As payment preferences continue to shift away from cash, Canadian businesses are shifting resources and investing more heavily in their digital presence and online storefronts. For some brick-and-mortar retailers, this investment in e-commerce sales platforms marked their first foray into online selling. According to Shopify, new online store creation by Canadian retail merchants increased 20 per cent during the last two weeks of March 2020.
And rightfully so as Canadians are making more retail purchases online – a number that’s grown 29 per cent since 2020. But as with all business models, regardless of size or primary location, determining customer preferences is key to driving sales success and building customer loyalty.
“55% of Canadian shoppers surveyed have abandoned a shopping cart because of the payment experience.”
Why are Canadians abandoning their shopping carts?
Here, at DirectPay, we wanted to learn more about this group of Canadians who are regularly shopping online to determine how to best support our nation’s financial health. The research revealed that 55 per cent of Canadians surveyed have abandoned a shopping cart because of the payment experience, which included issues in payments security and being uncomfortable sharing credit card details online. This could be attributed to multiple factors, such as screen size (ie. mobile or tablet shopping) or website design, but a common reason repeatedly given for abandoning a cart at checkout was a lack of preferred payment options, as cited by our study participants. In essence, Canadians want to shop online, but are looking for a simple, convenient and safe way to do so.
Companies must address these preferences to improve customer experience and online conversion. These expectations will continue to intensify B2C competition in the growing e-commerce market. We’ve highlighted four areas retailers can focus on today to better solidify long-term market share.
How to improve your e-commerce purchase process
1. Offer choice and convenience to consumers
Payment options are table stakes, but unfortunately almost three in five Canadians still experience some form of payment friction being caused by retailers not offering this choice. Canadians want to use their preferred payment method and want to avoid being forced to use a payment method not of their choosing. Experience shows that at a certain point, a consumer will source a similar alternative from another retailer if they can pay in their way. To avoid cart abandonment in the era of digital payments, retailers must keep up with the consumer expectation of diverse, quick and convenient online payments. These factors can make the difference between a successful checkout and consumer frustration.
2. Offer payments security
With growing reliance on digital connectivity, concerns of fraud and cybercrime are largely prevalent and can negatively impact consumer payment preferences and behaviour. We saw this fear fill our newsfeeds after information and data of 553 million Facebook users were made freely available online last year. When it comes to personal information, consumers have the right to be protective as potential theft can have devastating financial impacts. When we spoke with Canadians, 50 per cent surveyed shared that they would be more likely to shop online if they did not have to share their payment information or to risk having a merchant store or access personal details. Offering an alternative payment option, such as Interac e-Transfer®, which was used more than 763 million times in 2020 by Canadians, showcases a retailer’s commitment to providing trusted payment methods for its customers. This type of secure payment option keeps all personal and financial information private from the retailer and uses established and secure banking procedures to protect the customer.
Interac e-Transfer® was used more than 763 million times in 2020 by Canadians.
3. Choose cost-effective payment methods
Advancements in digital payment technology are changing the way consumers interact with e-commerce retailers and online marketplaces of all sizes. While digital payments are gaining in popularity, credit cards currently remain the primary payment option for e-commerce in Canada. This puts Canadian retailers in a bind as they are left paying some of the highest credit card fees in the world. Interchange fees in Canada are more than three times higher than in Europe and Australia as one example. High credit card fees reduce retailers’ profit margins and drive up prices for Canadian consumers. We should be actively searching for and supporting alternative payment options that benefit us all. For example, DirectPay would cost retailers ~55 per cent less than credit cards for a $100 purchase. Businesses who offer customers new e-commerce payment models that don’t require a credit card can keep their costs lower.
4. Learn from in-store payments experiences
E-commerce retailers can learn from how customers interact in-store. Consumers are more commonly choosing debit over credit payments options in-store, but these preferences are reversed for online shopping because of lack of choice, according to PYMNTS’ Digital Economy Payments Report. By offering a debit option at the online checkout, Canadians can more readily match in-store and online payment preferences. Our newest alternative payment method, DirectPay, will support Canadians’ seismic shift towards online shopping while expanding and providing an innovative debit payment option to consumers.
Payments choice and security are key
As online shopping preferences continue to accelerate, payments choice and security remain critical for Canadians. By improving the e-commerce purchase process with insights from in-store payment activity, retailers can lower cart abandonment, lower fees and access new customers through this platform. Adding a debit solution such as e-Transfer, which Canadians already know and trust, is one of the simplest and most cost-efficient ways to accomplish this for retailers.