Research from open banking platform Yapily reveals businesses are potentially losing up to £656 million in missed revenue at the last mile at online checkouts.
The research, which polled 2,000 adults in the UK, found that 52% of those surveyed have ditched at least one online purchase in the last 12 months due to a poor experience at online checkouts. This figure soared among younger generations to 70% of those aged 16 to 24 and 64% of 25 to 34-year-olds.
The need to manually input card details (25%), merchants not accepting their preferred payment method (19%), and payments being blocked due to suspected fraud (15%) were among the most popular reasons for consumers abandoning their online purchases.
Abandoned sales were mostly priced between £21 and £60 (69%) and £61 and £100 (25%), with the average value of a discarded shopping basket sitting at £30.
The findings come at a time when getting consumers to spend is already tough and profit margins for businesses are tight. Reports recently published by the Confederation of British Industry and Office for National Statistics warn organisations to expect a slump in retail sales in March following a month-on-month drop in online sales since January this year.
The research also revealed that payment headaches don’t stop at the online checkout. Overall, 77% of Brits are frustrated when it comes to making and receiving digital payments. Over a third (36%) said refunds taking a long time to appear in their accounts frustrated them the most, whilst 20% said their main grievance was not knowing what dates payments will leave their account.
Instead, 41% of Brits want to see businesses offer more convenient and easier payment methods at checkout, with over one-third (34%) stating they would use a Pay by Bank app, product or service. Powered by open banking, Pay by Bank enables consumers to instantly send and receive money directly from their bank account when making an online purchase. Businesses also benefit from using open banking payments, cutting out costly interchange fees, reducing fraud risk, and boosting conversion rates.
Founder and CEO of Yapily, Stefano Vaccino, said: “In times like these, payments are becoming a more critical and strategic focus for every business. New payment innovations like open banking are enabling businesses to realise this, transforming payments from a cost-reduction exercise into a way to increase performance and grow revenue. To stop poor payer experiences eating into their profits, businesses and payment service providers should listen to what consumers and merchants are asking for – a faster, cheaper, and more secure way to pay.”
These findings are part of Yapily’s new report ‘State of Payments: the £600 million pound problem open banking can fix’ which can be downloaded here.