How to improve trust and security with group payments
In today’s globally competitive environment, merchants must use all the tools at their disposal to build customer trust. Offering a variety of ways to pay securely creates the peace-of-mind that results in fewer abandoned carts and larger transaction sizes. This feeds a virtuous cycle that keeps customer acquisition costs in check.
What’s the use in spending money to acquire a customer, only to lose them during checkout due to a perceived lack of trust or security?
Build trust by meeting expectations
Consumer optimization is at the core of buying psychology. As we explain further in this article, in any given transaction, a consumer will try to optimize against a budget, product specifications, and individual preferences. These preferences are especially acute during the path to purchase, which shapes consumer brand perceptions.
Trust builds as the consumer goes through the research process, selects the best product at the right price for them, and reaches the checkout screen. At this point, there’s a risk of violating trust if the consumer’s personal payment preference is not available during checkout. The consumer may feel disappointment and even abandon the purchase. This feeling of wasted time may mean the consumer is less likely to trust the brand in the future.
In addition to integrating group payments, merchants should also localize payment methods to make as many preferred payments available as possible. Recent research from PPRO (registration required) backs this up: over half of shoppers report abandoning a purchase because their preferred payment method wasn’t available!
A thorough grasp of your consumer profile will shape which payment methods to offer. Just remember to disclose available payment methods (including group payments) early on in the checkout process – or even on the homepage. The goal is to give consumers the confidence to continue along the purchase path with your brand. Trus is often the final barrier to purchase.
Eliminate hurdles without sacrificing security
In 2017, merchants were on the hook for $19 billion in chargebacks, out of a total of $31 billion. That amounts to a 60% increase in losses due to chargebacks between 2016 and 2017. In the U.S., merchants spent $2.66 to combat each $1 of fraudulent activity. Digital-only merchants spend about 8% of annual revenues on fighting fraud.
Fraud plagues merchants in other ways, as each additional level of fraud-busting security drives consumers away.
“42% of millennials would engage in more online transactions if there weren’t so many security hurdles.” - Experian study
Since card issuers insulate most consumers from the direct costs associated with fraud, consumers now expect frictionless checkout – even if that means an increased risk of fraud.
Group payments is a simple way to reduce fraudulent activity for many merchants. If the cost of your product or service can be split among multiple people, it reduces risk. Why? It’s hard for someone to argue against a valid transaction because there’s an entire group involved. Social proof is a powerful force!
Group payments also throw off multiple signals for fraud detection, creating many points of interception. This gauntlet catches nearly all bad transactions, as it’s much harder to get through multiple security barriers unscathed.
Where UX and systems design meet
When it comes to increasing trust and security, the ideal balance is between a high barrier to fraud and a frictionless checkout experience. You want to meet consumer expectations without losing money on fraudulent transactions.
Look for the overlaps between the ideal user experience and the most effective systems design for your business. Those overlaps create value through increased consumer trust, fewer abandoned carts, and lower risk.