Chris Middleton reports on how changes in consumer behaviour are leaving some online retailers struggling to tackle financial crime – and keep our stockings filled.
With the festive season upon us, payments FinTech Paysafe has published its latest Lost in Transaction report, which looks at changes in ecommerce payment trends over the last 12 months.
The company spoke to over 900 small to medium-sized online businesses in the US, UK, Canada, Brazil, Bulgaria, Italy, Austria, and Germany in October and November 2021.
The key message is that nearly two-thirds of ecommerce sites now see the checkout as a competitive differentiator in response to changing consumer preferences, which are reported by nearly two-thirds of respondents.
With cart abandonment a significant issue for 40 percent of platforms – 16 percent due to a lack of payment options – 42 percent of e-tailers see reliability as the key factor when looking for a payments partner.
With ongoing reports of data thefts and hacks, some consumers are reluctant to have their credit or debit card details stored online and see other payment methods as safer.
Half of online businesses believe their payments providers could be doing more to support them, especially by enabling more options for their customers.
The next two most significant factors in the payment services relationship are cost (cited by 32 percent of sites) and security (26 percent).
The low security focus is puzzling, given that one-third of e-tailers admit that they are “currently an easy target for fraudsters” and are performing poorly on financial crime prevention.
Nearly 60 percent believe having more payment options at the checkout would help reduce fraudulent transactions, but 31 percent say they lack the tools to minimise financial crime.
Changes in consumer behaviour – accelerated by the pandemic – are evident in the diversity of methods requested by the customer. Sixty-one percent of online retailers now offer digital wallets and report a significant uptick in purchases via them over the past year.
Twenty-nine percent of online retailers offer eCash options, says Paysafe.
The growing popularity of cryptocurrency, particularly among younger consumers, is reflected by nearly half (48 percent) of ecommerce sites looking to offer crypto payment alternatives at the checkout as soon as possible.
A larger percentage of respondents, 59 percent, believe crypto payments will help them expand their business into new countries, as some nations begin to accept digital tokens as viable currency.
But with 11 percent more expressing this view than are actively pursuing crypto, uncertainty or inability to move quickly is evident.
Summing up the report’s findings, Paulette Rowe, CEO of Integrated & Ecommerce Solutions at Paysafe, said: “Since the start of the pandemic, more and more online businesses have learnt the hard way that not having a frictionless or secure check-out experience will kill their sales.
“On top of that, shoppers are now demanding a wider choice of alternative payments methods than ever before. With the holiday season now upon us, those who get it right will come out strong and avoid high rates of cart abandonment.”
In the long term, it is unclear whether the global shift towards Central Bank Digital Currencies (CBDCs), which are being explored by most large economies, may tip the balance against crypto in the decade ahead.
The extreme volatility of some tokens’ valuations mitigates against their use as money – the so-called ‘million-dollar pizza’ conundrum – and encourages high-risk speculation. These issues are explored in previous Transform Finance reports.
The future is uncertain, but ecommerce platforms need to keep the customer satisfied – especially in the run-up to Christmas and the holiday season.