Rethinking refunds – Interview with Luke Flomo, Trustly

Monday 4 February 2019 09:46 CET | Interview

We sat down with Luke Flomo, Trustly, to discuss how the payments company can help retailers improve the shopper experience beyond the buy button

As ecommerce grows, the cost of returns is increasing. For items purchased in brick and mortar stores, for example, the return rate is 8%, but this rate jumps to around 25 to 40% for items purchased online. The most commonly returned category is apparel and shoes at 30 to 35%, according to the Return Logistics Association.

There have been quite a few research articles published on customer expectations and return logistics. Can you share with us what consumers expect in terms of handling returns and getting a refund?

While free returns are now commonplace, timely processing of refunds is a key factor affecting shoppers’ experiences. Unfortunately, many companies overlook this and assume that offering free returns is enough, but this simply isn’t true.

The refund process greatly impacts how shoppers feel about a brand, according to a recent survey we conducted at Trustly. Of the shoppers surveyed, 65% claim the speed and ease of their refund affect where they choose to shop, while 95% said they’d be more loyal to an online retailer if they received refunds within one day. Clearly, an efficient refunds process can have a positive impact on shopper satisfaction and NPS scores.

What is the average time of receiving a refund when returning goods?

According to the same survey by Trustly, 64% of shoppers end up waiting four or more days to receive their refund. The survey goes on to reveal that shortening this time would have a direct impact on sales, as making shoppers wait for their refunds often delays any additional purchases. Increasing the speed of the refund process could lead to 58% of shoppers spending more and 56% buying more frequently. That’s an uplift in spend from over half of an online retailer’s existing shopper base.

What is it that makes Trustly’s refund solution different from other ecommerce payment solutions on the market?

Alternative payment methods like online bank payments are growing in popularity among both online retailers and shoppers – in part because of how they simplify the return process. For the online retailers, an automated instant refund solution, like Trustly’s, can reduce administrative costs of processing the refunds, which currently costs them about 8.1% of total sales, according to Shopify’s “2018 Holiday Ecommerce Returns Guide”. For the shoppers, getting their money refunded more quickly means they have better control over their finances and don’t need to put off their next purchase. These are big advantages over traditional refunds through cards, which can take anywhere from three to 25 days to process.

Instant refunds sound great in theory, but how can they actually help in practice?

Let’s turn to a satisfied customer as an example: one large Nordic online fashion retailer who was struggling with its resource-intensive returns process. After integrating with Trustly to offer automated instant refunds, it saw a decrease in the amount of administration required to issue refunds.

On top of that, the retailer’s shoppers instantly receive funds into their bank account, allowing the retailer to market new interesting products to shoppers, who can purchase goods straightaway instead of waiting days or even weeks to receive their refunded money. In fact, of those who were offered instant refunds, 55% had higher purchase basket size and 84% made more purchases in the past 12 months.

What does this tell us? By offering automated refunds through online bank payments, retailers have an opportunity to increase their revenue per shopper without fundamentally changing their business model or product offering. This can increase ROI from acquisition activities and help in differentiating them from competitors.

Does Trustly offer this service via their PSP partners as well?

Yes, Trustly’s fast and automated refunds are available through a variety of our PSP partners, including Adyen, Ingenico, and Worldpay. If you already offer payments through one of them, it’s easy to offer Trustly!

What developments are in store for 2019 with regards to the refund service levels Trustly offers in Europe?

Looking ahead to 2019, Trustly will continue to increase its bank coverage across Europe and further afield, which will better support retailers in offering a slick refund process in the markets they operate. Also, with the continuing drive to offer intrabank connectivity, the speed of refunds will continue to improve, with many shoppers receiving their refunds in a matter of minutes or even seconds.

This interview was first published in our Payments and Commerce Market Guide 2018-2019. The Guide presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.

About Luke Flomo

Luke Flomo is a payments expert, bringing a wealth of knowledge with his 12 years of experience in the industry. Prior to joining Trustly, he worked for the likes of Barclaycard, WorldPay and, more recently, Klarna, where he headed up the Sales and Partner channel. Over the years, Luke has worked closely with household retail brands such as ASOS, Footlocker, Boohoo, Missguided, Net-a-Porter, where payment alternatives have been a key driver for global success.

About Trustly

Trustly is a Swedish fintech company that makes online banking payments fast, simple, and secure. By signing just one agreement with Trustly, ecommerce brands can accept payments from and issue instant refunds to shoppers in 29 European countries, in all local currencies. To learn more, visit

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Keywords: Trustly, refund, retail, instant refund, Luke Flomo, ecommece, bank, Europe, retail experience, PSP, Adyen, Ingenico, WorldPay, bank, payment solution, alternative payment methods, bank payments
Countries: World