Poor payment performance costs online retailers more than they realise. Here’s why and what they can do about it.
Optimising payments is a source of growth for ecommerce retailers. Checkout.com’s research finds that those merchants focused on improving their payments performance by optimising authorisation rates capture more revenue and grow faster than their peers.
Despite this, only 30% of ecommerce retail merchants consider payment optimisation to be a strategic priority for the business. That’s 70% of senior ecommerce executives who are overlooking a significant source of revenue.
But that’s not all. By not focusing on optimising payments performance, these online retailers may also be unwittingly handing over potential customers to their direct competitors.
Checkout.com makes a case for why all ecommerce retailers should make payments performance a strategic priority and how working with a payments partner that provides granular data and dedicated strategic support puts retailers on the fast track to success.
Counting the cost of poor payments performance
When discussing payments performance, it’s the authorisation rate that matters. This metric tracks the number of payments initiated by customers that are successfully authorised by their issuing. It’s vital because no authorisation equals no sale, which equals no revenue. (See how better payments drive retail forward. Download report.)
Improving the authorisation rate by just a percentage point or two can have a sizable impact on revenues. And with Checkout.com’s research revealing that only 31% of ecommerce retail merchants have an acceptance rate of 90% or more, there’s clear evidence that many have room for improvement.
Failing to improve payment performance has other consequences as well. For example, if a merchant has a low authorisation rate, many legitimate customers will likely have their payments rejected wrongly. This is what’s known as a false decline.
Customers don’t like false declines. Thirty-three percent of consumers told us they’d been permanently put off shopping on a site because their payment was incorrectly declined.
And to make matters worse, the vast majority say they head to a competitor’s site. In the UK, France and Germany alone, $4billion is handed over to competitors when payments fail every year — and that doesn’t account for all the wasted time and effort spent marketing to the customer.
Uncovering the barriers to performance optimisation
The lack of focus on payments performance doesn’t usually exist because ecommerce leaders are ignoring the problem. Instead, it exists because many aren’t getting the data and support required from their payments partners to understand there is a problem — let alone do something about it.
Most strikingly, 70% of ecommerce merchants do not receive raw response codes on failed payments. This is a huge issue. Response codes are critical data points that tell merchants exactly why a payment has failed. Without access to them, merchants are operating in the dark, unable to understand where to focus their efforts to drive performance improvements.
Even when merchants have access to the data, many will need support from payment experts to help unpack and interpret it. But most are neglected by their payments partners, with 71% of ecommerce retailers telling us they’re not receiving any consultative advisory and strategic support.
Unlocking peak payments performance
Ecommerce leaders want to focus on the core of their business, which is retail. Payments may be crucial to unlocking monetary success, but merchants need the support of their payments provider to capture this value.
This article has been republished with permission from Checkout.com.
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In every aspect of the payment technology, Checkout.com builds delivers retailers ease, simplicity and actionable insights into their payments. It’s also why they believe so firmly in bringing white-glove consultative expertise to retailers.
This combination of radical data transparency and their consultative service is what helps retailers like Farfetch, Shein and The Hut Group achieve optimal payment success, resulting in more sales, happier customers and greater revenue.
Get in touch to find out how Checkout.com can support your business.