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Fa-la-la-la-la Friction-Free Festive Season

By William Levaggi, Senior Director, Visa Checkout • Visa

November 29, 2016

The high street Christmas lights have been turned on. Holiday ads are on our televisions. Black Friday and Cyber Monday have just flown by. No doubt about it - the shopping season has begun.

This year, Visa expects to see more consumers avoiding the crush by shopping from home. Last year in the UK, alone, there was a sharp 7.4% year-on-year rise in the e-commerce Christmas spend compared to a fairly flat spend in face-to-face shopping. That rate is expected to increase again this year. Only now, people aren’t just waiting until they get home from work to go online; they are also doing their shopping on their mobile devices whilst commuting and on the go.

This trend isn’t limited to the holidays. According to the European B2C E-commerce Report 2016, 43% of Europeans shop online, with total e-commerce turnover expected to exceed €500bn this year.

In fact, according to Visa data, there is a significant shift in how people shop, with growth rates for e-commerce at 11% and m-commerce at 32%. Our own recent European Digital Payments study confirms this, with more than two-thirds of all respondents saying that they “showroom” – or see an item in store before purchasing it online – for medium- to high-value items. And this is not purely a millennial behaviour, it crosses the generations.

This translates into two very important concerns for retailers: first, the need to ensure that their brand’s app and website are optimized for all platforms; and, second, that the customer can not only shop easily, that they can also complete the transaction quickly and securely.

Mobile browser experience

Addressing the first issue, the mobile browser experience remains more utilised than apps despite the hype over app-based retail. With desktop / laptop still comprising the majority of current UK online sales by value, getting the web-based browser experience right is essential as this method will remain the primary transactional device in the short-term. Additionally, even on mobile devices, searching for items via the browser or website is still overwhelmingly the most common starting point in the buying process. Visa estimates that across desktop, tablet and mobile, more than 90% of online sales are still browser based.

And, when shoppers do begin their shop using an app, they frequently leave it to shop via the brand’s website. This could be for a number of reasons, including streamlined search function and a better recommendation experience. Or it could be because the checkout experience is faster on the website than in the app. Either way, it is important for the retailer to keep this fluidity in mind.

One of the easiest ways for merchants to address the consumer shift in payment behavior is through digital payment innovation. Digital payment solutions include the electronic version of the wallet most people carry day-to-day, storing their credit and debit cards. Many banks across Europe offer this service, as well as third parties such as popular mobile devices and platforms. Visa launched Visa Checkout in the United States in 2014 and has since rolled it out to 22 markets. It is coming to Europe and will be available on select merchant sites in Ireland, France, Poland, Spain and the UK in 2017.

Addressing consumer concerns

Digital payment solutions directly address two key consumer worries – security and entering payment information, which can be particularly challenging on a mobile device. Typically, through automating the payment process, they enable the consumer’s name, card details and address to be entered at the touch of a button avoiding the need to leave the chair to get their handbag or wallet and retrieve card details, or enter credit card information while in a public place such as a café or on the daily commute. Not only this, it can also reduce frustration by eliminating entry errors which slow the process.

Of greater importance, given consumer concerns over security and merchant demands for lower cost, a digital payment solution such as Visa Checkout are tokenised, thus protecting sensitive account information. Instead of the 16-digit card number and other card information, the merchant gets a token which is linked to the card number which is stored securely by the payment services provider.

As mobile commerce continues to grow and an increasing number of retailers integrate their channels – such as the addition of tablets throughout stores, making it easy for shoppers buy an item if the one they want isn’t in stock - digital payment solutions provide the ideal way to reduce friction and reduce the incidents of cart abandonment.

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