E-tailers seeking an edge in a crowded market would do well to question whether their payment systems are making the customer experience as smooth as it could be.
The three biggest problems facing online merchants are high operating costs, such as transaction and chargeback fees; the high risk of fraud; and the low proportion of site visitors who become paying customers. These are the findings of a recent survey of etailers by TrueLayer and YouGov, which indicates that the UK has one of the highest levels of card fraud in Europe.
Customers have varied experiences when shopping online. Some ecommerce sites are slick and user-friendly, while others offer cramped windows, tiny fonts, ambiguous terms and a lack of payment choices at the point of sale. There is also confusion about shipping costs and import duties – often these aren’t made clear until a visitor is about to commit to a purchase. Little wonder, then, that so many consumers ditch their shopping carts at the checkout in frustration.
Global research conducted by Statista across a range of industries in March 2020 revealed that the average online cart abandonment rate for the month was 88 %. The largest proportion of trolley-dumping is done by idle browsers or shoppers doing price comparisons. But other key reasons that consumers cite for walking away at the last moment include unnecessary complexity in the checkout process, an obligation to create an online account with the retailer and mistrust in a site’s ability to keep their credit card details secure, according to research by the Baymard Institute.
We know that almost half of all online shoppers will drop out if their preferred payment method isn’t offered,
Here are four areas where improving the transaction process can enhance the etail experience and so convert more window shoppers into loyal customers.
1. Offer a wide range of payment methods
Consumers expect to be offered a variety of ways to purchase their goods and services, including Apple Pay, PayPal, digital wallets and buy-now-pay-later schemes.
“We know that almost half of all online shoppers will drop out if their preferred payment method isn’t offered,” says Maria Prados, head of vertical growth teams at Worldpay. “Consumers crave convenience: 58% of UK shoppers are more likely to patronise retailers that offer one-click checkout options.”
Clothing retailer Weird Fish invested heavily in upgrading its payment process last year as part of the brand’s digital revamp. It has seen a 12% improvement in its conversion rate (the number of buyers as a proportion of site visitors) since then.
“Covid-19 has changed the way that consumers look at payment options, with speed and safety now at the front of their minds,” says Weird Fish’s customer director, Benoit Mercier. “As part of our digital investment, we improved our checkout flow to prevent customers from being redirected to complete payment authorisations. Another useful innovation has been the integration of express payment options on product pages, such as Amazon’s ‘Buy now’ button, as this saves shoppers from having to go through a longer checkout process.”
Such is the importance of making the checkout experience as smooth as possible that Mercier recommends using a payment platform provider – for instance, Adyen or Alipay – that offers flexibility, risk management and even innovative solutions such as facial recognition to verify purchases.
“Such platforms allow multiple payment options – for instance, Klarna and Apple Pay – in a range of currencies, so every transaction gives a personalised experience,” he says.
It’s also crucial to evaluate the performance of these platforms constantly, assessing and amending metrics and key performance indicators as consumers change their behaviour, Mercier argues.
“Choosing a platform provider that’s flexible enough to let you adapt to the emerging environment is key,” he says. “Those that offer data insights are particularly beneficial, as they can capture valuable information to help businesses better understand their customers and how they prefer to pay.”
2. Take the pain out of returns and refunds
One of the inconveniences of online shopping is the consumer’s inability to assess an item’s suitability before buying by physically handling it and/or trying it for size. Research published last year by IMRG, a UK membership body for etailers, suggests that the return rate for online purchases is about 20%, compared with 10 % for in-store purchases.
Customers of clicks-and-mortar retailers find it frustrating if they’re unable to return an unwanted online purchase at a store. Many businesses still can’t offer this service because they have yet to unite their online and offline payment systems. Those that have invested in an integrated system have gained a competitive edge, according to Colin Neil, head of the commercial team at Adyen UK.
“The list of customer possible journeys is endless – let your imagination run wild,” he says. “If someone wants to buy online and return in store, a modern payment system can easily find the transaction and refund the customer, since it keeps all of the relevant data in one place.”
Neil observes that, while customers have demanded more flexibility for years, the pandemic has forced the issue by obliging brands to invest heavily in their digital infrastructure. One side effect of this has been an improvement in customer service.
“The latest systems make it easier for consumers to buy things the way they want to,” he says. “They eliminate all those ‘computer says no’ moments when a customer wants to click and collect, return in store or pay with an app. They do this by linking things that used to operate in silos.”
He cites furniture retailer Loaf as an example of how an integrated payment system can improve the customer experience. The company had been operating in a traditional ecosystem, working with different partners to provide acquiring and processing services, as well as using standalone card terminals in its showrooms. This made it impossible for the business to provide a consistent customer experience across all sales channels.
Now that it has adopted a fully integrated system, Loaf has “full control over the payments journey for customers. It has a single partner for payment processing, including fraud screening, both online and in its stores,” Neil says.
Nick Raper, director at Nuapay UK, says that retailers should consider how their digital infrastructure supports the entire customer journey – particularly the refund process – rather than treating the checkout as the end of the relationship.
“Retailers seeking a competitive advantage would do well to consider offering instant refunds,” he says. “A long-term relationship between a retailer and a customer is built on the latter’s experience and trust – and refunds play an important part in this. An instant-refund facility, enabled by open-banking technology, will improve the customer’s experience, as they can see the money returning to their account immediately, rather than waiting for a card payment to clear or seeing ‘pending’ on their bank statement.”
The result is likely to be a happier customer and more repeat business, especially if the money is there for them to spend.
Prados notes that a quarter of consumers who come into stores to collect or return online purchases are likely to buy additional items once they are on the premises. “Giving them the ability to add items to an order without showing their payment card again is another easy way to make such transactions seamless,” she says.
3. Conduct more surgical strikes on fraudsters
On average, etailers lose 1.5% of their income to fraud. In their efforts to foil the criminals, merchants can accidentally reject bona fide transactions and block legitimate customers. But the latest payment systems can reduce the number of so-called false positives by detecting fraud more accurately and allowing a higher proportion of genuine purchases.
The more intelligent the tech, the greater the number of honest transactions it can approve that might otherwise have been red-flagged. Such systems can even help to reduce cases of chargeback fraud, when customers falsely claim that their purchases were faulty or weren’t delivered.
“The more data about the customer that’s available, the better informed the decision can be in terms of blocking a given transaction.”
So says Christian Mangold, Co-CEO of Fraugster, a provider of fraud-detection technology powered by artificial intelligence. He observes that merchants can use email analysis, geo-tracking and data enrichment (merging information about customers from authoritative third parties with their existing data) to find clues about a buyer’s true intentions.
“Chargebacks can be costly,” Mangold says. “The best defence a merchant has in the fight against chargeback abuse is to ensure that it has the correct risk management system in place.”
According to Amir Nooriala, chief commercial officer at fraud-detection specialist Callsign, the assessment of any customer can and should start at the first contact, rather than the point of payment. This can be done by analysing the unique behavioural biometrics of each visitor to the website – for example, their mouse movements or even the pressure they put on their touchscreens. The technology is powerful enough to discern the activities of a genuine user from those of an imposter who may have hacked into their account.
“Behavioural biometrics considers millions of contextual data points, such as location or keystroke patterns, to verify that a user is genuine, without adding friction to the user experience,” Nooriala says.
The benefit is that fraudsters are identified faster but genuine customers don’t have to face any further verification hurdles, which might otherwise discourage them from completing a purchase.
4. Make your offering mobile-friendly first
Few retailers design a mobile ecommerce site as the first point of contact. This means that consumers who use smartphones and other touchscreen devices often have to deal with clunky websites aimed first and foremost at PC users.
The payment page in particular is one that “merchants need to take control of”, says Garry Hamilton, chief growth officer at digital agency Equator. “So many website owners skip this one, as it is ‘too hard’ to deal with. Don’t rely on an off-the-shelf solution from a provider. Make it mobile-first – find what works for your customers. And make it clever, integrated with Safari and Chrome.”
Online shoppers are increasingly using mobile devices, which makes entering a credit card number, say, more fiddly than it would be with a standard PC keyboard. This, among other factors, is fuelling the uptake of mobile digital wallets.
“A payment function embedded in an app that allows consumers to order a service or product and seamlessly pay at the same time is one example of eliminating friction for the shopper. This will improve your conversion rate,” says Eric Christensen, chief payment officer at ecommerce service provider Digital River.
For multinational companies, creating a dedicated retail website for each region is sure to improve the customer experience. Shoppers in the UK are likely to have different preferences from those of customers in other parts of the world, for instance. The shopping experience provided in each country should look like a local shopping experience, providing currencies and payment methods that are reassuringly familiar to consumers.
“Having a payment system which can ensure that a purchase clears as a local transaction will eliminate hidden fees that a consumer may incur. This will provide a smooth, surprise-free experience,” Christensen says.
Keeping transactions local in this way should also minimise the merchant’s costs. This has become an especially important factor, given that Visa and Mastercard will shortly be increasing their so-called interchange fees on cross-border transactions between the UK and the EU.