Payments: boring but essential. Without them, well, there is no retail. However, getting payments right is increasingly becoming a driver for business growth. Or, looked at another way, getting it wrong is costing businesses dear.
A recent study by payments specialist at BRD-GE finds, for example, that in May 2022, UK online retail businesses could have increased their weekly gross sales by £207m if all failed payments had gone through the virtual cash registers.
The explosion on online retail has pushed many retailer payment process, checkout pages and shopping baskets to breaking point. At peak times, payment systems can become so overloaded that payments fail. And when they do, the shoppers almost always gives up with that retailer and goes elsewhere. Payments failure is expensive.
Another facet of payments that is also impacting retailer growth are chargebacks. According to figures from IMRG this week, 44% of consumers have filed a chargeback – asking for their money back – in the past year. The problem is growing, says the research, with increasingly cash-strapped shoppers having buyer’s remorse almost as soon as they have hit the buy button and asking for their money back. Many simply cancel because they say they goods never arrived, while others just don’t like what they buy.
This is costing the industry a further small fortune, ties up inventory and hits both cash flow and bottom line – often many weeks after the fact.
Together, these two areas are becoming a drag on growth – so what is the answer?
Chargebacks, believes IMRG, can be lessened by offering better return policies: longer returns periods, free returns and better exchanges. However, as was discussed in a recent RetailX webinar on its European Growth 3000 report, the industry itself is moving towards paid returns, shorter returns periods and is increasingly seeing returns as a massive cost.
Tightening up returns processes and being aware that consumers are now more aware than ever of payment dispute processes is only going to add to that. It’s a tricky one.
While wrestling with that, retailers are also having to work on their payments platforms and processes to avoid failed payments. There are a growing number of payment channels available to consumers and they want to use them all. As a retailer, it is imperative to offer as many as possible – and make them as easy to use as possible – to encourage spending.
Being a data company, BRD-GE sees understanding failed payments data as key – and it is important – but beyond that, retailers need to focus on how to orchestrate their payments, offering the right ones at the right point for the right customer. And that means understanding in great detail how each shoppers uses payments.
As is made clear in our latest White Paper – produced in conjunction with Amazon Pay – getting payments right can reduce cart abandonment and churn, along with building loyalty and increase AOV – and this is essential for growth. Payments: boring but very important indeed.