Every customer who adds an item to their cart is a potential sale - yet nearly 70% of online payments are abandoned. The reasons vary: 40% of customers report abandoning because their preferred payment method wasn't supported, while 18% cite checkouts that feel too long or complex as their reason for leaving.
This article explores practical steps merchants can take to create an optimal checkout experience. From streamlining the payment process and reducing user friction to supporting localized payment options and leveraging advanced technologies like smart routing, tokenization, and payment orchestration, we’ll go in-depth on the steps merchants can take to increase their conversion and retention rates.
The Business Cost of Checkout Abandonment
When potential customers abandon their carts during the final stages of checkout or deposit, merchants lose more than immediate sales. These abandonments represent significant revenue leakage in an otherwise successful customer journey.
Common causes include unexpected costs on the final bill, forced account creation, slow delivery options for physical goods, and, notably, frustrating checkout experiences. Industry research shows that nearly 1 in 5 shoppers abandon checkout because it's too lengthy or complicated. Each step, form field, or page loading delay creates friction where customers reconsider their purchase.
The encouraging news is that reducing this friction delivers measurable results. Studies indicate that optimizing checkout design and flow can increase conversion rates by up to 35% on average.
For merchants, this presents a clear opportunity: a streamlined checkout experience directly captures sales that would otherwise be lost, with each improvement helping to recover a portion of substantial unrealized revenue.
Streamline and Simplify the Checkout Process
The foundation of an effective checkout experience is simplicity. Checkout flows should be concise and clear. User experience research suggests several best practices:
- Minimizing Form Fields: Request only essential information (name, address, payment details). Eliminating unnecessary fields can reduce abandonment by more than 20%, and merchants should avoid requiring phone numbers or secondary address lines unless absolutely necessary.
- Offering Guest Checkout: E-commerce data indicates that approximately 1 in 4 customers will abandon checkout if forced to create an account. Providing guest checkout options with optional account creation after purchase significantly improves conversion.
- Using Clear Progress Indicators: For multi-step processes, progress bars or step counts (e.g., "Step 2 of 3") help customers understand where they are in the checkout journey. Uncertainty about completion time often leads to abandonment.
- Enabling One-Click Payments: For returning customers, tokenized card details enable one-click purchasing. This dramatically reduces friction by eliminating the need to re-enter payment information, significantly improving conversion rates for repeat business.
The benefits of streamlining extend beyond preventing abandonment. Faster checkouts leave less time for purchase reconsideration, with research showing checkout processes exceeding 30 seconds may face abandonment rates up to 50%.
Every second matters. Optimizing page loading times, supporting auto-fill functionality for addresses and card details, and ensuring smooth mobile experiences all contribute to creating a frictionless path for customers to complete their transactions.
Reducing Payment Authentication Friction
Even after customers are ready to pay, authentication procedures can create conversion barriers. Security measures like 3-D Secure (3DS) authentication, required under regulations such as PSD2 in Europe, add verification steps that can disrupt the purchase flow.
While security remains essential, poorly implemented authentication significantly impacts conversion. Data collected after PSD2’s implementation revealed conversion rates declined by approximately 25% on average when standard 3DS was applied.
To prevent unnecessary abandonment while maintaining transaction security, merchants should implement authentication that minimizes disruption. This includes leveraging 3DS merchant plug-ins (3DS MPI) that can share user verification data across multiple processors if the initial attempt fails, eliminating the need for repeated customer verification.
Effective decline recovery is equally important. If authentication or payment attempts fail, customers shouldn't be forced to restart from the beginning. Research shows 30% of shoppers abandon entirely if required to re-enter credit card information after a failure. This substantial loss can be prevented with thoughtful recovery options, such as easy retry functionality with preserved details or presenting alternative payment methods when cards are declined.
Preserving the user’s progress and maintaining a smooth path to completion even when hiccups occur is crucial for recovering sales that would otherwise be lost to payment friction.
Offering Localized Payment Methods
One-size-fits-all payment options no longer meet modern customer expectations. Payment preferences vary significantly by region, country, and demographic factors. To optimize conversion, businesses must offer the payment methods their customers prefer.
Different regions exhibit distinct preferences - PIX dominates in Brazil, UPI leads in India, and iDEAL is preferred in the Netherlands. Similarly, specific industries have preferred payment methods, such as Skrill and Neteller in iGaming.
Merchants with global operations must consider these regional variations when designing checkout experiences. Displaying familiar payment options creates trust and comfort for local customers, substantially improving conversion rates across different markets.
For deeper insights into regional payment preferences, see our comprehensive article series on Alternative Payment Methods across Europe, Africa, Asia, and South America.
Enhance Approval Rates with Smart Routing
Sometimes customers complete all necessary steps correctly, yet transactions still fail due to behind-the-scenes issues. Cards might be mistakenly declined by banks or Payment Service Providers (PSPs) might experience temporary outages. These false declines and technical errors silently erode conversion rates, costing U.S. businesses alone an estimated $81 billion in lost revenue annually.
Smart routing addresses this challenge by directing each transaction through the optimal path to maximize approval probability. For businesses integrated with multiple PSPs, smart routing engines can direct different payments to different processors, based on a multitude of factors such as payment method, card type, location, transaction amount, currency, and can even cascade the same transaction across several processors, recovering what would otherwise become a lost transaction and missed conversion opportunity.
Leverage Praxis Tech’s Payment Orchestration Platform
Integrating multiple payment methods, processors, smart routing, tokenization for repeat one-click transactions, and other optimization strategies presents significant implementation challenges for merchants. Payment Orchestration Platforms provide a valuable solution, serving as a unified layer connecting businesses to numerous PSPs while streamlining payment infrastructure. These platforms handle complex tasks like transaction routing, card tokenization, and regional payment method management from a centralized hub.
Praxis Tech's orchestration platform goes beyond basic connectivity, offering sophisticated features that actively optimize the payment process:
- Decline Recovery for Failed Transactions: Automatically suggests alternative payment routes when transactions fail, providing options like open banking alternatives, secondary payment methods, or adjusted transaction amounts based on decline reasons.
- Checkout Customization: Merchants can utilize our Cashier appearance editor to deliver modern, user-friendly payment experiences that are optimized for conversions.
- Comprehensive Fraud Protection: Real-time analytics and sophisticated risk assessment tools identify suspicious activities without impacting legitimate customer transactions.
- Unified Analytics and Reporting: Consolidated dashboards deliver complete visibility across all payment channels, processors, and methods.
- Enhanced Payment Experiences: Support for recurring subscriptions and automatic account top-up transactions improves customer convenience and boosts retention.
Praxis Tech's Payment Orchestration Platform provides merchants access to these capabilities through a single integration, connecting to over 600 PSPs and 1000+ payment methods worldwide. This comprehensive approach not only simplifies payment operations but also actively works to maximize approval rates and enhance customer experiences.
Creating Your Ideal Checkout Experience
The perfect checkout experience combines thoughtful design, seamless authentication, and diverse payment options - all powered by sophisticated technology working behind the scenes. By focusing on these elements, merchants can transform their payment process from a potential friction point into a competitive advantage.
The result is a checkout experience that not only completes more transactions but also adapts easily to evolving payment trends and customer preferences, ultimately driving sustainable revenue growth and customer satisfaction.
