UK retailers are restricting their own online sales growth potential by up to 30 per cent due to only offering limited payment options, according to research by eCommerce and digital agency Visualsoft.
The study found that 19 per cent of the UK’s top 240 retailers fail to offer any payment choice outside of mainstream credit and debit cards, despite further research suggesting that having at least three payment options can increase conversion by 30 per cent.
“It’s the final – and potentially most critical - stage in the purchasing cycle, so it’s surprising that so many of the UK’s biggest retail players are limiting their conversion potential by overlooking the importance of payment options,” said Tim Johnson, chief sales officer at Visualsoft.
The most popular alternative payment method, as expected, was found to be PayPal – with 71 per cent of retailers offering the payment option alongside traditional credit and debit card payment. These retailers usually see around 25 per cent of customers using this option.
On the other hand, only eight per cent of retailers allow customers to use gift cards and other vouchers when they are making purchases online.
“This may be particularly pertinent around Valentine's Day, when millions of gift cards are set to exchange hands,” said Johnson. “However, many shoppers may face disappointment when they are only able to use their credit in bricks-and-mortars stores. When considering the example of this Christmas period, which saw online sales grow 18 per cent on 2016, the inability to use gift cards online seems oddly out-of-step with the current consumer trend for avoiding the high street and shopping from home.”
International growth is also a problem for retailers due to their limited payment options. 38 per cent of retailers were found to offer no option to pay with international currency, which could lose sites up to 13 per cent of customers, according to estimates.
“Perhaps more worrying still is that retailers are shying away from the potential of international sales,” said Johnson. “Outside of the UK, customers are already well adjusted to using alternate payment types - such as in Holland where payment solution, Ideal, processes around 55 per cent of transactions. This could prove crucial in a post-Brexit era, when providing US shoppers with their most popular payment options and charging in dollars could pay dividends.”