Transaction types

At the beginning of the consumer engagement the type of transaction is agreed between the consumer and the provider. This will characterise the rest of the consumer experience and especially the end. It goes beyond a simple exchange of currency and value, to establishing a power relationship that endues the rest of the relationship. It creates consequences that hide or encourage transparency. It can welcome or avoid feedback in the transaction. It can establish partnerships and bonding between provider and consumer. Transaction types are powerful tools for designing experiences. 

Surprisingly industries tend to follow long established modes of transaction, despite opportunities with technology to move on to different, potentially better systems. Some of the most innovative start-ups have leveraged a change in the transaction type to establish their businesses. Feeling a serge in financial services technology and changes in the consumer transaction. Other businesses have failed to see opportunities in the transaction type and restricted their potential. 

There are broadly five types of transaction models used in consumerism. There are of course nuances within these five. Sometimes one transaction type is clearly dominant in a consumer relationship. At other times it maybe a hybrid of a couple of different types. However most consumer engagements can be categorised in to one of these transaction types.

Addressing the type to transaction model is key for product teams understand the wider consumer experience and particularly the end. In the next few pages we will consider these five transaction types.

Payment after delivery
When a customer pays for a service after receiving it. Common in hairdressing, restaurants, taxis (at least the old sort), and a host of other consumer experiences. 

Payment before delivery
When the customer pays before receiving the service. Common in transport, like flights and train travel, also in concerts and a variety of live entertainment experiences.

Scheduled payment
The transaction happens on a scheduled basis, for example by direct debit though monthly payments via a bank. Common in subscription services and utility companies. 

Synchronous payment

The transaction happens synchronously, payment and ownership exchanged instantly. 

Common in shops and physical product exchanges. It is a well established historical exchange model. It creates a strong emotion around ownership transference and freedom for the consumer.

Continuous observation

The consumer agrees to be continuously observed in exchange for access to products and services. Numerous companies use this new transaction type now, but leaders are the likes of Facebook and Google who have built up vast advertising capabilities over the last decade.