Four ways payment gateways can improve the retail customer experience

4-minute read

Fri May 11 2018

Payment gateways are an integral part of the online shopping process, but it’s easy to underestimate their importance when it comes to optimising the online customer experience.

• Compared to the fun to be had redesigning the website homepage or running usability tests on product pages, payments can appear to be a mundane hygiene factor. Yet payments are that crucial final step in clinching a sale and preventing your customer from abandoning the checkout.
  
  A new Barclaycard whitepaper looks at the ways in which payment gateways can enhance the retail customer experience, leading to higher conversion rates and fewer abandoned shopping carts.
  
  Based on interviews with ecommerce experts and data from numerous user experience studies, the whitepaper shows that payments should be a priority for retailers that want to optimise their checkout journey.
  
  In this article we’ll give a brief overview of four ways that payment gateways can improve the customer experience, which are all covered in more depth in the whitepaper.
  
  1. Reduced friction at the checkout
  
  Checkout optimisation is all about streamlining the checkout process and eliminating barriers to purchase.
  
  Each additional form that needs to be completed gives the shopper more time to reconsider their purchase and can potentially cause them to become frustrated, increasing the chances that they will change their mind and abandon their shopping cart.
  
  Most online shoppers will be familiar with the convenience offered by Amazon’s 1-Click payment option, so this is the benchmark that retailers should be measuring themselves against.
  
  Payment gateways can help streamline the payment process for returning customers by storing their card details when they first make a purchase. This means that they don’t have to re-enter their card details and reduces the amount of form filling required at the checkout.
  
  Returning customers already convert at a higher rate than new visitors, have a higher average order value, and are more likely to recommend the brand to their friends¹. So it makes business sense for retailers to ensure they are partnering with a payment gateway provider that can offer returning customers the best possible shopping experience.
  
  2. Enables omnichannel retailing
  
  An omnichannel retail approach is about integrating customer touchpoints to provide a seamless shopping experience.
  
  If a retailer has successfully implemented an omnichannel strategy then all sales and marketing channels are connected and often managed centrally, so shoppers can move between offline and digital channels without their experience being interrupted.
  
  This requires retailers to have backend systems that can operate in sync and share data securely.
  
  Payment gateways play a crucial role here by tagging each customer or purchase with a unique ID number (known as a ‘token’), which then flows through to a central data hub. This enables retailers to track that customer securely across different payment channels.
  
  According to Ben Stagg, Sales Director at Barclaycard Payment Solutions: “The payment gateway is the glue that holds the omnichannel customer experience together. And if you don’t have a joined-up brand experience then you’re probably putting some shoppers off and damaging your conversion rates.”
  
  A Harvard Business Review study found that 73% of US shoppers prefer to use multiple online and offline channels when shopping, and that omnichannel experiences correlate to higher average spend and increased customer loyalty².
  
  Does your payment gateway facilitate omnichannel commerce? If not, it is probably damaging your customer experience and could even be deterring some people from shopping with you in the first place.
  
  3. Improved security and trust
  
  Data breaches are a common occurrence these days, with one study finding that 91% of retailers experience an attempted cyber attack at least once a month³.
  
  This should be a big cause for concern among retailers, particularly considering the business impact if hackers manage to gain access to customer data. Businesses that suffer a severe data breach can find themselves battling negative PR headlines and might even see their share price suffer⁴.
  
  While a payment gateway can’t prevent hackers from targeting your business, it can limit the amount of customer data that hackers can steal by employing state of the art encryption. Furthermore, by partnering with a trusted financial institution, retailers can provide customers with added piece of mind at the checkout and help to improve conversion rates.
  
  Due to the ongoing risk of cyber attacks and online fraud, people are understandably cautious about shopping online, particularly when it’s with a retailer they’re not familiar with⁵.
  
  Retailers using Barclaycard’s payment gateway have the option to display our brand logo on their checkout. This can help reassure customers that the checkout is safe and secure, which could help increase conversion rates.
  
  4. Fewer ‘false positives’
  
  One of the main functions of a payment gateway is to identify and block potentially fraudulent transactions. The process of weeding out fraudsters involves a complex set of criteria, such as:
  
    • validity of card information
    • behavioural triggers (e.g. the customer's previous shopping habits)
    • suspicious activity (e.g. time of transaction, unusual IP address)
  
  In a majority of cases payment gateways make an accurate judgment on whether a transaction is fraudulent, but unfortunately genuine customers sometimes exhibit certain behaviours that flag them up as potential fraudsters. Consequently, some valid transactions are mistakenly declined after being identified as fraudulent — in industry jargon this is known as a ‘false positive’.
  
  False positives are obviously bad news for retailers as they create unnecessary frustration for shoppers and will cause some people to abandon the purchase. Retailers must therefore balance competing priorities – namely, having systems in place that prevent fraudulent transactions while also providing a streamlined shopping experience for genuine customers.
  
  As well as providing fraud analysis as standard, gateway providers can also help retailers reduce the likelihood of false positives occurring by customising the criteria used to analyse and identify fraudulent transactions – a service known as payment optimisation.
  
  Download Barclaycard’s new whitepaper to find out how payment gateways can enhance the retail customer experience.
   

Sources

^1. https://blog.smile.io/repeat-customers-profitable-stats-to-prove
^2. https://hbr.org/2017/01/a-study-of-46000-shoppers-shows-that-omnichannel-retailing-works
^3. https://www.informationsecuritybuzz.com/study-research/retailers-experience-two-cyber-attacks-every-week-2/
^4. http://www.independent.co.uk/news/business/news/cyber-hacking-attack-cost-uk-business-investors-ftse-companies-lose-120-milli on-a7678921.html
^5. https://conversionxl.com/research-study/trust-seals/