Being the best at refunds could actually boost your sales

Shoppers expect flawless experiences, so competition is on for retailers to match the customer service levels provided by the best in the business. How you handle returns and refunds plays a significant role in this regard as it can create memorable moments, foster brand loyalty and encourage repeat spending.

Strive for impeccable refunds

Good transaction etiquette isn’t just giving a customer a smooth time purchasing an item. Efficiently returning money to shoppers has also become an essential part of retail.

When we speak to merchants about improving the refund process, some get it immediately, but others may need the challenge to be reframed to understand why it should be a top priority.

When we take them through the benefits, most merchants come to the same conclusion as us: giving back is just as important as taking.

Reframing refunds

• 96% of shoppers think easy refunds and returns are important
• 52% of shoppers will spend more if offered a faster refund
• 32% of surveyed shoppers* have returned at least one item in the previous six months

Pressures on customer service functions, increased costs and complicated processes across channels can make returns and refunds feel daunting for both customers and merchants. With the value of global e-commerce transactions growing sixfold in the last decade, increased returns and refunds are an expected side effect retailers must manage. Poor refund experiences lead to decreased retention and customer lifetime value.

Research shows 27% of customer support calls are related to refunds, and 25% of consumers say they would call the retailer within the first three days to find out where their refund is.

Not only can this be resource-intensive, but it can also damage customer relationships and tarnish a merchant’s reputation. Conversely, providing a great refund experience long before problems arise can increase shopper satisfaction and loyalty, making them more likely to spend with you again.

Faster refunds

Since shopping online means customers can’t touch, inspect or try an item before purchasing, they want the reassurance they’ll get their money back fast if it’s not right for them. The sooner that money is back, the sooner it can be spent again on something that is right, maybe even with an added item they didn’t spot the first time they were browsing!

Like Worldpay, Mastercard understands this, so we’ve collaborated to offer Faster Refunds, which will make the refund process back to cards almost instant. With money returned within minutes, fewer inquiries and complaints about refund delays significantly alleviate the pressure on customer support. Shoppers are quickly free to make new purchases, encouraging repeat business.

Shoppers have high expectations when it comes to refunds, with 47% expecting money to be back in their accounts within 24 hours, and 18% expecting an immediate refund.

It’s not often you’re able to surpass already high customer experience expectations. Merchants who do everything they can to build trust and loyalty with shoppers may set themselves apart in a crowded retail market.

Mastercard’s perspective

“Refunds are tricky for both customers and retailers, but approaching them as a growth lever can be transformative,” says Suren Nawalkar, senior vice president of business development at Mastercard.

Nawalker explains “with macroeconomic factors at play, there’s never been a more important time to treat every touchpoint with a customer as an opportunity to build a strong bond. A flexible returns policy can drive loyalty and revenue and help establish better customer relationships, while refunds encourage additional purchases by capitalizing on customers’ desire for immediate access to their funds.”

To learn more about Faster Refunds and our latest product enhancements, check out the spring edition of Innovation Focus.

*Unless otherwise linked, all stats are from Worldpay’s proprietary “Payments Performance for Retail” in 2024.