Struggling merchants turn to payment solutions to retain customers

By Puja Sharma

British business is bracing itself for a difficult year ahead, new research from Europe’s leading open banking platform, Tink, has revealed. In a recent survey of UK online merchants, half (50%) said they are worried about how their business will survive the next 12 months, with four in ten (41%) afraid of going bankrupt.

As consumers rein in spending, two-thirds (66%) of retailers are expecting to see, or are already seeing, more abandoned baskets – particularly at the point of payment (64%). Lower average order values (75%) and fewer repeat customers (67%) are also either expected or already observed.

To adapt and survive, four in ten (40%) retailers have already or are considering cutting costs across the board – from reducing staff (49%) and training (55%) to advertising (52%), technology, and online/website investments (48%). Services that customers have come to expect for free are also under threat – with over half of merchants having already stopped or are considering stopping free delivery (53%) and free returns (54%).

Top priorities for merchants looking to reduce payment-related costs include reducing payment acceptance fees (44%), lowering costs associated with fraud (35%), and cutting refund costs (40%).

The payments paradox

Despite pressures to reduce overheads in the current economic environment, one in three (32%) retailers are investing more in upgrading their payment stack to reduce burdensome costs associated with their current payment methods.

This suggests that even during a recession, online retailers recognise that investment in innovative payment solutions will not only help them reduce costs, but also remove unnecessary friction for consumers at the point of payment.

This is particularly important as consumer spending power is squeezed ever tighter. A new consumer survey conducted by Tink shows that already, one in three (34%) consumers say they abandon their online purchases if they have to manually enter payment details or personal information at check-out – with third-party authentication websites a major point of frustration (46%).

Consumers are also actively looking for secure instant payment options, with 43% worrying about online payment fraud, and 47% reluctant to use the Buy Now, Pay Later, as they are concerned about falling into debt.

“Pay by Bank” is a new technology that benefits merchants and consumers

The pressure is on to find payment solutions that are fast, frictionless, and affordable – while also protecting from fraud. Pay by Bank, a payment alternative powered by open banking offers a clear solution for both merchants and consumers.

For merchants, this instant payment method holds the key to lowering costs, reducing fraud, and speeding up settlement times. For consumers, it provides a secure and frictionless payment experience.

Tom Pope, Head of Payments and Platforms at Tink, said, “As the economic situation becomes increasingly challenging, it’s important that retailers can not only manage and reduce their costs but retain customers with services that better meet consumer needs.

“Against this backdrop of cutting costs across the board, it’s encouraging to see that retailers are investing in digital payment methods that help solve these issues. Low-cost, low-fraud, and zero-friction payments improve the user experience and lead to fewer abandoned baskets, while the ability to settle payments instantly will be essential for businesses who find themselves struggling with cash flow as the recession bites.”

Key Highlights :

• Half of UK online retailers are worried about surviving the next 12 months as recession looms
• More abandoned baskets, lower value orders, and fewer repeat customers are expected or already being experienced
• Retailers are cutting costs across the board to stay afloat, including reducing staff and reducing costs associated with payments
• Investing in low-cost, low-fraud, and frictionless payment methods are seen as essential by retailers to keep customers