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GUEST COMMENT Payment optimisation: the merchants’ silver bullet in the golden quarter?

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The knock-on effects from inflation and the cost of living crisis means that shoppers have less disposable income to play with during this year’s “golden quarter”. In 2021, the Christmas shopping period saw the UK reach a record high in sales of £84.7bn – but it’s predicted that, this year, the figure will decline by 6.9%.

With UK shoppers predicted to spend £4.4bn less this Christmas, consumer confidence is at its lowest as we enter the festive season. A faulty checkout experience can lead to consumers abandoning purchases, lost conversions and reduced brand loyalty; everything retailers want to avoid during this crunch time. As such, the pressure is piling up on retailers to nail the payment experience and prevent any missed opportunities.

At times like this, it’s crucial to have payment capabilities that are: localised to each customer, mobile friendly and which are protected against fraud. As consumers seek frictionless shopping experiences, payment optimisation – the process of going beyond basic payment processing capabilities – will be retailers’ silver bullet, as it reduces friction and time at checkout, and increases revenue. 

Retailers under increased pressure to perform

With tighter budgets and restricted shopping lists, retailers find themselves in a precarious position this festive season. Eased Covid restrictions saw high-street retailers across the UK experience a 4.6% increase in footfall this Black Friday. However, this is still over a fifth less than pre-pandemic levels. So, the pressure is on for the Christmas and New Year shopping period.

This is particularly true for ecommerce retailers who rely on at-home purchases. As consumers begin to return to physical stores, the share of online sales has already fallen from 37.8% in 2021 to just 26% this October. This squeeze on their margins warrants a ‘go big or go home’ mentality, where all resources must be poured into ensuring each step of the buyer journey – from the top of the funnel to the bottom – is as crisp as Christmas wrapping paper.

On top of this, one of consumers biggest worries this festive season is debt. Many are feeling the effects of the cost of living crisis but don’t want to neglect tradition. Shopping behaviours this Christmas will reflect this, with many expected to reduce their spending circle from family and friends to family alone. We’ll also see a decrease in the amount they are spending on each person. It’s therefore crucial that retailers ensure their checkouts are equipped with the appropriate payment capabilities to push consumers over the line, once they’re ready to purchase this year’s gifts.

Localising the customer experience

In 2021, we saw $20.1 billion in purchases abandoned, in part, due to a lack of alternative payment methods. Checkout abandonment – when a customer has initiated the checkout process but does not complete the purchase – is something many retailers will face this Christmas, amid increasingly selective shopping behaviours.

As the pandemic has shown, the customer journey starts at home, so retailers must ensure their websites identify users’ locations and present localised languages and currencies. Given that over half of shoppers are less likely to make a purchase if they’re unable to pay using their preferred payment method, legacy checkouts not only stand in the way of a convenient shopping experience but hard sales too.

However, localised payments can easily decrease checkout abandonment and streamline the journey from basket to the ‘buy’ button. The retailers with the top conversion rates offer on average, 6.8 global payment types, highlighting the importance of having a range of regional payment methods available such as iDeal, Sofort and SEPA.

Take Europe for example, where cross-border commerce saw a turnover of £147bn in 2021. Even if you take a quarter of that turnover, that’s a sizable chunk that retailers are missing out on, especially if they’re keen on reaching as many customers as possible during this period.

Optimising mobile-friendly checkouts

The next step to avoiding hardships this Christmas is to sell where your buyers are located. During this ’golden quarter’, over two in five consumers are expected to do their festive shopping on their mobile devices. Retailers that haven’t done so already need to optimise for a mobile-friendly checkout experience and include eWallets as an available payment method.

With consumers twice as likely to abandon their carts on their phones than on a desktop, retailers who offer digital wallets such as Apple Pay and Google Pay, can help separate themselves from the herd. This alternative payment method offers shoppers a faster checkout experience, greater convenience and improved security.

As we’ve established, the biggest cause of checkout abandonment is friction. When users are redirected to third-party payment gateways, they need to input their payment and shipping details, which is often a slow and clunky process for holiday shoppers looking to buy gifts on the go. Digital wallets eliminate the need to jump through these hoops by using saved payment details that allow shoppers to check out in as little as one click. 

Protect yourself from fraud

With more digital activity comes more opportunities for fraudulent behaviour. To protect customers, retailers need to consider a payment solution that keeps transactions secure and guards against lost revenue by reducing chargebacks.

A chargeback is a fee that is returned to a shopper after a successful dispute over a transaction. Often caused by fraudulent behaviour, it’s something that all retailers must be wary of at this time of year, as scammers look to exploit users looking for discounts and deals. 

Last year alone, we saw £15.3 million lost to scams during the festive period. While customers are urged to be more cautious with two-step authentication procedures, there is also an onus on retailers to protect their customers.

Retailers which optimise their checkout experience won’t only see an improved conversion rate but also streamlined authentication. Digital wallets, for example, can prevent fraudulent behaviour, as there are security measures embedded into the payment process through fingerprint and facial recognition. This ensures authenticity and prevents users from being redirected to 3DS authentication flows, where shoppers will often abandon their purchases. 

Another way retailers can guard themselves from chargebacks is to offer local currencies. 

Any confusion around exchange rates entitles customers to dispute the transaction with their bank and can result in a fee charge backed to the retailer. So, to target UK shoppers, international retailers must offer the ability to pay in pound sterling rather than say US dollars or euros. This may seem simple but avoiding confusion over the settlement currency will limit the chances of post-purchase disputes, therefore, preventing a chargeback fee or lost sale. 

This festive season, it’s imperative that retailers have necessary fraud prevention programmes in place to ensure that they aren’t missing out on additional revenue.

Retailers are not in this alone

If retailers want to be at full strength during the golden quarter, they need to be equipped with the appropriate payment capabilities to push sales over the line. To best achieve this, retailers can work with a payment technology partner to help them optimise their checkout process – giving customers the gift of a localised, mobile friendly, and secure shopping experience this festive season. 


Nikhita Hyett is EU MD of BlueSnap

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