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Security is a top concern at checkout for many consumers. In a recent survey, TrueLayer spoke with 4,000 European shoppers and found that nearly two-thirds (64%) prioritised security over all other factors.
But there’s a limit to that cautiousness. Although businesses need to protect customers and foster trust, some security measures can cause friction, which in turn can drive customers away.
Finding the right balance can seem daunting. But without the proper measures in place, businesses risk losing customers to competitors that offer a much more seamless payments experience.
During a recent PaymentsJournal podcast, Michael Brown, Head of Commerce at TrueLayer, and Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research, discussed how merchants can make customers feel secure during the payments process, including the use of familiar logos to provide consistency and open banking solutions to reduce friction.
These are just a few of the ways merchants can better live up to their customers’ payment expectations. For more information, read TrueLayer’s latest report, The Payments Experience Playbook: what really matters to your customers.
Customers Want Security in Payments
Customers want to feel safe when making a purchase, and for the most part, consumers feel safe paying with brands they’re already familiar with. In many cases, smaller businesses struggle to establish that trust. One option is to leverage familiar and established payment methods.
“Using logos from well-known banks at checkout can make customers feel secure,” Brown said. “Since people often use these logos in their mobile banking apps, seeing them at checkout gives an extra sense of safety.”
Keyes also noted that recognisable logos help consumers know what to expect from a payment. “Paying on every single website is different, so any kind of consistency you can offer can really help with conversion and can really create a better experience,” Keyes said. “Otherwise, consumers can get lost and frustrated.”
Open banking can also help establish that trust. Consumers use online banking daily, so by offering open banking payments, merchants can leverage that trust and familiarity at the checkout. Strong customer authentication (SCA) is also built in to these payments, protecting customers while offering a smooth experience.
Finding Balance Between Safety and Friction
Because security is so important, many customers will accept and even welcome extra steps at checkout—especially when purchasing of high-ticket items. But as always, too much friction can lead to lost sales.
“In the UK, 60% of consumers say a slow and frustrating checkout experience would stop them from shopping with a merchant again,” Brown said. “This is especially concerning for online businesses that rely on repeat customers.”
Authentication, the process of verifying payments, is a big reason for this friction. Measures such as SCA have made this even more challenging, particularly for businesses that mostly accept credit and debit cards for payments.
“Around 56% of merchants have seen their card payment success rates drop due to these authentication requirements, and for 36% of them, the drop is quite significant,” Brown said.
Bigger merchants with well-equipped payment teams have found ways to lessen this impact. It’s the smaller businesses, which can’t focus as much on optimizing their checkout processes, that really struggle to maintain their conversion rates in the face of new authentication requirements.
The Right Amount of Choice
Over the past couple of years, many payment options have emerged at checkout, and today, consumers expect their preferred option to be readily available. At the same time, merchants are working to figure out how many payment methods they should offer.
“Our research found that about 63% of ecommerce merchants believe having five or fewer payment methods is ideal,” Brown said. “But it’s not as simple as just picking five and sticking with them. Consumer habits and the market are always changing, and merchants must stay flexible.”
This can get rather complex. International businesses may need to offer various payment methods in different markets, and these methods each need to work on different devices and platforms, all while keeping costs low.
Having too many options isn’t a good thing, either. “You want to avoid what’s often called the NASCAR problem—slapping checkout buttons all over and confusing consumers,” Keyes said.
Determining the right number of payment options should vary based on the customer base and the cost of items sold. “If a merchant sells expensive stuff, offering installment or buy now pay later plans could be important,” Keyes said. “But for a merchant selling smaller items, this might not matter as much.
Best Practices to Consider
Overall, the checkout process needs to strike a balance: it should be secure enough for customers to trust yet smooth enough to guide the customer to complete the sale.
“Customers don’t really care if a business is small or big, they want a smooth shopping experience,” Keyes said. “If a smaller merchant’s process isn’t up to par, customers might switch to a bigger one with a better process. Small businesses need a plan to tackle these new changes and payment methods to keep their customers happy.”
Alternative payment options can help merchants do this. For example, open banking payments can help improve conversions by making customer authentication quicker. In Europe, new regulations, such as the Payment Services Directive (PSD2), require verification for online transactions. With open banking, customers can authenticate their info through their banking app, reducing friction.
Retaining customers is important, too. After spending effort and money to get consumers to make their first purchase, merchants need to make subsequent visits seamless and enjoyable.
“Once you spend all those marketing dollars acquiring that customer and you get them to do that first-time payment, the next time they come to visit your site you want to make sure that the checkout experience is smooth—so they keep returning and you can really extract that lifetime value out of that customer,” Brown said.
“Ultimately, we have to remember why merchants are doing this,” he said. “This is about enabling sales, driving those high conversion rates, and delivering that lifetime value.”
