White paper
Confidence
in every transaction:
a blueprint for payment
success
Building trust through awareness,
education, and implementation of new
payment methods among UK consumers
Table of contents
Methodology 3
Introduction 4
First impressions count 6
High levels of trust in familiar payment methods 7
Checking what consumers want, or checking boxes? 9
Trust issues 10
Opening up Open Banking 10
Regulation ramps up consumer confidence 12
Fool me once 14
The rise of antisocial social sellers 15
Younger generations increasingly becoming victims of fraud 16
Conclusion 18
2
Methodology:
This white paper is built on insights from two surveys:
one of 2,001 UK consumers and one of 2,001 Business leaders,
with an e-commerce offering in the UK.
3
Introduction
The past 12 months have been hard on many UK merchants and their
customers. The cost of living crisis has resulted in 80% of consumers
changing their spending habits as household incomes are squeezed,
making it more important than ever for merchants to do all they can
to create exceptional shopping experiences for their customers.
Despite an explosion in the number of new payment methods becoming
available to consumers, adoption has been limited in many cases. Some
payment methods have seen a surprising resurgence in popularity, such
as QR codes, and digital wallets have been embraced by older
generations, whereas the anticipated appetite for other payment
innovations such as Open Banking, has been somewhat lacking.
Ecommpay recently surveyed UK merchants to better understand their
pain points. Our findings revealed that 43% of merchants stated their
biggest payment challenge is keeping up with the latest technologies
and payment trends, but other factors relating to the day-to-day running
of their business are preventing them from dedicating as much time
to this as they’d like, such as the impact of the cost of living crisis,
gaining access to funding, and finding the right talent.
43% of merchants surveyed stated that their biggest
payment challenge is keeping up with the latest
technologies and payment trends.
4
Optimising payments infrastructure is an ongoing process, and with
customer demands evolving rapidly, merchants are rightly concerned
about missing out on potential revenue as a result of high checkout
abandonment rates if they can’t stay ahead of the curve.
One of their biggest challenges relates to abandonments as a result
of not offering their customers their preferred payment method,
and merchants should be worried, as our research revealed that three-
quarters of consumers are likely not to make a purchase
for this very reason.
However, just because a merchant offers a new payment method,
it doesn’t necessarily mean customers are ready to embrace using it.
Although consumers have warmed to relatively new payment options,
particularly BNPL, there is still a disconnect, and therefore a lack of trust,
surrounding other innovations, such as Open Banking and crypto.
In this white paper, we explore how merchants can build trust
with customers when introducing new payment methods by raising
awareness and educating them on the benefits while getting the support
they need from their Payment Service Provider on how best
to implement them.
5
First impressions
count
Consumers are expecting more and more when it comes to the checkout
experience. In our most recent survey, 92% of consumers stated that the
payment process is important in their perception of brand experience,
up from 70% in 2022.
With this in mind, a seamless payment process to make a great first
impression is more important than ever.
The most common reasons
to abandon a checkout
47% Concerns about the security or legitimacy of the payment page
46% Expensive delivery or service fees
31% Being asked for too much information
27% Too many steps to go through before a purchase
26% Having to make an account on the merchant's website/app
16% Little variety in payment method options
15% An unattractive or unprofessional-looking interface
10% No local payment method option
6
Designing a user-friendly checkout should be a high priority for
merchants who want to improve conversion rates. Getting the basics
right, like making sure a payment page is well laid out and secure
are critical, but offering the payment methods customers want
is just as important.
82% of consumers trust a brand more when seeing a
familiar payment option at checkout.
Consumers have high levels of trust
in familiar payment methods
Card payments remain the most popular method of payment (66% debit
card, 41% credit card), and as card scheme logos are recognisable, it’s
no surprise that 40% of consumers think checkouts which do not display
these logos are unsecured.
In addition, 72% of consumers are likely to abandon checkout or seek
alternative options elsewhere if their preferred method of payment
is not available.
While it may seem as though the simple answer to this problem
is to add as many new payment methods as possible, before going full
steam ahead, businesses need to do their research. Adding new
payment methods can be complex, and expensive.
Merchants cited their main payment pain points as keeping
up with the latest payment technologies and trends, and
customers abandoning a purchase if their preferred
payment method wasn’t available.
7
Top payment challenges for merchants
43%
Keeping up with the latest technologies and payment trends
33%
Customers abandoning a purchase if their preferred payment method wasn't
available
32%
Security and defence against fraud
31%
Managing the growing number of payment methods and sales channels
31%
Preparing for new payment solutions (i.e. blockchain, artificial intelligence (AI), and
meta-payments)
30%
Integration of new/ additional payment methods seems complicated
22%
Not sure which payment method to add
But do consumers have an appetite for new ways to pay, or is it a box-
ticking exercise that may end up being costly due to a lack of adoption
further down the line? Not to mention the impact on checkout design
when there are a multitude of payment methods available.
8
Checking what consumers want,
or checking boxes?
When choosing a Payment Service Provider, merchants should seek
out a partner who takes the time to understand their payment
challenges, their business, their target consumers, the jurisdictions they
operate in, and how to tailor their payment stack to meet the evolving
needs of their customers.
A good Payment Service Provider will work with a merchant to help
identify the payment methods customers actually want, rather than
letting them waste time and resources in implementing solutions
for the sake of it.
Additionally, while in the early stages working with a provider that offers
an out-of-the-box solution is quick and easy, this may not be suitable
as a business scales and moves into geographically new markets where
they may need to offer local payment methods. A tailored, flexible
approach is key to successfully scaling business operations.
9
Trust issues
New payment methods have been developed to reduce friction and
increase conversion rates at checkout. But with so many payment
methods experiencing low adoption rates, how can merchants put their
customers' minds at ease?
Opening up Open Banking
Merchants have expressed high levels of interest in Open Banking as an
Alternative Payment Method (APM), with a third of respondents stating
that they see it as a payment type with the most opportunity for business
growth, but the vast majority of businesses and consumers are confused
about what it is, and what the benefits are.
How much does your business
understand Open Banking?
10
Merchants are ramping up the adoption of Open Banking
as a payment method, yet trust among consumers is low —
37% of consumers have no idea what it is, and 28% have
a limited understanding.
Open Banking enables instant settlement, no fraud,
no chargebacks, and instant refunds, yet many merchants
are not yet adopting it as the demand is not there from
consumers.
47% of consumers do not know the difference between
Open Banking and regular bank transfers, and 48%
are unaware of Open Banking regulations. The result?
Consumers are concerned that Open Banking will charge
them additional transaction fees, while also being more
complicated and less safe than regular bank transfers.
While merchants may be aware of the benefits of Open
Banking for account-to-account payments (A2A), Open
Banking can also be utilised to facilitate deposits, offer
payouts, provide access to faster payment rails, and give
merchants access to settlement accounts. This gives
merchants a significant advantage over their competitors
when working with a Payment Service Provider with an
enhanced Open Banking proposition, such as Ecommpay.
More still needs to be done to support merchants to better
understand Open Banking.
Payment Service Providers, industry bodies, and regulators
need to step up to pass on this knowledge, enabling
merchants to educate their customers on the benefits
of Open Banking, and build trust.
11
Regulation ramps up consumer confidence
Trust in Buy Now, Pay Later used to be low. But since regulators began
scrutinising BNPL providers, with the UK Government drafting legislation
to better protect consumers, brands operating in this space have
invested in educating consumers to help establish BNPL as a viable
and trusted payment option. As a result, consumers have become more
comfortable paying in this way, particularly as it can help alleviate
pressures felt by the cost of living crisis when making more
expensive purchases.
f The number of merchants offering BNPL has increased
to 59%, up from 42% in 202C
f Almost 40% of consumers plan to use BNPL services
more frequentl@
f BNPL is becoming a more popular payment method,
especially for Gen Z and millennials9
f Merchants offering BNPL as a payment method reported
a 57% increase in payments settled with BNPL credit
arrangements8
f 56% of consumers are aware of BNPL regulations, with
30% stating that the regulations make them feel more
comfortable using the service
12
Unsurprisingly, crypto is still seen as the less trustworthy payment
method, which is unsurprising given that most people don’t understand
how it works, with 43% never having used crypto as a payment method
and a further 35% stating they would not be comfortable making
a purchase with crypto.
Another issue is the negative press surrounding crypto, which
undoubtedly contributed to the 26% of respondents who would be
uncomfortable using crypto stating they do not think it is safe. There
are also concerns about it being unregulated - however, perhaps new
regulations, such as MiCA, can one day change consumer attitudes
around this payment method too. This sentiment is echoed in consumer
research conducted by the FCA, which showed that 28% of non-crypto
asset users would be more likely to use it if the market and activities
were regulated3.
1 Capgemini Payments Top Trends 2024
2 Arkwrite/MPE report - Payments from a merchants perspective report 2024
3 FCA cryptoassets research 2023
13
Fool me once
Another huge issue holding back the adoption of new payment methods
is concerns about fraud. And for good reason - fraud is on the rise.
Businesses have seen a 58% increase in online fraud, or attempted fraud
since 2021, with 24% of consumers stating that they have noticed an
increase in scam-related online payments throughout the cost of living crisis.
60%
45%
30%
15%
0%
Merchants have reported
Consumers have reported
a 58% increase in fraud
a 24% increase in scam-related
or attempted fraud online payments
Consumers who have been victims of fraud may therefore be put off
trying new payment methods. Traditional payment methods, such as card
payments, remain popular as consumers look for familiar payment
methods to signal that a payment page is secure before parting with
their cash.
14
This doesn’t necessarily mean that consumers are safe when making
payments by card, despite what they may assume. Merchants should
ensure that they are implementing strong authentication methods,
including 3D Secure (3DS), tokenisation, or 2FA for online transactions,
while adhering to PCI compliance.
The rise of antisocial social sellers
Consumers are increasingly likely to make purchases via social media,
and merchants recognise this, with 66% of respondents offering purchases
through social media applications such as Instagram or Facebook.
Percentage of shoppers who make purchases
from social media applications
48%
50%
39%
40% 37%
30%
20%
10%
0%
16-24 25-34 35-44
But do consumers feel comfortable making purchases in this way?
48% of consumers stated fraud was their main concern with making
social media purchases with lesser-known brands. And it’s no wonder
they’re concerned.
A huge number of online payment scams occur via social media. In many
instances, consumers are tricked into buying ‘dupe’ items, which are
copies of viral or designer products, only to find that they do not receive
the product, or if they do, it is of very low quality.
15
According to a study by Trustpilot4, 34% of buyers scammed were
unable to return the item or get a refund. With hundreds of these sellers
operating purely to make a quick profit and disappear, the knock-on
effect is that consumers are put off social shopping — even from
legitimate sellers.
And it’s an uphill struggle. Research conducted by PwC5 revealed
a 57% gap between how businesses estimate versus how much
consumers trust them. In addition, 46% of consumers surveyed by
Ecommpay stated that a lack of trust was putting them off making
purchases via social channels.
Younger generations increasingly
becoming victims of fraud
As digital natives, Gen Z and Millennials are more likely to make
purchases via social media than older generations. Advertising on social
media platforms, which have sophisticated demographic targeting
features, is making it easier than ever for fraudsters to set up websites
that appear legitimate in order to scam unsuspecting buyers.
Social media platforms are doing little to protect consumers from social
shopping scams6, so merchants offering purchases via these channels
must do all they can to gain their trust.
Maintaining a strong brand presence is important for any business
heavily reliant on driving purchases from social media channels, and
while it does cost money, applying to be a verified business can also
help build consumer confidence.
Unfortunately, fraud will always be an issue, for businesses and
consumers alike. According to a report by BDO, UK fraud value doubled
in 2023 to £2.3 billion, and is set to continue to increase as scammers
seek out new and innovative ways to target their victims7.
16
UK fraud value doubled in 2023 to £2.3 billion.
Merchants should select a Payment Service Provider that not only has
robust risk control management systems in place to reduce fraud, but
also a partner that keeps them informed of the latest scams and tactics
being used to commit fraudulent transactions to help keep their
customers safe.
4 Trustpilot study
5 PwC’s 2024 Trust Surevy
6 Experian: Is shopping on social media safe?
7 Reported fraud doubles in 2023, BDO report finds
17
Conclusion
The payments ecosystem is complex and fragmented. As more and
more ways to pay are added to the mix, and as more and more channels
open up, it becomes increasingly difficult for merchants to keep up with
trends.
Both merchants and consumers need help understanding the benefits
that new payment methods can bring. As highlighted by our research,
there is still a disconnect between what merchants think consumers want
and what they actually want. Closing this gap will be crucial to ensure
that they have confidence in every transaction they make.
The payments industry as a whole has a responsibility to better
communicate with consumers, keeping them informed of innovations
in payments to help them make informed decisions about how they pay
for products and services online.
With regulations being introduced to provide a framework for emerging
payment types, consumers can be more confident when making
purchases. However, the average person will not be aware of the
regulatory frameworks that underpin the payment ecosystem to keep
them safe from fraud. Open Banking is one of the safest Alternative
Payment Methods, and yet, with consumers’ limited understanding
of what it means, many assume it is unregulated, and therefore, unsafe.
The vast majority of merchants understand the importance of providing
a seamless, secure checkout experience, building trust with their
customers so they return again and again. To achieve this, merchants
need a partner that can provide a blueprint for payment success
to ensure they stay ahead of the curve for many years to come.
Get in touch with us to receive an individual consultation on how to build
trust with your customers by delivering a seamless and secure checkout
experience. Let our experts analyse your business and find the payment
solutions tailored to your needs.
18
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with Ecommpay
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in every transaction
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