Click To Pay vs Card On File
In the e-commerce world, ensuring a smooth, secure, and user-friendly checkout experience is crucial. Two popular terms —Click to Pay and Card on File (CoF)—help merchants offer convenient payment options, but they serve different purposes. Understanding their differences, benefits, and limitations is key to optimizing your checkout process, especially for recurring payments like subscriptions.
What is Click to Pay?
Click to Pay is a fast, secure way for customers to complete one-time purchases without entering card details. Developed by major card networks (Visa, Mastercard, etc.), it provides a wallet-like experience where payment data is stored by the card network, enabling cross-device and cross-merchant usage. It’s typically used for guest checkouts and one-time transactions.
Key Benefits of Click to Pay:
- Frictionless Guest Checkout: Perfect for customers who don’t want to create an account.
- Universal Use: Works across different merchants and devices, simplifying the customer experience.
- Enhanced Security: Tokenization and 3D Secure help reduce fraud.
Limitations of Click to Pay:
- Not for Recurring Payments: Click to Pay is designed for one-time authorizations, making it unsuitable for subscriptions or automatic billing.
- No Merchant-Specific Personalization: Since it’s a universal payment method, merchants have limited opportunities for integrating loyalty programs or personalized offers.
What is Card on File (CoF)?
Card on File (CoF) allows merchants to securely store a customer’s card details for future use, making it ideal for recurring payments like subscriptions and faster checkouts for returning customers. CoF links payment details directly to the merchant’s platform, allowing for automatic and seamless future transactions.
Key Benefits of Card on File:
- Recurring Payments: CoF is perfect for subscriptions or ongoing services where recurring billing is needed.
- Faster Checkout for Repeat Customers: Registered users enjoy one-click checkout after their initial purchase.
- Integration with Loyalty Programs: CoF allows deeper integration with personalized customer experiences, loyalty rewards, and repeat-purchase incentives.
Limitations of Card on File:
- Merchant-Specific: CoF can only be used at the specific merchant where the card is stored. (this is changing right now in the industry; PSP-Tokens are made shareable across PSPs or intra-PSP. See here)
- Security Responsibility: The merchant (or payment processor) is responsible for securely managing the card data, increasing PCI compliance requirements.
Can Both Be Used in Parallel?
Yes, both Click to Pay and Card on File can be used together to cater to different customer segments. Merchants can offer Click to Pay for guest checkouts and one-time purchases, providing a fast and frictionless experience for new or occasional buyers. At the same time, Card on File can be used for registered customers or subscriptions, where ongoing payments or a more personalized experience is necessary.
This dual approach maximizes conversion rates and customer satisfaction by addressing both casual shoppers and loyal, returning customers.
Click to Pay vs. Card on File: Which is Best for You?
Best For:
- Click to Pay: Ideal for guest checkouts and one-time purchases.
- Card on File: Best suited for recurring payments, subscriptions, and repeat customers.
Scope:
- Click to Pay: Works across multiple merchants and devices.
- Card on File: Specific to individual merchants.
Security:
- Click to Pay: Managed by card networks through tokenization and 3DS (Three-Domain Secure).
- Card on File: Security is the merchant’s responsibility, requiring PCI compliance.
Recurring Payments:
- Click to Pay: Does not support recurring payments.
- Card on File: Ideal for automated billing and recurring transactions.
Customer Experience:
- Click to Pay: Great for quick, account-free purchases.
- Card on File: Provides a personalized and fast checkout experience for returning customers.
TL;DR: Use Click to Pay for fast, secure guest checkouts, and Card on File for recurring payments like subscriptions. Together, they enhance both one-time and repeat purchases, boosting your e-commerce success.