Reimbursement delays force consumers who need cash to spend less

New research from Tink, Europe’s leading open banking platform, today shows that struggling consumers are citing delays in the return process as a reason to cut back on their spending.

A new survey has found that nearly a third (30%) of UK consumers are spending less online because it takes too long to get a refund and they worry about their bank balance. Similarly, over half (52%) say they are less likely to shop with a retailer again if it takes a long time to get a refund.

This suggests that retailers are losing valuable revenue and repeating deals through lengthy refund processes.

Sellers struggle with return costs

Meanwhile, retailers are facing a difficult year, with many struggling to cope with rising costs and falling sales. In a recent survey of UK online retailers, Tink found that four out of ten (40%) retailers are focusing on cutting costs as a result of the current economic situation.

One area in particular that is flagged as a business leak is returns: over half (54%) of online retailers say they are forced to stop offering free returns or expect they will be forced to stop offering free returns as a result of the economic climate. .

Particular pain points for sellers include the cost of processing returns (43%) and the time it takes for a buyer to get their money back (40%). But since the return process is a key differentiator for consumers, online sellers risk adding more friction and damaging customer relationships if they start charging for returns.

The survey results are encouraging, showing that a significant number of forward-thinking retailers understand that getting refunds right is an important part of improving the return process for both buyers and sellers. Indeed, over a third (36%) believe that instant refunds will improve the quality of returns, and 32% believe they will ultimately reduce the cost of returns for their business.

New payment method offers a solution to the issue of refunds

Understandably, online sellers have a significant appetite for revisiting the return and refund process. Four in ten (39%) would like to see the cost of processing refunds reduced, and one in three (33%) would appreciate a payment method that offers real-time refunds to customers when they return an item.

The good news for both merchants and consumers is that such a payment solution exists: bank payment.

With open banking, Pay by Bank has clear benefits for retailers looking to streamline their returns and refunds process, eliminating some of the cost and hassle of the return process. And from the consumer’s point of view, it allows their money to be instantly returned to their account as soon as the refund is processed, eliminating friction and greatly improving the customer experience.

Tom Pope, Head of Payments and Platforms at Tink, commented: “It is clear that UK online retailers are facing the twin challenges of rising costs and meeting consumer expectations when it comes to returns and refunds. As a result, they risk missing out on vital revenue and repeat business in an increasingly complex operating environment. To turn returns into a competitive advantage in 2023, they can invest in payment solutions that will speed up the return process and in turn increase shopper spend, improve retention, and improve customer experience.

“Pay by Bank is the key to solving the ‘return mystery’ by helping reduce return costs for merchants and increase return rates from days to seconds for consumers. It’s a win-win.”