4 Ecommerce Checkout Tech Trends to Improve the Customer Experience

Customers today expect easier online checkout and faster transactions. While they don’t want to be bogged down by too many steps, they’re also highly concerned about security and protection. A recent report by Vanson Bourne found that 92% of 7,000 consumers surveyed across North America and Europe said they expect a fast, frictionless experience that is also trustworthy and secure.

This juxtaposition of “fast and frictionless yet safe” can often put a large burden on retailers who may be tempted to add extra steps to provide increased security. While there are many ways to meet these growing customer expectations, the best approach is to prioritize the user experience. From building machine learning models for pre-authorization risk assessment to offering fast and easy POS lending options at checkout, here are a few trends to watch for in the coming years as retailers double down on the customer experience:

Trend 1: Retailers that cut checkout friction will see double-digit conversion rate gains

According to the same Vanson Bourne report, an astounding 66% of consumers have abandoned opening an account or a transaction on at least one occasion due to friction, including the process taking too long. Further, a recent Baymard Research Study found the global average cart abandonment rate is 69.2%, with 23% of U.S. ecommerce shoppers claiming the abandonment was solely due to a “too long/complicated checkout process.”

Takeaway: Luckily, Baymard also found that the average large-sized ecommerce site can gain a 35.26% increase in conversion though better checkout experiences. With combined ecommerce sales of $738 billion in the U.S. and EU, that amounts to $260 billion of lost orders recoverable through addressing checkout usability issues.

Trend 2: POS lending at checkout to attract more shoppers with fast/easy approval key

2020 will bring a whole slew of new POS lending options, aka fixed payment loans, for shoppers who want to make payments over time without the hassle of a credit card. While POS financing has been around for a while, the pace of growth has accelerated in response to enhanced integration of POS financing offers into purchase processes, better application experiences and newer business models. According to McKinsey Consumer Finance pools, the total U.S. outstanding balances originated through POS installment lending solutions more than doubled between 2015 and 2019.

Takeaway: While fraudsters will also be trying these layaway-like options to make off with goods, the biggest risk to merchants won’t be letting fraud through; it will be not having an authorization process that matches the ease of the fixed payment option itself to ultimately secure these new customers.

Trend 3: A shift to pre-authorization risk screening through ML models to improve CX 

Whether it’s the fear of pushing out good customers, the price tags tied to rejected transaction, or the Transaction Risk Analysis (TRA) requirements under PSD2, machine learning (ML) pre-authorization is the answer to improve the customer experience, positively affect authorizations, and adhere to the new regulations. Pre-authorization screening becomes even more important in verticals such as digital goods and on-demand delivery, where consumers expect instant fulfillment and have even less patience for false declines or having to wait for their transaction to be assessed for fraud in typically slow, high-friction, manual review processes.

Takeaway: With ML as a central part of their strategy, retailers won’t just invest in third-party models and data, but will look to build their own models for optimal performance, reduced fraud and more control over the customer experience.

Trend 4: Regulatory initiatives for consumer protection will remain a priority

In the U.S., Congress will push to pass a GDPR-like law in the near future, but a full plate of priorities will prove too much of a distraction for getting a new law passed in the next calendar year. Take for instance, the EU’s Payment Service Directive 2 (PSD2) deadline that was slotted for Sept. 14, 2019, only to be pushed out into 2020. The U.S. will see similar delays and distractions in passing its own regulation in 2020. In the meantime, CCPA will likely function as the default privacy standard in the U.S., led by forward-looking businesses such as Microsoft.

Takeaway: It could be a while before the U.S. establishes a data privacy regulation. Retailers that want to stay ahead will elect to meet the CCPA requirements early, earning customer trust and loyalty over laggards.

Combating fraud is certainly an important initiative for merchants across industries. However, it will be equally important in 2020 for retailers to prioritize the customer experience or risk losing valuable customers along the way.

Kushal Shah is Senior VP Product and Global Expansion at Ekata