Why Pay by Bank is a Game-changer for Black Friday Returns
Getting Black Friday returns and refunds right is essential for both consumers and merchants. Black Friday, the Friday after Thanksgiving in the United States, typically marks the start of the US (and now European) Christmas shopping season. However, over the past decade, the traditionally US-only retail event has become immensely popular around the world.
This imported retail phenomenon has now resulted in a significant surge in e-commerce transactions throughout major international markets. For example, during Black Friday in 2023, the UK had a 129% sales increase, while France reported a 133% rise. Germany, meanwhile, saw the biggest bump in sales across Europe’s major economies, delivering a staggering 203% sales increase in 2023.
Clearly, Black Friday has had a significant impact on holiday season spending far beyond the confines of the United States. For instance, during the period of 1 November to 24 November, figures from Adobe Digital Insights show that the UK alone spent over £9.5 billion in 2023 — a 4.7 per cent increase from the previous year.
The hidden challenge of Black Friday Returns
However, despite all the focus on sales, a key caveat is that as many as one in three shoppers will return what they buy during Black Friday. Indeed, the biggest day for Black Friday returns typically is Cyber Monday — the Monday immediately following Black Friday.
According to analysts at GlobalData, in 2022, UK shoppers returned more than £4.1 billion worth of clothing purchases. Meanwhile, a National Retail Federation report in the US stated that returns cost retailers over $743 billion in 2023 alone. Worse, this figure is currently projected to rise to nearly $1 trillion by the end of the decade.
As such, Black Friday returns, and refunds are a significant area of focus and concern for merchants of all sizes and stripes. Thankfully, due to their speed of use, Pay by Bank, and particularly instant account-to-account payment methods (such as Brite Instant Payments), provide significant advantages for handling Black Friday payments.
In this article, we will explore the benefits of consumers having access to Pay by Bank at checkout, highlight its impact on merchant operations, and outline why Brite Instant Payments are a game-changer for Black Friday returns.
What is Pay by Bank?
Before discussing Instant Payments and their impact on Black Friday returns and refunds, it’s essential to define ‘Pay by Bank’.
Pay by Bank is a relatively new consumer-facing checkout term for existing payment methods, such as account-to-account (A2A) payments which has quickly risen to best reflect the growing use of A2A, open banking-powered, or other direct real-time bank payments.
To put this into context, Brite offers open banking-powered instant A2A payments. Previously, these payments were presented to consumers differently at checkout depending on circumstances, industry, or geographical location. For example, an iGaming brand may use the term instant deposit rather than an e-commerce merchant that wants to offer a potential customer what is essentially a buy now, pay now bank transfer option.
Pay by Bank’s emergence as a catch-all term has helped unify checkout experiences and further develop consistency that meets customers’ expectations when selecting a payment method. This is all important when building trust, especially when consumers are trying a new payment method. However, as with all new terms, how it is applied and used may change from provider to provider.
How Does Pay by Bank Work?
Pay by Bank is a straightforward process for both consumers and merchants that ensures a swift and efficient transaction experience. – particularly if it uses a combination of A2A payments and open banking infrastructure.
At checkout, customers can simply select the ‘Pay by Bank’ option and choose their bank from a list of supported institutions. They then authenticate using multifactor authentication, such as a code sent to their phone or biometric verification. Once authenticated, customers confirm the payment details, including the amount and recipient, before finalising the transaction.
The transfer is near-instant, with both the customer and merchant receiving confirmation of the successful transaction. This immediacy not only enhances the customer experience but also provides merchants with immediate access to funds, improving cash flow management.
What are Brite Instant Payments?
Brite Instant Payments is the name of the open banking-powered A2A payments that consumers see as Pay by Bank at checkout. Brite’s Pay by Bank offering ensures that funds are transferred immediately between accounts, providing instant access to money for both merchants and customers.
Utilising open banking technology and a powerful API, Brite Instant Payments enables smart reconciliation, ensuring businesses can maintain a positive cash flow, particularly during peak times, such as Black Friday. What’s more – and crucially – this works both ways, with instant payouts included as standard. Thus consumers and merchants alike benefit from a good cash flow at what can be a stressful time.
The seamless integration of open banking technology allows Brite Instant Payments to offer a highly efficient and secure Pay by Bank payment solution. By leveraging direct bank connections, this service bypasses traditional intermediaries, significantly reducing transaction times and costs. As a result, merchants can enjoy almost instantaneous payment confirmations, which is crucial for managing high transaction volumes during busy shopping periods, especially when dealing with Black Friday returns.
Moreover, Brite Instant Payments provides customers with a convenient and swift payment experience, eliminating the need for card details or lengthy processing times. This immediacy not only enhances customer satisfaction but also builds trust and reliability in the payment process.
Find out more about Brite Instant Payments here.
Here’s why Pay by Bank is crucial for Black Friday payments
As previously highlighted, Black Friday often brings a significant surge in e-commerce activity, whether it’s sales or managing returns and refunds. Pay by Bank, such as Brite Instant Payments, offers a robust solution to handle these challenges.
See below for just some of the reasons why Pay by Bank could be crucial for Black Friday returns and payments:
Reason 1: Instant refunds
Data from our latest Instant Economy Payment Insights report reveals that 32% of customers expect a payout (refund) in five minutes or less — particularly during busy periods such as Black Friday and Christmas. As such, Instant Payments such as Brite’s ensure that refunds are processed immediately, meeting customer expectations for quick resolutions during the busy shopping season.
Meanwhile, instant payments offer rapid reconciliation for merchants, ensuring that businesses are able to keep up with the high transaction volume and maintain smooth operations during peak sales periods.
Reason 2: Improved customer satisfaction
As highlighted above, consumers now expect rapid payouts from businesses during peak periods. Indeed, our report also found that just over 50% of customers believe that waiting over an hour for a merchant payout is unreasonable. As such, quick and hassle-free refunds can significantly enhance customer trust and satisfaction, encouraging repeat business.
Additionally, instant gratification from immediate e-commerce refunds can also turn negative experiences into positive ones. Instant refunds and cashback help e-commerce companies build and repair their brand’s reputation by promoting positive customer interactions regardless of whether a customer has liked or returned an item.
Reason 3: Enhanced cash flow management
Instant Payments provide merchants with immediate funds availability, aiding in better cash flow management during high-volume sales periods. Furthermore, real-time access to funds helps in restocking and managing operational costs effectively, which is crucial for maintaining smooth operations during Black Friday.
Reason 4: Scalability and cost efficiency
Instant Payment systems can scale effortlessly to handle increased transaction volumes during Black Friday. This system offers flexibility in adjusting payment schedules and amounts based on real-time sales data and customer preferences.
In addition to their scalability, Pay by Bank transactions are typically cheaper than card payments, reducing merchants’ overall transaction costs. Lower fees, of course, mean higher profit margins, allowing businesses to reinvest in marketing and customer service enhancements.
Why Pay by Bank matters for Black Friday refunds
Research from Signifyd and OnePoll found that the ease of return was a paramount concern for consumers across Europe. As many as 91% of Spanish shoppers felt that easy returns were vital. Meanwhile, separate data revealed that as many as 56% of Britons would be reluctant to shop with any e-commerce company that didn’t offer free returns shipping and processing as standard.
As we highlighted at the beginning of this article, Black Friday returns and refunds are common. As such, it’s imperative that merchants are able to handle the wave of Black Friday payments and the inevitable refunds as well. Here are just some of the reasons why expanding the use of Pay by Bank checkout options is important for Black Friday refunds.
Speed and efficiency
Our latest research shows that 42% of Pay by Bank users opt for the payment method because of its speed. As such, Pay by Bank’s instant refund capability ensures that customers receive their money back promptly, reducing frustration and enhancing the overall shopping experience.
Customer trust and retention
By providing immediate e-commerce refunds, merchants can significantly improve customer trust and retention rates. Quick refunds help e-commerce brands foster positive experiences and even recover negative purchasing experiences, such as late-arriving goods or incorrect items. This approach helps mitigate the negative impact of Black Friday returns and fosters long-term loyalty.
Operational benefits
Instant Payment systems streamline the Black Friday refund process and reduce the administrative burden on customer service teams. This efficiency allows staff to focus on more critical tasks, such as handling complex customer inquiries and improving service quality.
Final Thoughts
Offering Pay by Bank at checkout and using payment products such as Brite’s Instant Payments are revolutionising how merchants handle Black Friday returns, offering speed, efficiency, and cost savings. By adopting these payment methods, businesses can enhance customer satisfaction, improve cash flow management, and maintain a competitive edge during the busiest shopping season of the year.
To learn more about how Brite can deliver you a payout solution that works for you and provides your business with first-class Black Friday returns, be sure to check out our Brite for Business page.
