Open banking payments network TrueLayer today publishes new research revealing the gap between consumers’ expectations and the reality of payments experiences, and how this is affecting merchants. 

The report, the Payments Experience Playbook, finds that nearly 9 in 10 consumers are frustrated with their online payment experiences. With 55% of consumers saying they would abandon their transactions because of a poor payment experience, there is a clear need for merchants to explore alternative payment methods as a way to elevate their customer experience and drive continued growth.

This frustration can lead to real impacts for merchants; 73% of consumers say that slow or frustrating payment processes will make them more likely to abandon a transaction and try elsewhere. 56% of consumers say that poor payment experiences make them less likely to remain loyal to a brand, impacting long-term revenue for merchants.

Security, speed, trust and convenience are the key factors consumers look for in their payments experiences. Of these, security is the most important factor, as identified by 64% of those surveyed. For merchants too, security is paramount in reducing fraud, which is a serious problem: statistics from Juniper suggest that merchants stand to lose £269 billion to fraud over the next four years. Regulators have started to introduce new requirements to help combat this - including strong customer authentication (SCA) mandates for online card payments. 

However, the research suggests that some merchants have struggled with implementing SCA and that this has increased payment friction. The problem is particularly acute for smaller companies. 73% of merchants with 250-499 employees reported declining conversion rates from SCA. For companies with more than 500 employees, that figure drops to around 54%. It's clear that for smaller merchants in particular, balancing seamless payment experiences with security requirements is crucial.

Open banking can deliver a solution that addresses all four of merchants’ key requirements. By delivering smooth, secure and instant transactions, payments powered by open banking can help improve the checkout experience for customers. Open banking payment providers have been required to include SCA since 2018, a head start which means that SCA integrates far more effectively with open banking than other payment methods.

In addition to authentication, the need for a customer to repeatedly insert payment details is a chief issue according to over half (59%) of those surveyed. Consumers voiced issues with having to enter details multiple times during a single transaction, as well as having to enter details at every transaction despite making repeated purchases with a merchant. Open banking payments by their nature cut out the need for consumers to insert payment details, connecting merchants directly with customer bank accounts. 

Commenting on the research, Nadja Bennett, Strategic Accounts Director at TrueLayer, said, “Today’s report reveals the huge gap that exists between consumer expectations of the payments experience and the reality. This experience gap has significant consequences for merchants in terms of conversion rate, brand loyalty and ultimately, their bottom lines.”

“Whilst strong customer authentication rightly reflects the need to combat fraud, merchants have continued to struggle with its implementation. Alternative payment methods like open banking can deliver on consumer needs and expectations, while maintaining security and simplicity for merchants of all sizes.”