Seasoned payments professionals will likely remember the days when just offering direct and credit cards was enough to meet customers’ payment choice expectations. Those days are far behind us now, but the question remains, what choices does an organisation need to offer to ensure success?
Given the close link between a good payment experience and overall customer experience, we have conducted some research into customer attitudes and how these are reflected in evolving payment preferences.
Research from UK Finance charts which were the most popular payment methods in 2023, outside of CHAPS.
- 61% - Debit and credit cards
- 14% - Buy Now Pay Later offers
- 12% - Cash
- 10% - Direct Debit
- 10% - Faster payments, remote banking
Organisations also need to look again at their card options, given that a recent report from the UK Government found that just over a half of all consumers now use their cards through digital wallets than they use the card itself. This means that digital wallets now account for 35% of all spending in ecommerce and 10% of point-of-sale payments.
Including the digitally excluded
An interesting point that organisations should consider is 10% of sales sounds like a high proportion when it is a new channel. But consider this. Cash is still the preferred payment option in 10% of all UK payments. In many cases this will be because a person is paid in cash and so wants to use notes and coins to pay for goods and services. However, it cannot be overlooked that this could also be a sign of consumers who do not have the equipment or know-how to make digital payments.
The 2023 Digital Exclusion Index, published by Lloyds Bank, revealed one in four people struggle to carry out digital tasks that others who are more digital savvy may take for granted. So, to avoid a brand being seen as ignoring the digitally excluded, cash should not be overlooked.
Meeting customer expectations
Our recent report highlights a crucial insight for businesses: the strategic selection of payment channels is not merely a matter of comprehensive coverage, but a significant driver of customer satisfaction and overall experience.
When we asked customers how important the right payment in three different markets, we found a resounding response. It’s vital.
Payment choice:
- 62% report a wider choice of payment options positively impacts their choice of insurance provider
- Nearly a third, 32%, of health and beauty customer say choice is important in recurring payments
- Nearly a third, 30%, of gym members report frustration with lack of payment choice
Payment flexibility:
- 69% say flexible payment options are important in choosing an insurance premium
- 41% of gym members value flexible payments
- Nearly a third, 32%, of health and beauty customer also require flexibility
Failure to provide the right channel choice, and flexibility to spread payments (where reasonable and applicable). Figures from the Baymard Institute certainly make a clear link between payment choice and churn. Although adding extra costs is the biggest reason why people abandon purchases, one in four customers will walk away if they do not see a payment option they deem to be secure and 13% will ditch a cart if their preferred payment mechanism is not on offer.
There’s a lot to discover around the clear link between payments and customer experience and, in turn, the impact on revenue, brand image and loyalty. One of the main findings for organisations is to align their payment channel choices with those favoured by customers because those who don’t simply risk passing on new growth opportunities to rivals.