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 retailers, half (50 per cent) said they are worried about how their business will survive the next 12 months, with four in ten (41 per cent) afraid of going bankrupt.
As consumers rein in spending, two-thirds (66 per cent) of retailers are expecting to see, or are already seeing, more abandoned baskets – particularly at the point of payment (64 per cent). Lower average order values (75 per cent) and fewer repeat customers (67 per cent) are also either expected or already being observed.
To adapt and survive, four in ten (40 per cent) retailers have already or are considering cutting costs across the board – from reducing staff (49 per cent) and training (55 per cent) to advertising (52 per cent), technology and online/website investments (48 per cent). 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 per cent) and free returns (54 per cent).
Top priorities for merchants looking to reduce payments related costs include reducing payment acceptance fees (44 per cent), lowering costs associated with fraud (35 per cent) and cutting refund costs (40 per cent).
The payments paradox
Despite pressures to reduce overheads in the current economic environment, one in three (32 per cent) retailers are actually 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 per cent) 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 per cent).
Consumers are also actively looking for secure instant payment options, with 43 per cent worrying about online payment fraud, and 47 per cent reluctant to use buy now, pay later, as they are concerned about falling into debt.
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 payments 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, commented: “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.”
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