E-merchants seek to limit cart abandonment as much as possible, which is crucial in their business model. Between marketing and technical innovations, they put forward in their promise a fast and secure payment. But the PSD2 directive, by imposing strong authentication since 2020, adds a step to the purchase process. This is a new challenge for e-commerce.
« One-click » purchase, popularised by Amazon, use of wallets, these mobile wallets of which Apple was the pioneer, facilities for payment in 3 instalments without fees put forward by new FinTech players (e.g. Klarna, Alma, etc.), not to mention the time saved by avoiding queues and using the car, free deliveries and even (until recently) almost automatic free returns... e-commerce owes a large part of its success to the impression of fluidity and speed of the order. Even if the breadth of the choice (150 million products on Amazon !) and the price are also important, all retailers who sell online, whether they are pure-players or not, strive to optimise navigation and simplify the purchase process. It is a matter of this decisive moment of the famous « funnel » (the funnel of conversion), which turns the site visitor into a real customer.
It is in particular thanks to the new trust placed by consumers in the security of online transactions, which has become notable since the Covid crisis, that e-commerce continues to grow. Renewed inflation or otherwise, logistics in (too) tense a flow or not, e-commerce grabs market shares on « hard » business. While its birth certificate dates back to 1995 with the sale of the first books on Amazon, it represents 14.1 % of the retail trade in France, in 2021, according to INSEE and FEVAD1. More than 1.8 billion transactions were recorded on e-commerce sites in France last year (a figure up +5 % over the first half of 2022). The French put 62 euros worth of goods on average in their shopping cart. And 77 % of online buyers prefer to pay in one go by credit card (source : FEVAD).
In their conquest of a market that has become a mass market, pure-players have put forward a major weapon for them : a frictionless customer journey on the web, especially when it is necessary to validate your basket and proceed to payment. To pay for a ticket on www.sncf-connect.com for example, a few clicks suffice, because most of the time the consumer has already created their account and provided their personal data (name, phone number, address). They have also agreed to register their credit card on the site to avoid re-entering these elements each time. Result : For repetitive purchases, or purchases by subscription, Internet users head straight to the transaction, which is always a delicate matter, since it is a question of expenditure, with a minimum of effort.
By relying on digital specialists (PSP – payment service providers – IT solution providers), e-merchants have constantly sought to improve the customer experience. Their obsession ? Reducing the rate of cart abandonment, which is a fatal risk for their turnover and profitability. « It is a key indicator for e-merchants. They spend a lot of money (on affiliates, SEO, advertising banners, etc.) to increase the number of visitors to their site. They can't afford to lose too many customers on the way without increasing their costs. » Here lies a genuine dilemma. In France, the conversion rate (number of visitors/number of buyers) of an online store is on average 2 %. « It is radically different in stores, » recalls Jean-Michel Chanavas, of Mercatel2, where conversion rates can reach 90 % or even 100 %.« In some cases (department stores, furniture, high tech, etc.), »customers sometimes carry out a search during their visit, before buying elsewhere. But those who enter a Carrefour store, for example, rarely abandon their shopping trolley in front of the checkout !« According to the study published by the Baymard Institute with Amazon Pay, on good practices in payment 2022, 70 % of online baskets are abandoned before the payment of the order. The purchasing tunnel is considered too long (it is currently made up of an average of at least 5 steps) and cyber buyers, who are very demanding when it comes to efficiency, grow weary quickly. According to this Copenhagen-based organisation, which regularly carries out benchmarks and advises 71 % of B2C e-commerce sites in the Fortune 500 list, sites can greatly improve their conversion rate : up to +35 %. For example, by limiting the requirements on the password to a minimum, or by specifying the amount of the delivery costs very early on.
The goal is seductive. But new difficulties make the exercise more and more difficult. E-merchants have recently faced two additional constraints : one technical, which comes from the growing use of mobile devices for online purchases, and the other regulatory, with the entry into force of the PSD2 directive. Today, 48 % of French people make e-commerce purchases from their mobile, or nearly half, according to the study conducted in February 2021 by OpinionWay and iloveretail.fr for Proximis. The problem is that the rise of payment on smartphones generates more cart abandonment (85 %). This happens for at least two reasons : they are often impulse purchases, made on the move. And the internet connection may not be sufficient or present at the moment of the final click.
Second risk : the cumbersome procedures surrounding secure transactions. In 2018, European regulators, concerned about the risks of the spread of fraud via the rapid rise of e-commerce (instances of fraud on remote purchases are 20 times higher, in terms of percentages, than those of physical commerce), adopted the so-called PSD2 directive on Payment Services. This requires strong authentication, which is one more step at the time of payment. Although 3D-Secure protocols ( »Verified by Visa« or »MasterCard SecureCode« ) had already existed for several years with the aim of securing payment via customer authentication, this remained in the hands of merchants. With PSD2, authentication becomes mandatory, unless an exception is requested by the merchant. Ultimately, it is now the issuing banks that decide whether or not to apply them.
In addition, the European regulator has decided to no longer consider SMS authentication, which has until now been the most widespread version, as a means of strong authentication, which has forced all banks to offer online buyers new methods (most often via online banking) to validate their credit card purchases online. Result : this directive involves new steps for the customer (downloading a specific banking application, for example). It came into force in December 2020, combining several identification factors (PIN code, biometric data, SMS verification) ; it also strongly limits the one-click payment that is so dear to Amazon. It strengthens consumer protection. However, the speed and fluidity of navigation on a site are slowed down.
E-merchants were quick to adapt, in order to regain some room for manœuvre. Firstly, thanks to the measures provided for by the directive itself. They have the option of using authentication exemptions, for payments of less than €30, or when they are regular customers, for example, for whom the risk analysis is simpler. Furthermore, it is also thanks to the spread of payments. Online shops are developing BNPL (Buy Now, Pay Later), a multi-layered credit formula with no fees, an attractive option for young people. Even if e-merchants sacrifice some of their margins by bearing the costs of interest rates that are not passed on to the final consumer.
Caught between the fluidity of the customer journey on the site and the security of transactions, e-merchants are more constrained than ever by this balancing act. Still wary of remote purchases and respect for data confidentiality, consumers, especially those who are not »digital native« , prefer to take several precautions. According to the OpinionWay survey for iloveretail.fr (fourth unified trade benchmark of September 2022), the fact of displaying a clearly visible guarantee on the security of transactions on the home page of a site comes in the lead of the features sought by consumers (87 % of them consider it useful), just ahead of the display of delivery costs (85 %).
Among the best practices identified by customers in this study are the diversity of payment methods available on the site (91 % of consumers consider this feature useful), payment in several instalments without fees (82 %), deferred payment after receipt of the product (78 %), proof that Internet users want to avoid being debited in the event of a return of the item and, finally, one-click payment (61 %). »In fact, the brands selected in this ranking, because they have both stores and online sites, could do better when it comes to payment. Their average score is only 13/20. For them, it is clearly not a source of differentiation, unlike delivery,« explains Mike Hadjadj, founder of iloveretail.fr.
This reality gives »bricks-and-mortar" merchants food for thought. In response to the rise of e-commerce, brands, distribution chains, franchisees and independent retailers are converting to unified commerce (off and online), and more and more are opening an online store, in addition to their other sales channels. It is a fundamental trend. They too, by becoming e-merchants, will have to follow this crest line between speed and security of payments : and closely monitor cart abandonment.
1 FEVAD : Fédération du e-commerce et de la vente à distance [Federation of E-commerce and Remote Selling].
2 Mercatel : A Think Tank bringing together businesses, banks and payment actors.