Why are payment forms so complicated?

The reason why payment forms are so complicated is because the credit card model is completely broken. Instead of transferring money from your account to their account, you give the other person unlimited and irrevocable access to your account, and then that person takes the money. This is a hilariously stupid way to transfer money. Once they have your credit card number, they can continue to take as much money as they want. Even worse, if they lose the number to some attack, the attacker can take money.

A much better system would be if you could get a temporary number where the merchant can withdraw exactly the amount you need to pay and no more. No charge-backs possible. That's not a problem since the reason we need charge-backs is to patch up the fact that people can randomly take money from you just by knowing the credit card number, which you need to send around to make payments.

Even better is this. At checkout the merchant's site would redirect you to yourbank.com/makepayment?amount=X&target=themerchantsaccount. There you would log in (if you were not already logged in) and click confirm, and the bank would send the money to the merchant. Very user friendly and secure, and no chargebacks. In the Netherlands we have such a system, it's called iDEAL and pretty much all dutch e-commerce uses this. The nice thing is that if your bank is secure, it's secure. You are not relying on thousands of individual merchants implementing security correctly, and you are not relying on the merchant not being evil.

Or bitcoin of course.

IP based "fraud" detection is fucking annoying.

I live in the UK and want to have stuff shipped to family in the US. I've had vendors of all sizes turn away my business because either they didn't like my IP or wouldn't let international addresses order at all.

Amazon(.com) has literally earned themselves thousands in additional sales because they happily accepted my UK payment to a US address without fuss or hassle.

You might say this is a niche situation but money is money, and I've had lot's of small vendors lose out because they were "US only!"

I now also have a "flower guy" because they're the only one in the city who will do international flower orders...

PS - Specific example, NewEgg, wanted to buy a several hundred dollar laptop - couldn't. Used Amazon instead.

Hehe, I have a recent relevant experience with this topic:

I just finished a simple gift certificate purchase page[1] for a client where I attempted to cut out all unnecessary details; the client's immediate response? "Looks good, but can we add some more fields like name, address, and security code to make it look more 'official'".

Edit: I don't necessarily disagree with their intuition; I think some consumers might actually be suspicious of a sparse payment form but I don't have any hard data.

[1] https://motorcycle.ctec.ca/gifts.html

At Stripe, we've had to take a lot of these considerations into account when designing the Checkout. One particular bug-bear of mine is people disabling autocomplete on their credit-card forms.

Turns out that modern browsers (e.g. Safari/Chrome) encrypt CC data on disk, and that it's entirely PCI compliant to turn on autocomplete. The only field we don't do so (and that the browser doesn't store) is the CVC field.

Another tip is adding 'pattern="\d*"' to number/cvc/expiry inputs. That'll bring up a numeric keyboard in mobile browsers.

Lastly we've open sourced a library that'll do a lot of the client side validation and credit card number formatting for you: https://github.com/stripe/jquery.payment

Most of these forms are more complicated because of tax codes and such. If I don't know your name or your address, I can't adequately assess whether I should be collecting sales tax. Failing to collect and report sales tax can come with very hefty fines.

There's a whole bunch of other valid reasons too. If there's a problem, it's nice being able to actually contact your customer. Most businesses need to be able to produce receipts, with some data needed to even count as a receipt ("you were charged X on Y" via email -- which you may not have anyway -- usually doesn't cut it).

And I'd love to see the data on this, but if someone has gotten to the point where they've decided to purchase and are presented with fields that are pretty standard just about everywhere else, I suspect abandonment rate is rather low. The pros just seem to outweigh the cons on this minimalism debate.

We at Thumbtack use a similarly simple form, and our chargeback rates are very small [although admittedly we aren't a particularly attractive candidate for fraud]. We also did see both conversion increases and frustration decreases when we switched to a simpler payment form.

We do have one difference though (which I would call a simplication): For the expiration date, we just have input boxes for the person to enter it instead of a dropdown. Select boxes are great if a) You can pick a sane default and b) you don't have many options. For a CC form, both of these fail. You cannot set the default with anything better than random accuracy, and each box probably has at least 10 options. Additionally, the expiration date box says "2 - February". I have a lot of credit cards, and none of them say the name of the month on it, only the number. Why waste the space?

The user just typed in their 16-digit credit card number, just pop them right into the expiration date input boxes for them to type in their month and year free-form. Don't make them put the credit card down, pick up the mouse, then have to navigate select boxes with tiny print.

Don't forget, the amount of fraud that you need to worry about depends highly on the service or product you're selling. My company has only dealt with one fraudulent charge for $65 over the past 5 years of selling our product across a huge number of transactions.

No thief in their right mind would want to steel a Software as a Service product like ours since you can't really resell it. If they were reselling it we'd quickly find out about it and disable the account.

If we were selling hardware or an item that a thief could turn around and resell without any trace, we'd have to worry quite a bit more about fraud.

I'd hate for somebody who is running a SaaS company to read this and implement some insane IP/Tor/blah fraud detection scheme when the nature of their product/transactions doesn't necessitate it.

Even if you do need to collect some of that information (such as the address if you need to ship a product), several of those fields still remain redundant.

Notably, you should never ask for "credit card type"; the credit card number already tells you that. I like the forms that just ask for a credit card number and then show the computed card type's logo once you've filled it in.

You can also automatically compute the city and state from the zip code, but that requires you to ask for the zip code first, which does break user expectations somewhat.

And please, don't ask for "First Name" and "Last Name" unless you specifically need them separated for some reason; just ask for "Name".

I had a relatively simple payment form for a while, but I found I was being hit with a huge amount of fraud transactions and had to manually review each transaction at the end of each day to see if any looked suspicious and issue a refund.

I switched to using MinFraud automatic fraud detection. Unfortunately, their system requires that the customer provide their country, city, and postal code. They run over a dozen different checks from IP address, proxy detection, distance from IP to provided ZIP code, etc. I haven't had a single chargeback since I started using it.

For me, my product sells for $8 and a charge back is $15. For me it ended up worth while to implement the larger payment form in exchange for eliminating chargebacks.

I really wish that payments could be made simpler, but that would require that processors do much more vigorous fraud checks and they don't have a financial incentive to do so (they make their normal fees from fraudulent transactions that aren't caught).

Here's a tip if you care at all for International payment:

DON'T RELY ON ZIP CODE ALONE

For one, you don't know the different formats of zip codes around the world

Second: not all countries have Zip Codes. Like Ireland, for example.

See here: http://www.google.ie/about/jobs/locations/dublin/ "Dublin 4" is the "Zip code"

About the issue of matching addresses, it seems that the payment processors can't do a fuzzy matching (not sure why), so if your address is "P Sherman 42 Wallaby Way Sydney" and you typed "42 P Sherman Wallaby Way Sydney" you're denied the transaction

So I recently went from one of these simple forms to a more complex one due to a client's request. I did this because his customers were complaining that they didn't understand why they didn't have to fill out all this information. Everyone else makes them fill it out and they thought it was an problem or scam of some sort.

I implemented a full form asking for all their information and toss out everything during processing. It's a very silly thing but it makes customers feel better about the checkout process for some unknown reason to me...

Where companies like Sift interest me is moving from a place where a system determines whether or not it believes a charge is fraudulent to a place where you evaluate the likelihood that an individual transaction is fraudulent. And they're absolutely right that individual components are going to lead to tons of false positives and then eventual end-gaming of their countermeasures.

As an example, in the implosion following the dot-com boom, it was almost impossible for denizens of many Eastern European and African countries to buy things online because the incidence of fraud attributed to their country was high enough that the fraud officers at many online retailers wouldn't chance it. I have a friend who lived in Romania who had a credit card that used my address in the US and frequently required me to ship stuff for him because no companies would ship directly to him. He loves the modern era of fraud evaluation, because while his country is weighted negatively, his use of a respected international bank, an IP address in the same area as his billing address and purchase history with many online companies has greatly reduced his level of hassle due to false positives alleging that he's a fraudster.

Fraud is a huge motivation but one thing the article doesn't mention is sales tax.

When I sell a product online, I need to charge sales tax if the customer lives in Canada, a different tax if the customer lives in my province, or no tax if the customer lives in another country. Therefore, I'm forced to ask for the customer's address just for this.

That said, I can probably still avoid asking for a lot of the info but this requirement still increases the minimum set.

This is all silly and retarded in my opinion. Consumer credit authentication is in the stone age. What happened to two factor authentication?

If someone steals your social security number they can open accounts in your name. To stop it you have to call one of the credit bureaus and they will put an "alert" on your account together with a phone number. What most creditors do when they see this alert is call that phone number and make sure it's really you opening the account.

Really? Why isn't that just the default? Are you opening credit accounts so often you are majorly inconvenienced to make sure someone verifies it's you by calling the number you selected?

Similarly with credit cards. They could just text your phone to confirm that you really are about to purchase something. You could turn this off EXPLICITLY, and turn it back on when you lose your credit card.

If everyone used "Verified By Visa" or PayPal oauth-type portals for payment, this wouldn't happen. When your bank password is compromised, you can just change it. To do this, you simply ask them to send you an authentication code at a previously supplied email address -- two factor authentication. But now it's too late, because anyone who accepts your credit card can steal it, and use it a year later.

For that matter, why do we use Social Security Numbers and Credit Card Numbers for such important things? It's a relic of terrible one-factor authentication. That signature stripe was probably supposed to be used to match your signature that you sign the receipt with. Well, no one does that.

All you have to do is go on the site, purchase something using two lines, and they text you on your phone. You can turn it off explicitly. Then the law and the liabilities can change with such merchants. Of course, this will take years.

I'm the OP. Let me know if any of you out there have questions! Or, better yet, experiences with simplifying payments on your site good or bad.

sigh, and where are you going to send your invoices to? or is your plan to issue invoices for the costumers ip's. I am sure the tax authorities will love that.

The interchange fees Visa/MC charge vary with what information is collected. The minimum required info is assumed to be at a higher risk of fraud, so the fee passed to the merchant is more. Sure, some optimization can be done to make online forms easier to use, but collecting more information is necessary to offset the fact that you aren't physically in a store handing someone your card, letting them see the name on your driver's license, etc.

Thanks for bringing the topic up, I always wondered why some sites ask me for only my ZIP next to the CC number, but never really got into finding out why.

My payment form[1] is relatively simple.

[1] https://dl.dropbox.com/u/8554242/dmitri/pay.html

You can save a bunch of fields in the form (and has nothing to do with fraud):

1. Given postal code, asking for city and state is pretty much useless. There is a unique mapping from postal code -> city, state. Maxmind used to have free db, but you can download it from geonames here: http://download.geonames.org/export/zip/

2. You don't need to ask for card type given card number. Again, simple regex. Reference: http://stackoverflow.com/questions/72768/how-do-you-detect-c...

3. Only American Express supports name verification. Most other banks don't. So, asking name is pretty much useless. If you already have the customer name in you database, use that to fill them in.

4. Things like 'Company' are just not needed.

5. Phone verification is again something supported by very few banks.

That just cut down 7 fields with no compromise on fraud.

Also, any good payment processor will let you store card information (in a secure manner adhering to standards set by Visa, a.k.a being PCI complaint). So, you could just display the last four of the card along with card type and charge them at a later point of time (think Amazon checkout).

So, payment forms need not be nearly as bad as the one pointed out in OP. But, sometime bad design choices and legacy thinking comes in way.

I work for Balanced Payments. When we were PoundPay (previous avatar of our product), we used to serve the payment frame via iframe. Our form looked like this: http://imgur.com/wF2Z2qZ

It encapsulates lot of points I discussed earlier.

I'm not sure '40% higher conversion rates' means anything pertinent. If it directly correlates to a company's revenue, this is fantastic. However, if it also contributes to a higher fraudulent payment rate (say we are funding loans, or performing a transaction where payment fraud tends to be higher), it must be taken into consideration and weigh how much the company will pay for each individual customer support case versus revenue accrued from each conversion.

That aside, customer data here is not only used for simply 'making the payment' as the writer says. This is a huge over-simplification of the problem, the payment gateway for the transaction to detect AVS and CVV is a /last ditch effort/ to catch fraud. The other fields could be used for other services that detect fraud such as ID Analytics, Experian, etc. and ultimately help mitigate credit and fraud risk for the company.

I don't understand why the merchant should pay the chargeback on fraud. Online payment works best by making electronic wire transfers. This is how payment normally works in Finland: you buy something, and at checkout click the logo of your bank. You're redirected to the bank's website where you login and accept the payment. Then you're redirected back to the website.

That's quite similar to 'Verified by Visa' model, where the client has to accept the payment on Visa's website.

Recurring billing (e.g. monthly payments) could be authorized once.

If a customer's computer gets hacked and the access to the online bank gets compromised, then that situation should be dealth completely by the bank (in the same way it's being dealth even now).

Merchants and online stores shouldn't have to worry about preventing fraud, that should be centralized and dealt by banks

What works for one company may not be acceptable or optimal to other companies. I think the biggest insight is that you should measure these things and see what approach earns you the most money, taking chargebacks into account.

I don't understand why, instead of adding extra fields to collect more information, the banks and credit card companies instead just added more digits to the original fields. So instead of a separate field for the security code, why not just append the security code (and the postcode, and the XXX, etc.) to the credit card number field? I always have to enter a bunch of information anyway, so why not let me enter it all in one go? (Better for copy and paste.)

The way they're doing things at the moment is driving people to pay via PayPal, because PayPal requires--hey look!--a single string which they call a "password".

Bitcoin's forms are easier :)

There is another reason as well - at least in the UK if you are VAT registered. You need to know if your customer is in the UK, EU or outside of the EU, and if they are a business or not (their own VAT registration number), so you know if you need to charge them VAT or not. When the tax man comes calling, you need accountability to ensure that you have been charging the correct amount to the correct people.

Extremely frustrating for purchasers and sellers to need to provide and collect all of that information simply to accept a payment. Far too much friction.

CSC is only one of many options to improve checkout conversion. There are many other ones that don't result in increased fraud exposure like:

- Eliminate the concept of a shopping cart if you just sell one product

- Don't force buyers to create an account

- Don't ask for the same information twice like shipping and billing address (if you collect billing address, you shouldn't)

- Combine first and last name into one field: name

- Auto-complete address based on ZIP

- Trust messaging

Baymard has great recommendations based on their extensive studies: http://baymard.com/checkout-usability

Credit card numbers are not something that you keep secret (you give it every time you use it). This is why you need that much "fraud" detection. So we need a better alternative to pay like PayWithMyBank (http://www.paywithmybank.com). You can try how it works at http://try.paywithmybank.com

While I largely agree with what is said here, the author highlights 131 characters like it's an absurd amount. That's not even a tweet.

A: Chargebacks

If you don't want chargebacks, accept digital cash in addition to credit cards. Give your customers a discount for digital cash, and charge your price + (estimated cost of chargebacks/sales) for a given period. BitPay / Coinbase are probably your best options for accepting non-reversible digital cash.

Great article. I do think cutting out "account creation" is something to look at. My friend, Joe just launched a very easy to use check out procedure for his new start up - https://www.getphotogasm.com/. Great example.

This is why I will usually hit the Paypal link if available, because I don't have to enter anything.

Um, the billing address you enter is often used to compare against the billing address on file with the CC company for security purposes. So you need the billing address, too. The security code wouldn't hurt, either.

I've never had to fill out 14 fields for payment. Ever. While I agree this might be too many fields, I very much doubt it's the standard practice.

Bitcoin.

They're not complicated if done with little bit of common sense.