It's the new holy grail of retail sales: the so-called "frictionless transaction."
The people behind the newest methods for making purchases are doing everything they can to reduce the steps and barriers between wanting and owning. But here's an interesting side effect: In our increasingly cashless and plastic-less world, those clever new apps and platforms promoting are boosting another sought-after -- but contradictory -- quality: stickiness.
Sites like PayPal that ushered in secure transactions online now face competition from a growing bevy of platforms that offer e-payment options while you're on the go, and far from your computer keyboard.
Purchasing Power in Your Pocket
The rapid growth of mobile payments can be credited to companies like Square or Zong, which, for now, primarily cater to gadget-wielding Generation Y'ers who want to pay for things in the real world using their smartphones or iPads.
"Our goal at Square is to create a beautiful, seamless experience for both businesses and their customers," said spokesman Aaron Zamost. "By concentrating on connecting both sides of the counter -- from Square Register to Card Case -- we think we can make payments as easy and frictionless as possible."
Square's Card Case allows people to pay without ever taking their phones or wallets out of their pockets. The natural theory is that this will make buying things easier.
However, what makes things easier for a customer to patronize some merchants may also make it harder for them to switch away from them. E-commerce in general allows providers of goods and services to reach consumers directly. But "cybermediaries" -- intermediaries in electronic transactions -- can strengthen the invisible attachments between consumers and merchants.
Let's Stick Together
Reducing friction is about more than making it easier to make a purchase.
"[It] creates a switching cost that makes it difficult for someone trading with one partner to trade with another," explains Charles Steinfeld, a professor in Michigan State University's Department of Telecommunication, Information Studies and Media. "When you move away from cash transactions -- which create only some kind of stickiness -- it increases as you get to some more of these alternative payment options."
In other words, once you've set up a new method to make it easier to buy from one merchant, you're significantly more likely to keep buying from them. The more high-tech the method -- and the more of your data you leave in your digital fingerprint to enable it -- the more likely you'll be to stick with those few trusted vendors.
In his paper, Dispelling Common Misperceptions About the Effects of Electronic Commerce on Market Structure, Steinfeld argues that the advent of e-commerce actually makes purchases less fluid.
"There is some evidence ... suggesting that network-based transactions actually promote longer term, more tightly coupled linkages between businesses that have a continuing need for a given product and their suppliers," Steinfeld wrote. "Empirical studies that examine more than a small set of cases have tended to find that interorganizational data networks promote more tightly coupled relations among firms."
That tight-knit interaction makes consumers latch onto particular merchants all the more because of the transparent personal information that's at stake.
"These firms reduced the number of suppliers with which they traded, despite the lower costs of coordinating with the market," Steinfeld wrote.
The End of Anonymity
The price of all this frictionless on one hand, and stickiness on the other, is a growing loss of privacy.
"We went from an anonymous transaction to one where the merchant has information about the buyer that allows them to market," Steinfeld said. "We've lost anonymity."
When you use mobile payment platforms, your whole pattern of buying is an open book to the provider -- something that's true with credit cards, too. But that ease of use means that even more of your purchases are likely to be made electronically, leaving a detailed record that marketers can use discern your tastes, habits and needs to better target ads to you.
"There's a digital record of a purchase, who what where it was purchased," Steinfeld said. "People need to be aware of that. they've lost something they've had with cash transactions."
Given those negatives and others, it's not surprising that not everyone sees much immediate benefit to using mobile payment technology.
"I don't see the big advantage of it, off-hand," said Glenn Ellison, professor of economics at MIT. "[A] credit card is an awful lot thinner than a phone. I guess you've got the phone anyway. ... It doesn't strike me as something that's transformative."