Instant financing improves conversion by 20% on e-commerce sites

In recent years, e-commerce has seen great improvements in terms of usability and knowledge of the user. Websites are getting faster and purchasing processes easier and more transparent.

But apparently, that’s not enough. There is one issue that keeps e-commerce operators awake at night: the shopping cart abandonment rate. In Spain, the abandonment rate was 90% in 2016, a slight improvement over the previous year’s rate of 93%. But 90% is still 90%. No wonder e-commerce entrepreneurs are worried...

The figures are a bit better in other European countries, but their rates are actually getting worse. For example, the abandonment rate in England has gone from 77% to 80%, and in France from 82% to 86% (data for 2015 and 2016, respectively).

However, there is one subtle distinction to keep in mind: a product in the shopping car is not the same as a purchase decision; rather, it is an indication of interest in the product.

When a user puts a product in his shopping cart, he might not be ready to buy; he might simply want to check the final price, or save the product in order to remember it, or to purchase it later.

In the latter case, once the purchase process begins, the user has decided that he wants to pay for the product. If he still abandons the purchase, it is probably due to a poor user experience.

Payment: one of the main reasons for abandonment

According to the 2016 eCommerce in Spain Study, four of the main reasons for abandoning a shopping cart have to do with payment issues.

  • 46% abandon the purchase due to unexpected costs.

  • 37% abandon because the price is too high.

  • 19% abandon due to confusing prices.

  • 17% abandon the purchase because of an inconvenient form of payment.

  • Clearly, the price and the payment process are both critical factors for conversion on e-commerce sites. But identifying the problem is the easy part. The question is: how do we solve it?

Improved financing for higher conversion rates

We have observed that users want to pay with a preferred payment method, and even want to have financing options for higher-priced items.

Online transactions of this type have increased six-fold in the past two years, rising from 35 million euros in 2014 to the current level of 206 million (figures as of August, 2017). Fintech loans that are processed 100% online in less than 48 hours are increasingly in demand by consumers.

But we can do even better. The next step, now becoming available, is instant credit, in which the consumer gets financing rapidly and securely.

These immediate financing systems increase conversion by up to 20%, a figure worthy of notice. Solutions of this type are being offered, for example, by Aplazame, an instant financing system for online purchases that is being integrated into e-commerce sites.

This system verifies the purchaser’s identity in fewer than 20 seconds, analyzes the risk and the documents provided, and makes a decision to grant or deny credit. With this system, e-commerce sites increase conversion rates by up to 20% while also reducing identity fraud by 88%, which in turn reduces losses due to identity theft.

One big step towards reducing that fearsome 90% abandonment rate.

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