Voice of the Industry

Customer behaviour per generations – what to consider for an optimised checkout

Wednesday 21 October 2020 10:52 CET | Editor: Anda Kania | Voice of the industry

As the commerce industry is consumer-driven, Isil Ugurlu, Head of Payment at elumeo, shares her expertise on what current generations prefer when it comes to payments methods and why this information is crucial for customer conversion

Why convenience varies and matters

One thing every retailer, especially in ecommerce, needs to understand is the interpretation of convenience by their customers. Throughout different clusters of consumers, convenience has a variety of definitions. Generation X customers (born between 1965 and 1980) prefer sticking to traditional payment methods depending on local customs, such as invoice or cash in the GSA region, or credit and debit card payments in France and the UK. Middle-aged adults tend to adopt newer payment solutions. Studies show that certain incentives such as discounts or waived delivery costs may allow additional convenience for short-term payment behavioural change, and subsequently, allow for permanent behavioural change.

However, as stated by the European Central Bank (ECB), noticeable effects on consumer payment behaviour, such as the adoption of new payment solutions, would require a much stronger incentive. One example of this is the shift towards contactless payments during the 2020 COVID-19 pandemic, in which customers were prompted to avoid traditional cash payments, therefore potentially altering payment behaviour in the long run.

Regardless of demographics, speed, and payment security remains important to retail consumers’ decisions to adopt and use payment solutions. Nevertheless, factors such as convenience and cost will most likely always be at the centre of consumers’ payment decisions. Factors such as indirect costs may remain invisible to many consumers, such as through reduced handling costs on the retailer’s end followed by price reductions and/or additional sales. Considering newer publications by the German Federal Bank, the importance of cost factor for payment selection should not be overlooked. Interestingly, using cash in stores is still the fastest way of settling payment amounts of up to EUR 100 (ECB, 2015). Above that amount, card payments prove to be slightly faster in processing.

In Germany, around three-quarters of retail transactions (15.6 billion) are settled in cash. This leaves average cash transaction costs at just under EUR 0.24, while girocard and SEPA direct debit have transaction costs of EUR 0.33 and EUR 0.34. Compared to these ‘cost-efficient alternatives’ card payments with signature amount to EUR 1.04 respectively. Given these statistics, retailers’ readiness to digitise and adapt newer solutions will vary.

When it comes to convenience, however, change and optimisation remain crucial topics. A broader perspective beyond payment is crucial to a longer lasting and effective retail strategy when aiming for a better customer experience. A research from 2018 shows that customers’ shopping experience is not only influenced by the selection of payment options. To many, free returns are essential: 50% of customers state that lack of free return service is the most annoying issue in their shopping experience and 60% said they would avoid shopping at a retailer with such policy.

While offering goods and services to a variety of customers, retailers should bear in mind that generational issues not only apply to customer’s shopping behaviour but also affect their expectations for a checkout flow. Baby Boomers (born between 1944 and 1964) are less trusting and harder to please. On the other hand, Gen Z (born after 1997) is more receptive to marketing messages as well as more social and impulsive. For example, social media purchases are more appealing to them. Furthermore, Millennials (Gen Y; born between 1980 and 1997), now making up the largest consumer generation, demand payment options that fit with their digital lifestyle. Retailers must adapt to these rapidly changing shopping habits. Further studies show, while 39% of people between 25-34 years old can imagine opening a fully digital bank account rather than banking traditionally, this perspective is shared by only 7% of consumers over 65 years old. Similarly, the successful checkout rate of retailers will rely on different variables such as payment security and general convenience of the experience (see Eurostat’s recent Europe-wide research below).

Therefore, an online retailer’s strategy should not only be shaped by the pre-selection of payment service provider’s standardised agreement, but by the individual needs of their customers.

In this day and age, considering the variety of generational shopping expectations and individual payment habits, the payment landscape has moved beyond simple cash or card transactions. ‘The customer is always right’ statement can be translated today as ‘the customer has the final say in however retailers maintain their payment acceptance’. Hence, innovation is channelled by customers and their individual needs.

The secret recipe for a successful payment strategy must lie in streamlining customer experience in online checkout procedures. The personalisation of custom-fit offers and services advanced by better use of data is the way to a highly functional and appreciated customer experience in online retail.

This article was published in our Payment Methods Report 2020, an extensive overview of what’s new in how people pay in the most relevant ecommerce markets.

About Isil Ugurlu

Isil Ugurlu is currently working as Head of Payment at elumeo SE. She has furthermore taken over an additional role as Money Laundering Reporting Officer in 2019. She has been an active member of European Women Payment Network (EWPN) since 2018, fostering the network’s presence in the German Fintech industry. She is initiating partnerships with leading organizations and organizes meet-ups which cover not only the latest industry topics but also focus on matters like diversity. After completing her Bachelor’s degree at Freie University Berlin with a focus on Business & Managerial Economics, she completed a Master’s degree at Berlin School of Economics and Law, focusing on Anti-Money Laundering regulations and recent developments in Europe. 

About elumeo

elumeo is a leading European company specialising in the production and sale of a wide range of gemstone jewelry. Founded in 2008, it combines the tradition of age-old handcraft with the cost benefits of electronic sales channels.

About EWPN 

EWPN is a not-for-profit organisation dedicated to building a community for women in cards, fintech & payments in Europe. As the first and only Pan-European community for women, EWPN strives to create more opportunities for women and minorities, as well as being a champion for a more diverse and inclusive industry for all. EWPN does this by organising local networking evenings, workshops, annual events, awards and research, which all are welcome to be involved in.


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Keywords: elumeo, ecommerce, payments checkout, customer conversion, retail, payment methods
Categories: Payments & Commerce | Ecommerce
Countries: World
This article is part of category

Payments & Commerce