What are Frictionless Payments: Types & Benefits
Today's clients are accustomed to the convenience of electronic payments and online billing. They also expect businesses to offer multiple payment options, ensuring that their digital preferences are always available—and when they're not, they take their business elsewhere.
To meet the expectations of modern clients, top performing law firms are using frictionless payments to stand out from the competition. They provide a seamless payment process for clients and lawyers, keeping the two in sync every step of the way.
In this article, we'll explore what frictionless payments are, share the most popular types, and reveal how lawyers can benefit from offering them at their firm.
What Are Frictionless Payments?
Frictionless payments aim to streamline the checkout process with fewer steps and simpler interactions. The goal is to eliminate obstacles and potential barriers that could prevent a consumer from completing a transaction, resulting in a higher conversion rate and more revenue for businesses.
Online retailers are credited with pioneering the frictionless transaction process by eliminating the need for customers to visit physical locations and reducing cart abandonment rates. While this methodology was once limited to e-commerce, frictionless billing is now widely available to traditional brick-and-mortar businesses, including law firms.
For a payment to be considered frictionless, it must adhere to the following criteria:
- Provide a fast checkout with minimal steps
- Minimize time spent on the checkout process (including loading times)
- Use automated steps, when applicable, to reduce potential for human error (for example, a mistyped credit card number)
- Integrate seamlessly with the customer's overall shopping experience
From a client perspective, frictionless payments provide a convenient, secure, and efficient means to pay for legal services. Frictionless billing gives clients more flexibility and control over the payment process, allowing them to choose the method that best suits their needs, pay on their own schedule, and remain up to date on current invoices.
In addition to an improved payment experience for the client, lawyers also benefit from quicker payments and reduced time spent on administrative tasks, like manual billing.
Next, we’ll look at which frictionless payment types make the greatest impact on law firms and client satisfaction.
Types of Frictionless Payments
With frictionless billing, there is no waiting for a paper invoice in the mail, no need to pull out a checkbook, or uncertainty about whether a payment has been sent or received. But how do law firms implement frictionless payment methodology into their current billing workflow?
Let’s review six types of frictionless technologies that streamline the legal payment process and discuss how lawyers are using them at their firms.
Proprietary mobile apps have become popular with retailers and service providers in the 21st century. They create a tailored experience that is on brand while allowing users to pay for goods and services directly within the app.
Mobile apps work by storing the customer’s payment information after making an initial purchase. Then, the next time the user wants to place an order, the saved payment method will be available for use—no manual entry required.
While mobile apps create a convenient way for customers to shop online, for service providers, it doesn’t always make sense to have a consumer-facing approach.
Take LawPay's mobile app as an example.
Instead of being designed for client-use, LawPay’s app is designed for lawyers to accept payments on the go. With a swipe, tap, scan, or insertion of a card, lawyers and clients can meet outside the office for greater flexibility and faster transactions.
While there are many benefits of mobile payments, client satisfaction is the leading factor in adopting this frictionless transaction at your firm.
Payment Links & QR Codes
Creating a custom payment experience is one of the most effective ways to get paid immediately when a client receives a bill. Payment links and QR codes allow users to instantly access a personalized payment page, without needing to search for a URL or enter details of their purchase.
These links are practical for law firms because they can easily be added to invoices, making payment a breeze. Simply include the payment link or QR code on the invoice and clients will have direct access to their payment process while it is top of mind.
In addition to a simplified invoicing process, certain legal billing software will also allow you to host payment links and QR codes in other areas of your business.
For example, LawPay enables firms to embed payment links in emails, automatically, with every email sent. You can also share your firm’s unique QR code at the reception desk, allowing clients to pay bills before even stepping out the door.
Digital Wallets & Mobile Wallets
Digital wallets allow users to safely store their credit and debit card information on electronic devices, such as computers or tablets. They're also most commonly used on mobile phones, which is referred to as a "mobile wallet."
When making an online purchase, users simply select the appropriate card in their digital wallet, which then prepopulates the stored data. Your device may request a fingerprint, password, or security code to complete the transaction.
When shopping in-store, mobile wallets act similarly to contactless cards (minus the card). Instead of pulling out a physical credit card, consumers tap their phone next to a contactless-enabled payment terminal. With a facial scan or double-click, the transaction is processed, and payment is made.
This alternative payment method is available through a variety of technologies. Some of the most popular digital wallets include:
- Apple Pay
- Google Pay
A word of caution: Law firms require additional security measures before accepting e-wallet payments. Unlike non-legal service providers, law firms must ensure trust account compliance by separating earned and unearned funds into their respective accounts. There are also ethical obligations regarding how to process fees, which we'll discuss later in the article.
Contactless cards are another frictionless option that soared in popularity during the COVID-19 pandemic. According to a study by MasterCard, 79% of respondents had transitioned to contactless payments between February and March of 2020.
Today, this choice of payment method has become the new normal with an expected market size of over $4.6 trillion by 2027.
Contactless cards use near-field communication (NFC) technology to send short-range radio waves when next to a contactless payment terminal, thus successfully performing a transaction. This type of payment method is also commonly called "tap to pay," an autological name that self-describes how this type of transaction is performed.
Unlike digital wallets, this type of frictionless transaction does require a physical card for payment.
Our next example of frictionless billing is often overlooked but highly effective: scheduled payments.
Take all manual steps out of the equation (besides the one-time, initial setup) and you're left with an automated billing process that guarantees accurate transactions, no missed payments, and a steady cash flow for your firm.
Recurring payments are pre-authorized and run on a set schedule, so clients enjoy an effortless process that avoids late fees and repetitive data entry. They’re also flexible enough that clients can change which account is being used at any point of the process.
Legal Fee Financing
Similar to recurring payments, legal fee financing can help break large, upfront costs into smaller, more manageable installments.
Where do they differ? When the law firm gets paid.
Unlike recurring payments that trickle in over time, certain legal fee financing options allow law firms to receive 100% of the cost at the beginning of the engagement.
With LawPay’s ClientCredit, law firms get the full, upfront payment while clients continue to enjoy flexible, monthly installments. This type of frictionless transaction meets the needs of both parties (receiving and sending payments)—all without the concern of being unable to make a high payment or the risk that a lawyer may be left with an unpaid invoice.
How Electronic Payment Tools Reduce Friction for Clients
Electronic payment solutions simplify the billing process for your firm and simply the payment process for clients.
Here are the top reasons law firms are choosing to implement digital payments and increase client satisfaction:
Eliminates Paper Bills
Eliminate disorganized paper trails with electronic billing processes that accurately invoice, track payments, and store fees owed. Online payment platforms and digital invoices make it easier for clients to access invoices, view payment records, and locate the information they may need to make a payment.
Provides Instant Confirmation
Instant gratification is key to online retailers' success. In just a few clicks, a user is well on their way to receiving their desired product or service with minimal effort.
Electronic payments offer this same instant gratification to clients with immediate automated payment confirmations. Clients are no longer left wondering if their payment was received, and lawyers don't have to ponder if payment has even been sent. It's fast, accurate, and easy.
Facilitates Preferred Payment Methods
Consumer surveys show that the majority of users prefer to pay by credit, debit card, or other electronic means. This includes payments not only for consumer goods but for any bills they receive, including invoices from service providers like attorneys.
By expanding the digital offering of accepted payment methods, law firms create a more accommodating environment for current and prospective clients. It also helps your firm stand out from the competition with a wider offering that has a better chance of featuring a client’s preferred payment method.
Allows Clients To Pay on Their Own Schedule
The proliferation of electronic payments has converted convenience from a luxury to a necessity. Modern clients are used to paying billing on their schedule—24 hours a day, seven days a week.
If clients can pay your invoices on their own schedule, rather than during business hours, they're more likely to avoid missed payments and late fees. This flexibility is also key in how modern law firms get paid quicker than antiquated practices with rigid payment processes.
What Lawyers Should Consider When Accepting Frictionless Payments
Lawyers face a unique set of issues when accepting electronic payments that other retailers or service providers do not encounter. This stems from an attorney's ethical obligations to clients and third-party funds.
Ethical rules require lawyers to separate payments received that do not represent expenses or earned fees into a separate trust account.
In the earlier days of electronic payments, lawyers did not necessarily have the option to divert client payments into trust accounts. However, in recent years, the legal industry has seen the launch of electronic payment processors targeted specifically at law firms. These platforms give lawyers the ability to separate payments into earned and unearned funds and send funds to their appropriate accounts.
Another concern for law firms is the posed ethics and operational issues of processing fees from electronic payments. Lawyers cannot use payment processing to accept client payments representing unearned fees if the payment processing fees are deducted from the payment itself. Those funds still legally belong to the client, so deducting fees and expenses from the client’s property represents a violation of ethical and fiduciary obligations.
Finally, from a practical perspective, electronic payment processing fees represent an expense that lawyers have resisted. However, to stay relevant in today’s landscape, firms must recognize that these fees are just another cost of doing business in the digital age. More and more firms are also willing to accept that the benefits of accepting electronic payments far outweigh the costs associated with offering frictionless billing.
Explore Frictionless Payments for Your Law Firm
Ultimately, frictionless transactions are designed to aid both clients and law firms with a simplified billing process. They provide a streamlined way to invoice clients, eliminate potential obstacles to pay, and keep both parties in sync throughout the process.
While law firms do face more complications than traditional online retailers when accepting electronic payments, legal billing software can alleviate the burden from the law firm to guarantee PCI and IOLTA compliance every step of the way.
With LawPay, fees and expenses are appropriately deducted from operating accounts rather than clients’ funds. An intuitive mobile app allows you to accept payments from anywhere, our proprietary Card Vault safely stores clients’ preferred payment methods for future use, and custom payment links make for tailored billing to your client’s case.
To learn more about how LawPay can help your firm implement frictionless transactions, visit our Legal Payments Guide or schedule a demo today.