Tink research: Struggling online retailers invest in PayTech as economic mood worsens

The British retail sector is bracing itself for a difficult year ahead, according to new research from Open Banking platform, Tink.

In a recent survey of 506 UK online retailers, half said they are worried about how their business will survive the next 12 months, with four in ten afraid of going bankrupt. 

As consumers rein in spending, two thirds of retailers are expecting to see, or are already seeing, more abandoned baskets – particularly at the point of payment (64%).

Lower average order values (75%) and fewer repeat customers (67%) are also either expected or already being observed.

To adapt and survive, four in ten retailers have already or are considering cutting costs across the board – from reducing staff (49%) and training (55%) to advertising (52%), technology and online/website investments (48%).

Services that customers have come to expect for free are also under threat – with over half of merchants having already stopped or are considering stopping free delivery (53%) and free returns (54%). 

Top priorities for those looking to reduce payments related costs include reducing payment acceptance fees (44%), lowering costs associated with fraud (35%) and cutting refund costs (40%). 

One in three retailers are actually investing more in upgrading their payment stack to reduce burdensome costs associated with their current payment methods. 

A Tink survey of 2,004 UK consumers shows that one in three abandon their online purchases if they have to manually enter payment details or personal information at check-out – with third-party authentication websites a major point of frustration (46%).

People are also actively looking for secure instant payment options, with 43% worrying about online payment fraud, and 47% reluctant to use buy now, pay later, as they are concerned about falling into debt.

Tom Pope, Head of Payments and Platforms at Tink, comments: “As the economic situation becomes increasingly challenging, it's important that retailers can not only manage and reduce their costs, but retain customers with services that better meet consumer needs.”

“Against this backdrop of cutting costs across the board, it’s encouraging to see that retailers are investing in digital payment methods that help solve these issues.”

“Low cost, low fraud and zero friction payments improve the user experience and lead to fewer abandoned baskets, while the ability to settle payments instantly will be essential for businesses who find themselves struggling with cash flow as the recession bites.”