When thinking about a digital issue, it helps to frame it as a real-world one. So how are we to think about the problem of “cart abandonment”? Well, imagine if more than half of the people pushing their trolleys towards the checkout of their supermarket simply gave up and went home without paying.
That’s a lot of aborted purchases. And a huge missed revenue haul for the supermarket. Of course, people do very occasionally abandon their real-world shopping — usually because the queues are too long. But it’s a trifling issue: the store can simply monitor the lines and open new tills when the queues start to stretch.
In the digital world, cart abandonment is a much more serious problem. It’s been with us for years and mobile has only made it worse. In the early days of mobile commerce, much of the problem was due to the fact that merchants did not modify their sites for mobile. As a result, many payment pages were displayed as if they were on a 17-inch PC monitor rather than a four-inch mobile screen.
Advertisement
Even when these design wrinkles were fixed, other hurdles remained. The most notable is the payment process. Even on a site or app with a clean layout and simple instructions, a shopper can still give up when faced with a long payment form requesting dozens of credentials.
But it’s not just the number of details that’s off-putting. It’s also their unnecessarily personal nature. In an era of rising privacy awareness, perhaps the biggest cause of payment abandonment today is a lack of trust.
Earlier this year, Mobile Ecosystem Forum published its annual Mobile Money Report. The study confirmed what most of us already know: mobile commerce is booming. Consumers are switching their shopping habits from desktop to smartphone, with 78% confirming they had made a purchase by mobile in the previous six months.
But the study also laid bare the cart abandonment problem. It revealed that 58% of shoppers had started to pay for something via mobile, only to abandon the process before the end.
When asked to explain the reason for abandoned purchases, 21% said the process was too long, while 22% cited technical/connectivity issues. But the biggest cohort — 31% — said it was because they were asked for too much sensitive information.
This should not be surprising. It’s clear that the public is increasingly aware of — and concerned about — privacy in the digital domain.
Indeed, another MEF study published in 2016 revealed that 36% of consumers in eight countries are put off from downloading and using more mobile apps and services due to privacy and security concerns. 52% have deleted apps that worried them.
It also revealed that, in 2013, 21% were always happy to share personal data with an app. By 2015, this had fallen to just 6%.
So what can the industry do to regain trust and claw back all that lost revenue? The obvious answer is to avoid asking shoppers for unnecessary details. Merchants should only include essential fields in checkout forms. And they should abandon any forced registration. It’s a guaranteed turn-off.
Another option is to offload payment credentials to a third party that shoppers do trust. That could even include another retailer. Amazon, for example. The e-Commerce giant makes its checkout system available to other merchants and recently announced that over 33 million customers have used Amazon Payments across 170 countries. As many as 32% of these transactions were made on mobile devices.
Apple Pay and Android Pay offer another option. They solve the problem by storing card details safely inside the device itself (so the merchant never has to ask for them). These processes are not just private, they are quick too. The shopper can check out with a PIN or fingerprint, rather than filling out forms.
The card networks have also acted to ease mobile payment. Mastercard’s Masterpass, for example, lets shoppers register their payment details once with Mastercard and then check out with a PIN on any participating merchant checkout. Again, the retailer never has to ask for sensitive payment data.
These solutions are fast and private. They also are secure. Apple Pay, Android Pay and Masterpass all use a technology called ‘tokenization’ to protect the payment credentials when they are transferred over the air. Here, the details are stored as an encrypted token, which can only be ‘understood’ by the bank. This makes them useless to any attacker that intercepts them.
Another interesting fix for cart abandonment is to let shoppers pay directly from their banking apps. At checkout, the shopper doesn’t submit any card details. Instead, he or she opens the banking app and “pushes” the payment from there. This is something U.K. firm Zapp is working on.
Finally, there is the “pay later” option. Here, shoppers can order something without completing any kind of payment checkout. Instead, they supply a postal address and email, and settle later when the goods arrive.
Typically, intermediaries handle the transaction and pay the merchants immediately after a customer completes a purchase in return for small cut. The Netherlands’ Klarna is active in this space, while Wirecard and Commerzbank launched a pre-financing option of this type in 2016.
Clearly, the consumer trust deficit is a major concern for the digital ecosystem. But the good news is that there are simple things merchants can do to bake trust into the payment from the get-go. And they will stand to make more money when they do so.
Rimma Perelmuter is CEO & Global Board Director at the Mobile Ecosystem Forum (MEF), the global trade body that works with its members to accelerate the growth of a sustainable mobile ecosystem that drives inclusion for all and delivers trusted services to enrich the lives of consumers. Named as one of the top 30 women in mobile content in 2014, Perelmuter also is on the Global Advisory Board for Women in Wireless (WiW) which connects, develops and promotes women leaders in mobile and digital media.
