Nearly a third of UK consumers (30%) are spending less online because refunds take too long and they’re worried about their bank balance, a report from Tink claims.
In line with that, 52% of respondents said they are less likely to shop with a retailer again if a refund takes a long time to receive.
On the side of the retailers, Tink found that many are struggling to handle rising costs and falling sales. In a recent one of its surveys, Tink found that 40% of retailers are focusing on cutting costs as a result of the current economic environment.
One area flagged as a big drain on business was returns, with 54% of online retailers saying they are or expect to be forced to stop offering free returns as a result of the economic climate.
Pain points of the process are the cost of processing returns (43%) and the length of time that it takes for a customer to get their money back (40%). However, with returns being a major differentiator for consumers, Tink claims online merchants risk adding more friction to the experience and damaging customer relationships if they charge for returns.
Over a third of the respondents (36%) believe that instant refunds would enhance the customer experience of returns and 32% feel it would reduce the returns cost to their business.
Tink’s report also stated that 39% of people want the cost of handling refunds reduced and 33% want a payment method that offers real-time refunds to customers.
To meet this need, Tink points to Pay by Bank, a payment solution that is powered by open banking and allows users to pay directly from their mobile banking app.
Tink head of payments and platforms Tom Pope said, “It’s clear that the UK’s online retailers are facing the twin challenges of rising costs and meeting consumer expectations when it comes to returns and refunds.
“As a result, they risk missing out on vital revenue and repeat business in an increasingly difficult operating environment. In order to turn returns into a competitive advantage in 2023, they can invest in payment solutions that speed up the refunds process and, in turn, boost shopper spend, improve retention and enhance customer experience.
“Pay by Bank holds the key to overcoming the ‘refund conundrum’ – helping to cut costs associated with returns for merchants and increasing the speed of refunds from days to seconds for consumers. It’s a win-win.”
Another recent research piece was released by Juniper Research. It claims that the global revenue from embedded payments for embedded finance vendors will reach $59bn in 2027, rising from $32bn in 2023.
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