High rates of false declines and the negative impact on online shopping

A new report explores the relationship between consumer shopping habits and brand trust, and found alarming rates of false declines, cart abandonment, and trust issues in online shopping users.

Abandoned Carts at the First Sign of Friction

A seamless checkout experience is one of the most essential pieces of building trust with UK shoppers.

The report found that more than three quarters (77%)[1] of UK consumers would abandon a purchase if the checkout experience is too complicated or time-consuming.

While retailers often rely on one-time passwords, CAPTCHAs and manual order reviews to enhance security, when used indiscriminately, they deter good customers and leave money on the table.

The report data found that mandating account creation can cause, on average, 3-5% of consumers to drop off, while requiring consumers to validate their email addresses/phone numbers can cause a 4-7% drop-off rate, on average.

By creating unnecessary friction, retailers are turning good customers away.

False Declines Lead to Lost Revenue

Despite their growing buying power, younger shoppers in the UK face the most friction with online shopping.

Millennials are twice[2] as likely than Gen X to be falsely declined whilst Gen Z consumers are up to six times[3] more likely to be falsely declined at checkout compared to Baby Boomers (10%).

In the race to win the next generation of shoppers, ensuring legitimate customers have a friction-free experience is critical.

Retailers Have a Trust Problem

With many new shoppers venturing into digital commerce, the report found that retailers often turn away new — but trustworthy — customers simply because they’ve never encountered them before.

The data revealed that false declines are typically five to ten times higher than actual fraud rates.

Based on estimates, for every $1 retailers lose to fraud, they forfeit $30 by declining legitimate consumers.

Many UK consumers are cutting back on their non-essential spending, so trust is a key driver for continuing retail growth.

The report found that UK consumers are willing to spend 44% more on average with retailers they trust – coined the “Trust Premium.”

As economic conditions grow less favourable, investing in building customer trust and long-term loyalty is vital to help insulate retailers against market turbulence.

Unfortunately, the report showed that over 73% of UK consumers have had a negative online shopping experience in the past three months, with high rates of false declines (14%), purchases not arriving on time (37%), and expensive and/or difficult returns policies (27%).

[1] Very likely and somewhat likely combined

[2] Among survey respondents, 42% of UK Millennials (born between 1981-1996) have experienced a false decline versus 24% of UK Gen X (born between 1965-1980) in the past three months.

[3] Among survey respondents, 60% of UK Gen Z (born between 1997-2005) have experienced a false decline versus 10% of UK Baby Boomers (born between 1946-1964) in the past three months.