7 reasons why you need to evaluate your payments technology

By: David Nunn

This article will explain why online retailers should evaluate their payments technology, and how to go about it.

  1. Decrease abandonment and increase conversion
  2. Reach more people
  3. Focus on what you do best
  4. Win more mobile sales
  5. Improve customer loyalty
  6. Make it easy to get paid
  7. Reach customers when it matters most

When it comes to payments, many merchants cling to the idea that if it isn't broken, don't fix it. With so many other things to think about, it's easy to reason: why mess with your payments technology?

Turns out, your payment system can have a direct impact on everything from conversion rates to customer loyalty.

A lot has changed in the world of payments — and in commerce — and the right technology can make all the difference between getting an edge and losing ground.

If you haven't recently, here are seven reasons why you should evaluate your payments technology.

1) Decrease abandonment and increase conversion

As a merchant in the digital space, you probably understand the importance of getting digital browsers to follow through on a transaction. What you may not realise is just how much payments matter.

In a recent survey of Northern Europeans, 83 per cent of respondents said they abandoned their carts; just 20 per cent “hardly ever" do so. Yes, people do change their minds, but poor user experiences are a common culprit. Two of the three biggest frustrations, according to the survey, were “favorite option is not available" (39 per cent) and “poor payment processes" (33 per cent).

Even small changes can have a big impact on revenue. Consider this: by improving checkout design alone, a large ecommerce site could boost conversion rates by more than 35 per cent, according to Baymard Institute estimates. Whether you're a growing startup or an established player, better conversion rates translate to better sales.

2) Reach more people

Improving your payments tech isn't just about getting existing customers to follow through with purchases. It can also pave the way for new customers, whether through partnerships (more on contextual commerce in a bit) or by expanding your reach internationally.

If you aim to tap into a global audience, for example, you'll need to make sure your payments tech has what it takes to scale. There's more to it than currencies, compliance, security, and taxes.

Payment preferences and expectations can also vary by market. E-wallets account for more than half of all global ecommerce and are projected to reach 64 per cent by 2020, according to yStats. They are the most common form of payment in Western Europe, and represent more than a third of payments in Asia Pacific, North America, Latin America, and Eastern Europe.

3) Focus on what you do best

Whether you're a promising startup or an established multi-national, managing payments takes time and resources. It requires staying current on changing shopper preferences, compliance, and technology, as well as managing the day-to-day flow of payments.

One of the biggest drains: fraud management. On average, online retailers spend more than 7 per cent of their total annual revenue fighting fraud, according to Javelin Strategy and Research. Meanwhile, some of the very security measures designed to keep the bad guys out can lead to false positives — and declined transactions — for legitimate customers.

With so much at stake, it's important to reduce fraud-related losses, keep your customers’ sensitive information safe, approve more orders, and free up resources for what your company does best.

4) Win more mobile sales

With more people spending more time on their mobile devices, winning mobile sales should be easy. But while 30 per cent of Northern Europeans surveyed for Optimizely said they researched and browsed on their devices, just 22 per cent used the devices to complete transactions.

Security concerns are a common barrier, even for digital natives. In a survey of UK shoppers by Ofcom, just 40 per cent of mobile phone users believed that mobile payments were “fairly" or “completely" secure.

Tiny screens and buttons are another barrier. Mobile browsers are happy to click and swipe, but entering a 16-digit card number, expiration, three-digit code, and billing address is another story. Streamline mobile retail for your customers with simple and intuitive interfaces. There are features that make it possible for even first-time customers to check out in seconds – especially on mobile devices. And logging into an account they know and trust can go a long way toward assuaging security-related fears with an unfamiliar brand.

5) Improve customer loyalty

What does payments tech have to do with customer loyalty? Take a look at your own digital shopping habits. You might be willing to shop on a new site, and maybe you'll even make it all the way through the checkout. Still, if the experience is subpar, what are the odds you'll go back? What are the odds you'll recommend the site to a friend?

In Optimizely's survey of Northern European shoppers, 84 per cent of respondents said they would only accept a "poor experience" a maximum of three times before losing loyalty, and 35 per cent said one bad experience would cause them to be disloyal.

Improving the user experience at the checkout doesn't just reduce cart abandonment — it paves the way for repeat customers. That means more loyalty, more referrals, pretty much everything you strive for as a merchant.

A payment solution should help you optimise your user interface to improve checkout flow, make it easy for customers to update their account information, reassure them that their information is safe, and make a strong parting impression so they come back again.

6) Make it easy to get paid

Think about the time and money your company spends getting customers to come to your site and put items in their carts — from building your digital storefront to marketing, advertising, and optimizing. Yet, many merchants lose sight of the final stretch — getting paid.

Customers will ditch their carts for all kinds of reasons, including too few payment options. Increasingly, credit cards are not always the payment of choice. In a November 2016 survey of online shoppers in the UK, 50 per cent of shoppers indicated that PayPal was a top choice, versus 38 per cent for credit card and 33 per cent for debit card.

Offering many payment options not only improves the customer experience, it can lead to more sales. After adding PayPal, merchants saw up to a 5.3 per cent increase in incremental new customers and a 2.7 per cent increase in transactional value, according to Nielsen Online Buyer Insights.

7) Reach customers when it matters most

Technology is dramatically changing how merchants identify and engage with shoppers, and the newest chapter — known as contextual commerce — makes it possible to complete transactions at the point of intent. Users of Facebook Messenger in the US, for example, can order and pay for food delivery or movie tickets directly within Messenger.

After Skyscanner globally added the option for shoppers to book directly with participating airlines via its site, participating airlines saw up to a 20 per cent increase in flight book conversion.

While contextual commerce holds the promise to boost distribution and deepen customer engagement, it also requires the right payments tech to accept, process, and share payments, seamlessly and securely.

Rethinking the way you do payments can be the first step in your journey to forefront of your industry. After all, payments technology is no longer just about managing routine transactions. It's about adapting to a changing marketplace, managing risk, improving customer satisfaction, and embracing new opportunities as they come.

 

By: David Nunn - Head of Braintree Europe - Braintree

 

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