- 1 year 7 months ago 04:00 am
- 2 years 11 months ago 01:00 am
- 3 years 5 months ago 03:00 am
With physical outlets locked down or suffering greatly reduced footfall during much of 2020, online has become the go-to sales channel for the majority of merchants across a huge variety of industries. e-commerce providers are under pressure to optimise their sales experience, which resurrects the thorny issue of ‘cart abandonment’ and how to minimise its impact.
Of course, cart abandonment has existed since the advent of e-commerce and, arguably, since the advent of shopping! Back in 2006 the abandonment rate was just shy of 60%; in 2020 it’s estimated at around 76%, with a slow but steady increase over the years. Reducing this figure by just 3-4% directly adds to the retailer’s bottom line, so preventing cart abandonment is big business and there a multitude of website and customer journey optimisation tools available designed to help merchants push more customers over the line.
However, the question of ‘payments abandonment’ is rarely considered on its own merit. Perhaps this is because so many e-commerce providers view payments as the part of the process over which they have the least control. Whatever the case, these merchants are overlooking a critical influencer in the digital shopping experience.
Customers who ‘abandon’ their carts at the point of payment, as opposed to the order summary page, or midway through browsing a site, generally do so because the merchant hasn’t provided the payment option they want, or because the customer has tried to make the payment and it has failed to complete.
Had conditions been different, having made it to this point, the customer would almost certainly have completed the transaction. Hence, solve these two payment challenges and there’s no reason why abandonment at this point in the customer journey should ever occur.
So why isn’t more being done to tackle ‘payment abandonment’?
Well, most e-commerce providers feel their hands tied when it comes to payments. Without the technology to control the transaction mechanism, retailers tread a fine line between wanting to offer a range of payment options to customers while struggling to manage the complexity and cost of dealing with multiple service providers. The result is a lack of agility to explore new payment options and innovate with short term offerings. This is a major reason why 81% of leading European e-commerce providers still don’t offer a ‘local’ payment method and why payment abandonment is too often written off as natural attrition.
However, customers are starting to vote with their feet. Almost two in five shoppers have abandoned a transaction due to a lack of payment flexibility. On average, UK shoppers are now abandoning a purchase 1.27 times every week, with 22% admitting they’d be more likely to complete the transaction if flexible payment options were available.
At the same time, the resilience of the payment providers has been called into question by data showing that three in four European merchants experienced a complete outage in their payment service, and 42% experienced six or more partial outages, over a 12 month period. Payments integration is hugely complex and it’s inevitable that individual services will encounter problems from time to time, but it’s still the online merchants that ultimately lose sales when payments hit a problem.
Merchants cannot afford for this situation to continue. They need to find ways of boosting the number of payments they process. Enter payments orchestration technology, which has been developed for this purpose: to help merchants seamlessly switch between multiple payment providers and maximise the successful completion of transactions.
A payments orchestration platform sits between the merchant and its payment providers, and intelligently routes each transaction through to completion based on merchant and customer preferences. This could mean prioritising the providers with the most favourable terms, or automatically rerouting traffic in the event of a delay, under-the-hood and with no impact on the customer. Using a payments orchestration platform also makes the process of adding and switching providers far easier, allowing merchants to test and learn until they arrive at the optimum blend of payment provision to suit their business and their customers.
There are phased benefits to this approach. In the short-term, merchants can minimise transaction failures and optimise how they use their existing providers. In the longer-term, better control means access to richer data to support innovation in new payment options, incentives and providers.
Optimising payments revenue and minimising payments abandonment is a hugely under-researched area. Ultimately, cart abandonment is almost certain to increase in the next few years – an inevitable consequence of greater e-commerce competition and the introduction of more first-time shoppers with unpredictable digital behaviours. So, maybe it’s time for merchants to put the issue to one side and, instead, double-down on payment abandonment; eliminating some of the payment problems regularly experienced by the shoppers actively intending to make a purchase.
Get FinTech news headlines, videos, stories and product reviews on your mobile device. Download Financial IT App for Free