Voice of the Industry

Spoilt for choice: Why merchants need to act now on checkout processes

Thursday 15 September 2022 09:30 CET | Editor: Raluca Ochiana | Voice of the industry

Katharine Evans, Economist at CMSPI, reveals best practices on how to balance choice and friction at the checkout.


Over two years since the onset of the pandemic, it is clear that the future of retail is digital. But whilst growing ecommerce volumes can unlock whole new markets, they also make it easier than ever for customers to move between competitors.

The new-found pressure means that a negative experience can be the difference between a sale and the loss of a lifelong customer. With an estimated 74% of European internet users now shopping online  and skyrocketing inflation driving profit margins down, merchants are becoming more aware than ever that they need to invest in their online payments processes now.

But what does this really mean? In Part 1 of this series, we’ll walk you through the steps leading merchants are taking to optimise their checkout process – and why it’s so critical for your business.

Why is the checkout process so important?

Our estimates suggest that the average merchant is losing 96% of customers before they even have the chance to make a transaction. That means that, of the 14.5% of sessions where an item is added to the customer’s cart, fewer than 1 in 3 will end in a transaction being approved. Optimising the checkout process increases the likelihood that consumers will get to that all-important transaction stage – and to do so requires strong inter-departmental collaboration from merchants.



Figure 1: The online checkout process
Source: CMSPI estimates and analysis

The checkout process is also a powerful marketing tool. Convenience is now king, and customers will expect their payment process to be as simple and frictionless as possible. With an ever-increasing number of consumers utilising not only card payments but also multiple alternative payment methods (APMs), a positive checkout experience is vital to retaining good customers. And with a 5% customer retention rate increase estimated to uplift profits by up to 95%, this could be game-changing for your bottom line, at a time when rising inflation means that every cent counts.

Crowded checkouts: balancing choice with friction

With the growth of ecommerce has come the rise of multiple APMs. A consumer might now expect to be able to pay with a number of different options, including Buy Now, Pay Later (BNPL), digital wallets, and open banking.

Many merchants have attempted to keep up with this increasing variety by continuously adding payment methods to their checkout page, hoping to maximise their consumer base and not lose out to competitors. But are those payment methods always appropriate for the transaction and customer? Local payment methods such as iDEAL in the Netherlands may boost spend in their intended regions, but crowd the checkout if offered internationally, for example. In fact, fewer than one in five BNPL users say they would abandon their purchase if their preferred BNPL option wasn’t offered. Too many APMs could also reduce volumes through each party, limiting your negotiating power while necessitating more complex contracting and monitoring processes.So, how to take advantage of a payment method’s consumer base without turning off customers – or implementing options that are sub-optimal for the merchant? One answer may lie with dynamic payments pages, which allow the merchant to target specific payment types towards certain consumers or transaction profiles. This can also be useful if you want to restrict fraud or chargeback rates – by not promoting high-risk payment types on high-value transactions, for example.

Checkout steering, a similar solution in which the merchant’s preferred payment method is placed at the top of the page, or incentivised via other means, likewise allows you to tailor consumers’ online payment experience and encourage the use of APMs which achieve the optimal balance between customer experience and cost, approval success, and fraud rates.

Optimising the customer payment process

Having successfully enticed your customer to the payment page, there are a few short steps you can take to ensure the maximum possible success before the transaction is sent to fraud and authentication checks.

With 72% of consumers unwilling to spend more than 2-3 minutes at checkout, elements of the checkout process you previously may not have considered are now vital to your customer retention and revenue. Factors such as CVV field length and address verification input methods may seem small, but will, nonetheless, have a significant impact, particularly as customer friction increases due to SCA requirements. These small but crucial fixes can also help prevent multiple transaction retries – and with 90% of consumers unwilling to retry three times, this could be a deciding factor between you and a competitor.

What’s next?

Your online checkout process is a vital part of your business and a major determinant of the revenue you receive. Implementing dynamic checkout pages, checkout steering, and optimising the input of vital payment information are comparatively simple options that best-in-class merchants are using to streamline the checkout. As shoppers adapt to online retail, a strong checkout strategy is crucial to retain loyal customers for whom shopping with a competitor is as simple as the tap of a button.

Checkout optimisation gets you to the payment – but what happens when you’ve invested all this time and money into maximising conversions, only to have the transaction rejected? Look out for Part 2, to be published on The Paypers’ website, where we’ll take you through how blindly handing that sale over to the payments supply chain can leave billions on the table.

In this article, we ran through how we help merchants across the world optimise their pre-checkout processes, but what about after the consumer clicks ‘pay’? HERE you will find the follow-up article focusing on how the post-checkout process is losing European retailers billions – so stay be sure to read it! 


This article was first published in Payment Methods Report 2022, the most updated overview of trends and developments in the payment methods space and the innovative technologies that these methods work upon, emerging consumers habits, and strategies on how to win at conversion and retention.

About Katharine Evans

An Economist as part of CMSPI’s Insights and Advocacy Team, Katharine’s role is to analyse the payments industry from the macroeconomic perspective, providing strategic insights to merchants across Europe.




At CMSPI, our payments experts provide advisory services and powerful analytics. Our ultimate goal? Supporting a more innovative and productive payments ecosystem. For hundreds of clients across the globe, our insights help improve performance and create positive change.

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Keywords: payment methods, checkout optimisation , chargebacks, checkout process, local payment method, ecommerce
Categories: Payments & Commerce
Companies: CMSPI
Countries: World
This article is part of category

Payments & Commerce


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