This article is provided by BRC Associate Member and Partner, Trustly
The British Retail Consortium (BRC) is proud to work in partnership with Trustly across 2021 on a series of digital resources and events, focusing on helping retailers understand the risks and opportunities available and supporting retailers approach the wider challenges the pandemic has brought with it for the payments landscape.
What’s going on?
This last year has accelerated five years of change into twelve months. The impact of COVID now means there is a larger share of payments through online, therefore, creating a dramatic increase in the importance of conversion in online checkouts. Businesses with successful customer journeys in store needed to replicate that online immediately or lose customers to rivals with better sites.
A recent survey conducted by Trustly has found that 16% of UK consumers (20 % overall) do not pay for high value purchases (+ EUR 1000 / GBP 870) online, with 40% of UK consumers (62% overall) preferring physical stores.
Retailers face increased friction on the horizon with the roll out of SCA (Strong Customer Authentication). This should tackle some of the £374.3 million lost to fraud in the first half of 2020 (UK Finance) however, evidence from Europe shows this has damaged conversion, particularly on mobile (see the Microsoft SCA scorecards as of Dec '20).
Why is this imperative for retailers?
SCA based drop off could materially impact revenues, particularly for customers with larger basket values. Even a 20% reduction in conversion could decimate businesses hard hit in the pandemic. An increase in returns itself is challenging to deal with, but having more refunds means more consumers contacting support lines chasing up refunds. On average, merchant support calls from questions around refunds (“Where is my money?”) is 27% (overall 1000 merchants in Europe).
Having the right payments mechanism can mean success in new digital world
The new paradigm for payments is more choice. It is imperative for merchants to offer payment methods that their target audience prefer in order to deliver high conversion rates. Particularly online bank payments that have embedded SCA and leverage biometrics for m-commerce. Proactive work with new payment methods like Open Banking Payments will ensure they maintain above benchmark conversion in a time of change.
Merchants need to adapt to the new reality of higher returns rates and use new technology to minimise returns. However, when a customer wants to return an item, merchants need to convert the resulting refund experience into something that exceeds expectations, builds loyalty and doesn't result in a dissatisfied customer calling support and leaving a negative review. Merchants that do this effectively will build customer loyalty and trust as well as reduce their operational cost, which will result in higher and more sustainable long-term revenue.
On March 17, the BRC in partnership with Trustly are hosting a webinar digging deeper into the challenges that Covid-19 has brought with it and its implications on the future of payments. The webinar will feature key findings from Trustly’s most recent survey covering over 10,000 consumers and 1,000 merchants across 10 countries, what new measures to combat fraud could mean for your payment processes and what you can do to improve your customer experience.
Further information and advice
From 2008 to now, the Trustly mission has been to make Open Banking Payments convenient for everyone and today Trustly is the global leader in this space. With an account-to-account network that covers 7,600 banks and bypasses the card networks, Trustly lets consumers make fast, simple and secure payments to merchants directly from their online banking accounts.