Voice of the Industry

Winning customer loyalty with real-time refunds

Friday 11 February 2022 13:23 CET | Editor: Irina Ionescu | Voice of the industry

Yael Barack, VP Product at Checkout.com, talks about the importance of payout options for online shopping and details the various ways through which ecommerce platforms can boost customer loyalty when it comes to refunds

As businesses expand into new markets, their first concern regarding payments is usually around collecting funds from customers efficiently and effectively. This makes perfect sense. Businesses need to understand the local payment ecosystem and establish systems and processes to optimise conversion and acceptance. Their revenue and success ultimately depend on it. But in today’s fiercely competitive ecommerce landscape, successful merchants must also consider how they pay money out to customers. Returns are an unwelcome reality of selling online, with between 10% to 40% of purchases returned. But that doesn’t mean merchants can’t turn a negative into a positive.

Research from Klarna finds that 84% of shoppers won’t go back to an online store if they’ve encountered a poor returns experience. It’s imperative then that merchants make this return and refund process as straightforward as possible. If they do, they can ensure they retain the business of those customers, rather than lose it to competitors.

Making sure that a refund lands in the customer’s account without delay and in full is a critical component of this process. This means seamless payouts are not only an operational consideration. They’re a driver of consumer loyalty, revenue, and, as 86% of ecommerce retailers in Europe told Checkout.com, a matter of significant competitive advantage.

Yet, payouts are an area that’s historically seen little innovation. The outcome is that many businesses are still using legacy payment methods, like bank transfers, to disburse refunds to consumers. Consequently, most payouts, especially those made across borders, remain slow, expensive, and fall short of the standards now demanded by consumers. How then can businesses deliver on these customer expectations and use payouts as a driver of customer loyalty and sustainable revenue? 

Speed of payout

Speed is a critical factor for businesses that want to create a winning ecommerce purchasing experience. That’s no different when it comes to refunds. The faster someone gets their money after requesting a refund, the happier they are, the more loyal they become, and the more they’ll spend in the future.

A recent survey by Raconteur found that 58% of UK consumers would spend more with an ecommerce merchant if they knew that they would receive refunds into their account quickly. They’d also spend 22% more if they knew an immediate refund was available. Legacy payment methods, like cheques and bank transfers, cannot deliver the speed that consumers demand. Instead, businesses should consider modern alternatives. These might include real-time bank payouts using schemes like SEPA Instant. Or they could use card payments leveraging the Mastercard Send and Visa Direct rails.

Key takeaway: Legacy payment methods are no longer suitable to meet the demands of the modern consumer. Businesses should consider what other options are available and prioritise finding a way to make real-time refunds. 

Choice of payout method and currency 

There is no one-size-fits-all payout method. Every payout to every recipient is unique. The best way for a recipient to receive payments depends on various factors, including the dollar amount of the payout, the region, and the nature of the transaction. 

The option to select what payout method they use isn’t just nice to have for payees. In fact, 81% of payees say that choosing how they receive payments is very important to them. Businesses must then prioritise understanding how their customers want to receive their money and have a solution to switch on new payout methods when needed. 

The same is true when considering what currency to use. Customers in Denmark don’t want Euros nor Swedish Krona; they want Danish Krone. And while merchants have worked hard to expand the number of currencies they can accept, there’s a lag in the number of currencies offered for refund payouts that needs to be addressed. 

Key takeaway: Businesses must understand who they’re sending money to and offer payees the ability to pick the payout method and currency that works best for them. 

Operational ease 

Receiving payments from a person or business in your own country is one challenge. But if the payout must cross international borders, the added complexity can introduce new points of failure and disruption. Different banking systems and regulatory jurisdictions aren’t designed to work in harmony, so money that needs to traverse them faces more barriers. Regional inconsistencies in data formatting and fraud prevention – to name just two challenges – may slow down a payout, or even stop it entirely. 

The right payment partner will mitigate much of the localisation complexity. The payee stands a better chance of getting their money when they expect it when the payer uses a payment platform that can dynamically route a payout using automated local channels, global compliance screening, and data-enabled enhancements like real-time account validation for every payout. 

Key takeaway: Leveraging cross-border payment rails built for the 21st century gives payouts the best chance to reach the recipient successfully. Doing so will reduce the burden and cost associated with exception handling for the payer and ensure the recipient has no reason to look negatively upon the brand. 

Data transparency 

One sure-fire way to lose a customer is for the payee to receive less money than they expected. Yet hidden costs – such as provider, scheme, and currency conversion fees – can result in precisely that. Whereas some costs can’t be avoided, transparency ensures expectations can be well managed. Publishing all costs, including FX rates, is one way to engender trust. Another way is to be transparent and predictable by providing payees with real-time payout status updates. 

Key takeaway: By using a payouts solution that prioritises transparency, businesses can provide customers with visibility of the end-to-end payment flow and all associated costs. That way, there are no surprises that can potentially damage the customer relationship. 

Unlock a competitive advantage through payouts 

Events of recent years have driven a surge in cross-border shopping. For merchants, this is creating an unprecedented opportunity to tap into this demand and enter new markets. However, the key to capturing this demand and revenue opportunity doesn’t only rest on the ability to accept payments. Businesses must also consider how they make payouts quickly, transparently, and efficiently, especially to consumers from overseas. Get it right, and the prize is reduced costs, improved brand loyalty, and customer lifetime value, which all translates into more sustainable revenue.

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 


About Yael Barack
Yael has been building and deploying global payments solutions for the last 15 years. She’s worked with businesses around the world helping optimise the payment experience in verticals such as Ecommerce, Omnichannel Retail, Digital Goods, and Subscription platforms. A Product Manager at heart, Yael is obsessed with customer experience and customer-centric solutions. Now with Checkout.com, Yael covers such segments as Payment Facilitators, Marketplaces, Payout Solutions, and Developer Experience.

About Checkout.com

Checkout.com is a leading cloud-based payments solutions provider that helps brands optimise their payments and payouts on global scale. The company offers improved acceptance rates, more granular and actionable data, a flexible product structure that merchants can adapt to their needs, and deep local expertise in major markets.


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Keywords: payment processing, online shopping, online platform, checkout optimisation , refund, ecommerce, merchant
Categories: Payments & Commerce
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Countries: World
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