By Ed Whitehead, Signifyd managing director, EMEA
Vaccines are rolling out around the world and bringing with them realistic hope that 2021 will be the year that we will vanquish the virus.
That doesn’t mean we won’t continue to live with its effects for years to come. COVID-19 and the pandemic succeeded at changing nearly every aspect of our lives, including retail and commerce.
The changes in consumer behavior and retailers’ operations have been on vivid display during the Christmas shopping season. Fewer shoppers in stores, when stores were even allowed to be open. More online orders. More click-and-collect.
And, perhaps most surprisingly, more cheating among consumers when it comes to filing false claims in an effort to keep online orders while also receiving a refund for the goods.
Pandemic-induced changes aren’t going away any time soon
These changes were not subtle and like many other pandemic-induced changes, they are not going to be reversed — not in 2021 and possibly not ever. And so, brands and merchants should take note: Commerce life during Christmas season 2020 is a model for everyday life in 2021.
How do we know? Consumers have told us. More than 77% of UK consumers surveyed by Signifyd in September said the pandemic has encouraged them to try new ways of shopping that they are likely to stick with from now on. When it comes to those new ways, 57% said they do more shopping online. Nearly 48% said they’d be more likely to use click-and-collect in the coming year.
We saw that sentiment reflected in transaction data. Online sales in Europe were up 56% year-over-year in November, according to Signifyd’s Ecommerce Pulse data. Globally, ecommerce sales on Signifyd’s Commerce Network increased 49%, with some verticals — including electronics, grocery, home goods and precious metals — up significantly higher.
As for click-and-collect, Signifyd’s global data shows were up more than 500% the last week of November, over pre-pandemic levels.
It’s possible, likely even, that the rate of dramatic growth we’ve seen in online shopping and click and collect will slow once it’s safe to return to stores. But shopping habits have staying power and tend to become established through step changes: A dramatic event shifts behavior significantly; the event passes and the behavior falls back, but rests at a higher plateau.
Changes in consumer behavior raise warnings
That consumers have embraced new behavior and thinking around shopping is certainly a message to retailers that they must sharpen their online and omnichannel operations. But it brings another warning, as well.
In our September survey, consumers also told us something rather surprising: a significant portion are not beyond cheating in order to get free or discounted products. More than 36% of respondents, in fact, said they had falsely claimed that a legitimate charge on their credit account was fraudulent in order to receive a refund while keeping the product.
Another 31% falsely claimed that a product they ordered had never arrived or that it had arrived in unsatisfactory condition in order to keep the product and get a refund. And 32% said they had broken discount and promotion rules by, for instance, falsely claiming to be making a “first-time purchase.”
Those figures were substantially higher than what we would expect based on previous consumer surveys. For instance, in January, just two months before COVID and pandemic and lockdowns became a part of life, we asked U.S. consumers a different, but similar, question.
The answer for retailers is to focus on relationships
In that survey only 8% of consumers said they had falsely claimed that an online order had never arrived. Another 6% said that when they weren’t pleased with a product ordered online, rather than return it, they would keep it and ask their credit card companies to reverse the charge.
Like the other changes in behavior brought on by months of pandemic life, we’d expect that the level of bad behavior among consumers will settle at a level higher than it was before the pandemic. For retail leaders, that means a need for higher vigilance.
But it also means they need to continue to build relationships with consumers. Ensuring that the product descriptions and photos are accurate and clear, so shoppers are less likely to be disappointed with their online purchases. Make sure your return policies are reasonable and easily accessible, so customers don’t turn to chargebacks to take returns into their own hands.
And be prepared to push back on chargebacks that you are convinced are illegitimate. The dispute process is a quasi-judicial process that requires evidence and comes with deadlines. Have systems in place for gathering the necessary documentation in real time and consider assembling a dedicated team, either internally or externally, to manage and assess chargebacks as they arrive.
In 2020, we’ve seen how quickly the unexpected can turn the world upside down. While 2021 is likely to be the year we’ll return to normal, it will also be the year we realize that normal isn’t anything like it once was.
THE ACCELERATION TOWARDS A MOBILE FIRST ECONOMY
By Brad Hyett, CEO at phos
Over the last year, we have seen a big shift towards contactless payments. Fuelling this has of course been the coronavirus pandemic, which has made the public hesitant to handle cash due to the health concerns.
As multiple national lockdowns forced physical stores to close, and customers demanded easy, cash-free payment options, merchants had to quickly adapt. The result? An increased provision of pay and collect services.
In the UK alone, 83% of people use contactless payments according to data from the Office of National Statistics.
So it’s vital that merchants are equipped with the most efficient payment solutions, as the UK heads towards a mobile-first economy.
Proliferation of contactless payments
In 2020, 90% of UK card payments were contactless. This equates to an increase of 12% on the year prior, despite the total number of payments made falling by 11% from 2019 to 2020. Moreover, the affordability of smartphones has increased significantly over the last decade. And it’s estimated that 84% of UK adults now own one.
We’re Seeing merchants embrace more efficient and cost effective payment methods in response. While physical payment terminals are often too expensive for many small businesses, software point of sale, or SoftPoS, enables merchants to turn hardware that they already own – i.e. their mobile device – into a point of sale terminal.
With merchants increasingly adopting these innovative technologies, contactless payments will continue to gain popularity among the general public. In 2020, 13.7 million people in the UK either didn’t use cash at all or only used it to make a single purchase. That’s double the same figure from the previous year.
Changing consumer demand
Now more than ever, consumers are aware of how innovative payment solutions can add efficiency to their daily lives. As such, consumers now demand better payment services, including reduced queuing times, checkoutless stores, and bespoke loyalty schemes.
Businesses such as Mercedes offer an end-to-end digital car purchasing service, so customers can go through the whole car purchasing journey from the comfort of their own home. This includes car deliveries, financing, insurance and more.
Meanwhile, eCommerce giant Amazon has started trialling checkoutless ‘Go’ stores, speeding up the shopping experience by eliminating the queuing process altogether. The days of waiting for a table at a restaurant are also over, as more people have grown used to booking in advance.
Hence, it’s important that we empower small businesses to remain competitive and provide them with the payment solutions to meet customer demand.
The digital payments revolution isn’t slowing down anytime soon. By 2026, only 21 percent of transactions will be made using cash.
The US might have been slow out of the gate, but it’s starting to see increased adoption of mobile payments. In-store mobile payments grew by 29% in the States last year alone.
This growth was primarily fuelled by Gen Z-ers and millennials. Latest projections show that there will be 6 million new mobile wallet users by 2025, with millennials accounting for 4 million of this figure. These two generations, the former in particular, have grown up with mobile banking.
For most Gen Z-ers, their first foray into financial services was with a challenger bank like Starling or Monzo. These banks are able to offer online features such as ‘split the bill’, fee-free withdrawals abroad and much more to cater to the modern financial needs of the younger generation.
The Middle East experienced similarly sharp increases in contactless payments. From 2019 to 2020, there was a 200% growth in contactless transactions. This shift towards a mobile-first economy in the region was inevitable; the pandemic merely accelerated this shift. A recent study showed that 80% of people living in the Middle East planned to continue using contactless payments post-pandemic, with speed and security being the main draw.
The future is mobile
As parts of the world now start to come out of lockdown, there’s an openness to new solutions and a widespread acceptance of new technologies.
It is now a case of when, rather than if, we’ll see a permanent shift to cashless in the future. For businesses, embracing digital innovation will be key to remaining competitive and keeping pace with consumer demand in this fast-changing payments landscape.
HOW MERCHANTS CAN IMPROVE THE ONLINE PAYMENTS EXPERIENCE
By Alan Irwin, Senior Director of Product at Global Payments UK
The dramatic increase in online shopping over the past 18 months has encouraged many businesses to invest in developing their omnichannel shopping experiences. The reasons vary – some are keen to capitalise on the trend of older shoppers migrating towards ecommerce and some are trying to make up for loss of sales in brick-and-mortar stores during the pandemic. It is also true that many businesses are shifting their models to sell direct to consumers to avoid high marketplace fees and are therefore building their ecommerce channels for the first time.
The checkout experience is arguably the most important and delicate part of the ecommerce transaction, as it can make the difference between a happy customer likely to return, and a shopping cart abandoned out of frustration and confusion. A survey from March 2020 suggested that 88% of online shopping orders were abandoned, i.e. not converted into a purchase. A seamless, customer-centric online payment experience is therefore critically important in ensuring completed transactions. But with so many payment providers available, what should businesses be looking for when trying to keep friction to a minimum?
Keep clicks to a minimum
Less touchscreen interaction equals less abandonment. Adapting the payment page to fit any device and supporting popular mobile digital wallets like Google Pay ensures a seamless, stress- and hassle-free checkout experience for the customer and keeps clicks to a minimum. Friction can present itself in the most minor features – for example, when the customer is navigating the payment form, the appropriate keypad should be shown to the customer when required. It’s much easier to enter a card number using the dial pad instead of switching between QWERTY keypad layouts.
Simplifying online forms with autofill and tokenisation also significantly reduces friction at checkout and shortens necessary time taken. Ensuring checkout forms are tagged correctly for “autofill” is a great way to offer customers a single-click to input the payment, shipping, and billing data that they have stored in their browser profile. Similarly offering a guest checkout option will help convert customers who are in a hurry or looking for a one-off purchase. This can also be achieved by offering to store the payment details (called ‘tokenisation’) for express repeat and one-click purchases.
Make it easy to understand
A tailored payments approach can increase both domestic and international global sales. By offering a checkout experience in the customer’s language, the option to pay in their currency of choice, and use their preferred method of payment (whether it’s PayPal, Alipay or card), businesses can build loyalty quickly and put customers at ease. It is equally important for merchants to ensure they always display simple direction and information about next steps to instil confidence and prevent customer drop-off. The customer should be informed of what is happening at every stage in the process, for example, whether they will proceed to SCA (Secure Customer Authentication) next or go straight through to completion.
In addition, validating forms in real-time means merchants can highlight potential errors to the customer early on, and payment providers should provide this functionality. This could be an invalid expiry date, an incorrect digit in the card number or incorrect CVV number based on card type. When issues are only flagged at the end of the process, this forces the customer to go back through the steps to figure out the error. Real-time signposting of problems removes this potential friction and reduces the potential for a declined transaction.
Ensure seamless security
Merchants should work with a payment partner who offers the right blend of security and compliance management without it coming at a cost to the end-to-end checkout experience for the user. Instilling trust and security in your checkout flow while utilising the right solutions to drive seamless authentication flows will increase customer confidence and help prevent drop-off.
The greatest level of security and control comes from either utilising hosted payment fields that the
merchant can natively integrate into their checkout flow, or a hosted payment page where they can
manage the look and feel. Showcasing your brand on the checkout page with trust signals and logos also adds to building trust with the customer.
Staying ahead of regulations is also important. Secure Customer Authentication (SCA) will soon be mandatory in the UK for all eligible digital transactions, and this doesn’t have to be a friction-full process. Tools like Transaction Risk Analysis (TRA) and Exemption Optimisation Service (EOS) can quickly score transactions and drive exemptions where there is the right blend of transaction risk.
The devil is in the details
These three rules for successful ecommerce checkout experiences may seem straightforward, but it is important to apply them at a micro level. It can take only one minor point of friction to cause a customer to abandon their cart, and this will inevitably be replicated across other similar customers. It is critical to identify friction points early on and anticipate customer needs throughout the process. Discussing these points and any opportunities to improve customer checkout experience with your ecommerce team and payment provider is an important first step towards ensuring your entire shopping experience remains competitively seamless and loyalty is won. It may be that your payment provider cannot address them, in which case it could be time to move on in order to stay competitive.
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