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Research updates: retailers on secure customer authentication, customers on serial returners

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We take a look at some of the latest research, from what retailers say about secure payments to what customers think about serial returners.

Retailers on strong customer authentication (SCA) requirements

More than one in 10 UK retailers still do not have strong customer authentication (SCA) in place, one year on from the measure being introduced in order to imply with the new Payments Services Directive (PSD2), new research suggests. 

Some 13% of 500 senior retail decision makers polled by Censuswide for Adyen research said they were still not compliant with SCA rules that were introduced last March – although the majority are. 

A year earlier, when Adyen polled the same number of retailers, 56% said they were prepared for the new rules to come into place. Of those questioned this year, 32% say conversion rates have fallen since SCA came into effect. 

Alexa von Bismarck, EMEA president at Adyen says: “It’s encouraging to see most businesses embracing next generation SCA, but 13% of businesses still aren’t compliant with the new regulation one year on.

“Without a solution in place businesses are vulnerable. They lose the benefit of a liability shift and also damage their conversion as more and more issuing banks are declining non-compliant transactions. With the right financial technology in place many SCA checks can be completed in the background while the customer completes the transaction, meaning there’s no friction to the customer experience and the conversion rate needn’t be affected. These checks can be done without the customer even noticing.”

“Furthermore, it’s important businesses don’t leave themselves exposed to pay a penalty with the FCA, and vital they have all the technology systems in place that provide a slick customer journey that prevents fraudulent transactions.”

Customers on serial returners

Customers say serial returners may be an asset rather than a blight for retailers – who should think again before banning them from buying, new research suggests. 

Almost a quarter (23%) of 1,000 shoppers questioned in research for the Retail Technology Show say shoppers who return at high rates are often the highest spenders and most valuable customers, while 6% say they have been banned for being a serial returner. That rises to 15% among generation Z respondents. 

The study found that the average UK shoppers returns 15% of the items they buy online. That rises to 20% for millennials and 22% among Gen Z shoppers. Retailers including Zara, Next, LookFantastic and Mountain Warehouse now charge shoppers to send items back, while others are reported to have started warning customers who are thought to be ‘serial returners’ that they have the right to suspend their accounts. 

This research finds 32% of respondents say bans should not be implemented, rising to 44% of Gen Z respondents. Three in 10 (31%) say retailers should not ban those who kept some of their order, while 26% say that the retailer should take responsibility in the first place for preventing returns. A further 27% say retailers should do more to understand why returns are being made – and 23% say those who return the most often are often the highest spenders. 

Matt Bradley, event director for the Retail Technology Show, says: “Despite much debate on the best way to tackle the issue, it’s clear that retailers still haven’t squared the circle when it comes to returns. Retailers are looking at ways to address the spiralling operational costs associated with returns on the one hand – and where the responsibility for paying for that lies. Yet, on the other, they are also having to weigh up the cost of potential lost conversions, Customer Lifetime Value (CLV) and loyalty from shoppers who have been conditioned to expect returns to be free.”

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