

But do you think the (desktop) NYTimes could save themselves by adding a "Pay by iTunes/Amazon/Apple" button? Fundamentally the problem is too many alternatives.

Matt Mireles 9 minutes ago in reply to chris dixon

Obviously product differentiation matters too. NYT still runs a lot o
f generic legacy newspaper type news, so they're not a good example. But let's take TechCrunch––would you pay for a TechCrunch Pro product if all it took was two clicks? Step 1) Initiate purchase, Step 2) Confirm Purchase. I sure as hell would.

But see, even this pay by iTunes/Amazon/Apple option involves the friction of having to remember then type your login info and password. 

What the world needs is a web browser that interfaces with a standard payment system. That's how you really get to frictionless two-click purchasing. [I compressed 2 comments into one here, just fyi]

Think about it. Imagine how your purchasing behavior would change and how your purchasing threshold would go up if in the offline world each purchase required you to manually input then confirm your credit card number, first and last name, address, expiration date and secret code instead of just swiping your card or paying cash? Transactional friction would skyrocket and you'd think a lot harder making a purchase. In fact, I think impulse purchases would simply dry up as a category. And lets face it, media is often an impulse purchase (that's why they put magazines at the checkout counter). This nightmare scenario is how the desktop internet currently operates.

Amazon Payments, PayPal and the like are better-than-nothing half-measures. One simple fact remains: the online payments industry is just too fragmented. Users have too many passwords and logins to remember. The world needs a single standard for online payments. We need to make buying online as easy as buying in the real world, if not more so.

And it can't be a browser plugin. Too few people download those. The payments have to be integrated into the browser itself, so that no matter the site, you can pay with two clicks. The other option is Facebook Connect. That could work too.

2 Comments

  1. Somebody December 28, 2009 at 10:42 pm #

    yes, again.

  2. Somebody December 28, 2009 at 3:42 pm #

    yes, again.

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