The Retailer Spring_09.05_FA
Online payments: From obstacle to opportunity
Luke Flomo, Head of e-Commerce trustly
HOW PAYMENT PROCESSORS CAN BE A VALUABLE ASSET TO ONLINE RETAILERS LOOKING TO REDUCE CART ABANDONMENT It’s a familiar story: Online retailers invest massive resources to lure shoppers to their site and streamline the shopper experience, only to have them jump ship when they get to the checkout. These flighty shoppers abandon their carts for various reasons, from unexpected extra costs (55%) and a lengthy checkout process (26%), to being required to create an account (34%) or the lack of their preferred payment method (6%).
How, you ask? An estimated 18% of shoppers drop out of the purchase process because delivery is projected to be too slow and another 11% due to the fact that the returns policy isn’t satisfactory. But online retailers that offer online banking payments through a provider like Trustly, as opposed to manual bank transfers, can receive instant credit notifications when a payment has been made, letting them ship goods faster with greater confidence. Retailers can also offer instant refunds, which can drastically improve the return experience. In fact, according to a recent study conducted by Trustl y, 69% of shoppers reported waiting four or more days for a refund, but 58% of shoppers agreed they would spend more and 56% would shop more frequently if offered faster refunds. Clearly, offering faster refunds can have a dramatic impact on a retailer’s bottom line without needing to upend its existing business model. Unlocking data’s potential But where online banking payment processors can really add value is in the shopper data they can glean during the payment process. Imagine shopping on your favorite brand’s website. You load up your shopping cart and when it’s time to check out, you simply proceed to the checkout and make a payment through your online bank, which can be as simple as using your thumbprint or facial recognition. That’s it, you’re done, and a few days later your purchases shows up at your front door. There’s no need to fill out a long form with your shipping details because online banking payment processors like Trustly can fetch that data during the payment and pass it along to retailers, who can pre-fill the shipping form. Not only that, there is no paying bills at the end of the month or waiting days to see the transaction on your account. The result is a more frictionless experience and fewer drop-offs due to a complicated checkout experience. Or let’s take it one step further. Considering that an estimated 34% of shoppers drop out during the checkout process because they are forced to create an account, retailers could quell that concern by automating the registration process. Using the data delivered by the payment processor, online retailers could create a shopper account in the background with nearly no shopper interaction required. This is a concept already revolutionizing the online gaming industry, where players don’t need to actively register an account because the operator can easily do so for them. And just like in online gaming where operators must confirm that their players are of legal age to play, online retailers could confirm shoppers are of legal age to purchase certain goods, such as tickets for an 18+ concert. Best of all, there’s no need for the shoppers to remember a username or password because their identity is confirmed when they verify themselves through making an online bank payment using two-factor authentication. By delivering this data, payment processors can help online retailers know their shoppers better, which could also inspire better retargeting and personalized recommendations.
As a result, the checkout has become the bane of online retailers’ existence — that last hurdle in the purchase process. But what if online retailers stopped thinking about the checkout and the payment step as a hindrance and instead started thinking of payment processors as an ally that can deliver a treasure trove of data to be used to simplify the shopper experience? Online banking payment providers to the rescue By adding an online banking payment option to the checkout, for instance, online retailers can eliminate many of the main reasons for cart abandonment and ultimately increase conversion. Off the bat, 6% of shoppers report that they abandoned an intended purchase because there weren’t enough payment methods. Often online retailers assume that offering payment by credit card is sufficient, but it turns out that many shoppers want an alternative. But beyond simply offering more choice, online retailers that add online banking payments to their checkout can drastically decrease abandonment.
34 | spring 2019 | the retailer
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