For small and medium merchants (SMBs), achieving success at the checkout increasingly feels like trying to hit a moving target. Consumers expect payment to be fast, simple and secure — three demands that aren’t always easy to reconcile. But those demands also keep shifting as payment technologies evolve.
In our latest Lost in Transaction report, we asked 900 merchants from the US, UK, Canada, Germany and Austria about their top concerns going into 2019 and beyond.
Here’s what they told us.
Giving consumers more payment choices is key
With consumers increasingly expecting to pay using their preferred payment method, it’ll come as no surprise that most merchants see offering more payment choices as a crucial competitive advantage. 75% of respondents told us they think it’s essential to their success.
In two years’ time, online merchants expect to be offering six payment options on average, up from four. Similarly, 74% of offline merchants are also planning to introduce new payment methods.
Online, most merchants are focusing their efforts on mobile apps and digital wallets. That said, 56% think a significant number of consumers want to pay in cash. As a result, 15% plan to start offering cash replacement systems in two years’ time, bringing total acceptance to 45% — further proof, if this were needed, that cash is still a force to be reckoned with, even in the digital space.
Offline, contactless adoption is merchants’ top priority. But Amazon Go — which launched to much fanfare in January 2018 — has also had a noticeable effect. 42% of merchants expect to have an Amazon-style, checkout-free in-store experience in place in two years’ time. And 21% expect to implement it even sooner: in six months’ time.
But are these timescales achievable?
As things stand, our research suggests in-store technology will need a considerable overhaul before this can happen. Only 36% of merchants we surveyed in North America currently have contactless card readers. And, at 9%, 8% and 1% respectively, self-checkout, order-ahead apps, and biometrics have an even longer road ahead.
Addressing cart abandonment
For online merchants in particular, consumer demand isn’t the only factor driving their appetite for more payment choices. 21% think a lack of options at checkout is a significant cause of cart abandonment — another priority issue.
As things stand, 96% of merchants experience at least some cart abandonment. And almost half — 41% — consider it a significant problem.
So how are they planning to address the issue?
Leaving lack of payment options aside, some of the most common reasons merchants gave us for cart abandonment are arguably problems with their business process:
● 30% think it happens because customers don’t like hidden fees
● 22% blame unsatisfactory delivery options
● 21% link it to operational glitches such as system freezes
So, it seems broadening payment choices at checkout will only go so far. Merchants must also look inward if they’re to address the root causes of cart abandonment once and for all.
The fight against fraud intensifies: but who’ll take it on?
Most merchants agree tackling online fraud has become more pressing. 74% told us they think it’s more commonplace than it was a year ago. And 55% consider it a growing problem.
The level of concern seems to vary depending on the payment method. At 36%, merchants are most worried about credit card fraud. But cryptocurrencies, mobile apps, prepaid cards and even payment by invoice also have their fair share of doubters, albeit to a lesser extent.
But while merchants may have divergent opinions as to which payment methods are safer than others, they’re certainly united on one point. For 81%, the responsibility for fraud prevention falls fairly and squarely on payment service providers.
Merchants’ lessening tolerance for fraud means security is paramount when picking their payments partner. 59% think it’s the most important factor to consider, trumping reliability and even cost. The problem is that merchants also want the payment process to be as quick as painless as possible, because they’re concerned friction will lose them sales.
Speed vs security: will we ever find a balance?
Online, the tension between speed and security has been playing out for a while. Our 2017 Lost in Transaction reports suggested that customers are more tolerant of friction that previously thought. At the same time, this doesn’t mean they’re prepared to jump through endless hoops in the name of better security.
According to our latest findings, this tension has made its way offline. Merchants in bricks-and-mortar stores also worry about the speed of transactions. And while, at 9%, fraud is much less of a concern than it is online, card declines are seen as a problem, with 23% saying it loses them business.
Moving forward, most merchants will be doubling down on removing friction from the payment process. Yet, interestingly, views seem to differ as to how this will impact the risk of fraud. Online, 52% of merchants agree less friction increases the likelihood of fraud. By contrast, only 26% of offline merchants think frictionless transactions are riskier.
Of course, this could well be due to the different realities in which these merchants operate. Regardless, there’s no doubt that striking a balance between speed and security will continue to be one of the most important challenges facing merchants in the coming years.