By Jens Saltin, Head of Expansion, Klarna
The UK is a nation of multichannel consumers, who buy goods on many different devices, often on the move. According to research from RetailMeNot, Britons are set to spend £60bn online in 2016, with an increase in mobile devices fueling an £8.9bn increase in online sales. According to yStats, in the next five years the global online payments market will exceed $3trillion, with the mobile space driving growth. This is a great opportunity for retailers. However, many large retailers are still searching for the right way to bring the success of their bricks and mortar payments models to online selling.
Consumers are looking to merchants to provide a means to purchase their goods online simply and securely. We expect to be able to shop, buy and pay online with an absolute minimum of friction, and be confident our purchase will arrive swiftly. There is a clear demand for convenience and ease of use from consumers – retailers need to keep up with the trend to avoid losing customers and sales.
The market for payment technologies in the UK is fragmented and a challenge for retailers to negotiate: there are currently over 40 local payment methods. As these technologies consolidate and become established, and the mobile web becomes simply the web, retailers will need to ensure their checkout solutions are compatible with payment systems available on mobile devices.
Here are three key questions to keep in mind when retailers begin to look at new payment options.
Is it easy to use?
Customers want the easiest route possible from product to purchase. A retailer can stand out from their competitors by ensuring the purchasing process is as simple as possible. There are many payment methods on the market which simplify customer registration – some in fact remove the need for customer registration completely.
The simpler it is for a customer to confirm a purchase, the higher conversion rates climb, and the lower basket abandonment rates sink. Customers will always want to return to a site which simplifies purchase, so first movers will profit from increased retention. The standard checkout process has led to an abandonment rate of 71% across tablets and 81% on mobile in 2014. The amount of monthly sales abandoned each year totals just over four trillion dollars.
What else does the solution offer the customer?
Simplicity is key for a modern payment solution. However, the consumer wants more than justsimplicity. For example, does the payment technology provide a process where the customer can complete the purchase in seconds, then pay for their goods at their leisure? Can it remove the need to remember a password, or enter credit card details? Especially when dealing with distractible, time-poor customers limited by small on-screen keyboards, retailers should be looking to see what payment technologies can additionally provide for customers. Using sophisticated algorithms, it is now entirely possible to get an instant answer as to whether or not a customer should be offered to pay after delivery. If the answer is “yes”, there is no need to make the consumer jump through additional hoops to pay at the moment of purchase.
How secure is this payment method?
In the wake of a flurry of news stories about fraud and data theft, my advice to retailers would be to look for a payments system that can both minimize the risk of security breaches and take on the risk of fraudulent payments. Identifying and protecting against attempted fraud is of course important, but failure to protect customer data can have long-term negative effects for a brand, as can overzealous and over complex verification systems. Minimising the amount of data that needs to be shared and stored will mitigate this risk, as will ensuring that the payment system is not a weak security link.
Managing a multichannel operation, while still offering consumers a smooth and integrated service, is a challenge and can be a daunting one. However, if retailers fail to diversify their payments processes they may miss out on a huge opportunity. Not only the opportunity to cash in on the potential of online commerce, but also to increase customer loyalty and retention. With the right payment method in place, retailers can provide a simple and seamless payment process for their consumers while improving customer experience.