The e-commerce sector has seen major technological changes and dramatic growth over the last half-decade. Despite an economic downturn and evolving consumer behaviour, there are still plenty of opportunities for online retailers to stand out from the crowd and expand into new markets.
The payments landscape in 2025 is equally dynamic, and businesses embracing the latest fintech solutions are reaping the benefits in a market where consumers are now more demanding than ever.
Today, we’re chatting with Exactly.com Payment Expert Saran Talasila to gain practical insights into the latest payment trends and how to apply them, as well as tips on creating smoother, better-converting checkouts and scaling e-commerce businesses across borders.
According to some reports, UK consumers will spend less in 2025. How bad do you think the current situation is for retailers?
Acquisition costs have risen dramatically for e-commerce businesses over recent years—in some cases by over 200%. People are making more online purchases than ever, but they’re far more discerning about where their money goes.
Although UK spending has risen above pre-pandemic levels, in real terms, that’s largely down to rising prices rather than an increase in purchasing. That’s apparent in the data, where we’ve seen spending increasing but sales volumes falling 3-4% per year. There was a small increase in sales volumes of 0.7% in 2024, but we haven’t yet returned to pre-2022 levels.
The cost-of-living crisis has also led to changes in buying behaviour. 60% of adults have reduced spending on non-essentials and now hold out for promotions or discounts before pulling the trigger on expensive purchases.
Has the cost-of-living crisis affected the way consumers pay?
We’ve seen an explosion in the use of payment methods giving shoppers the option to break down purchases into manageable instalments. That’s no surprise, as if someone is offered an interest-free option, they’re likely to take it.
Split payments are also becoming popular. Most of us are familiar with using a combination of cash and cards to make in-store purchases. For e-commerce, the process is similar, allowing shoppers to use multiple digital payment methods to complete a transaction.
Overall, consumers are becoming more cautious. They’re worried about what might happen over the next few months, so they’re spreading the cost of big-ticket items to protect themselves. That also means if a checkout flow causes unnecessary friction, they’ll have more time to experience purchase guilt and abandon the cart.
Do you have any advice for businesses selling lower-priced items or products classed as necessities?
In these scenarios, it’s still important to have optionality. I’ve seen companies use gift and loyalty cards very effectively. For example, certain versions of these cards have offers such as “Pay £20 get £2 cashback”. That can be a great way to entice a shopper to spend more than they might ordinarily, or upgrade to a higher-end experience—even for necessities such as groceries or lower-value items bought as treats and indulgences.
Would subscription services also work well in these kinds of scenarios?
Subscriptions are a good way to raise the lifetime value of a customer while fostering a greater sense of loyalty. They’re also perfect for introducing shoppers to special officers or upselling different products.
With that being said, it’s important to handle subscription payments correctly and have a system in place that allows easy customisation. For example, I use a service that delivers fresh milk and eggs to my door. Direct Debit means I never miss a payment, and the company makes it easy to change my billing cycle if I’m away or haven’t used all the eggs. I can also pause my order or increase the frequency, making it far more likely I’ll continue using the service.
Today’s consumers aren’t always buying from standard e-commerce websites. How can businesses take payments across multiple channels without unnecessary friction?
Payment links are becoming popular in these kinds of scenarios. For those who aren’t aware, this method uses a unique URL that once clicked, directs the shopper to a secure payment page hosted on the payment provider side. Once there, they can pay in the same manner as a regular checkout page.
Payment links work very well both for new businesses and those running multi-channel operations, as they allow billing via messengers, social media inboxes, SMS or email. You don’t need a website to get started, or deal with coding and complex integrations.
Payment links also allow businesses to create tailored payment pages for each audience segment. For example, a company might want to run a special campaign on social media or bill a B2B client for a custom service.
What are some of the most common mistakes e-commerce businesses make that can reduce checkout conversion?
Small businesses turning over £30k a month are often hesitant to implement the full range of payment methods used by big companies doing over £500k. They look at American Express, Google Pay and Apple Pay and think to themselves “I don’t want the cost or hassle of setting those up, I’ll keep it simple by just accepting Mastercard and Visa.”
Despite the slight increase in cost, I believe that failing to implement popular payment methods is a huge mistake, as customers will go elsewhere if they don’t see the options they prefer or trust.
Another mistake is failing to implement one-click payments, which allow returning customers to pay without re-entering their card details. Traditional manual-entry checkouts can take up to three minutes to complete —including authorisation. One-click payments can be completed in as little as four seconds, making them less likely to frustrate consumers, leading to improved conversion rates.
Do smaller e-commerce businesses have any specific concerns and sticking points when it comes to payments?
I mentioned the perceived cost of adding alternative local payment methods. That could be both in terms of integration and ongoing transaction fees. Monthly settlement fees and cycles can also be sticking points for smaller businesses.
It’s possible to use multiple providers—known as payment orchestration—to get the best approval rates and prices. However, that isn’t logical or cost-effective for small businesses. A good payment provider will advise on the best way to proceed and create a tailored solution that not only gives the best rates but also allows for future expansion.
We’ve discussed the importance of offering the top payment methods. Visa and Mastercard are less popular in some European countries. Do you think UK companies underestimate this fact?
Lack of knowledge about local payment habits can be a problem when selling across borders. Many companies incorrectly assume that Visa and Mastercard are just as popular across Europe as they are in the UK. However, Bizum is popular for sending and receiving money in Spain, while Multibanco and MB Way are top payment methods in Portugal, to name two regional examples.
E-commerce businesses should always strive to offer the most popular payment methods in every country or region where they do business. Of course, Apple Pay and Google Pay are also incredibly popular worldwide, so offering a dedicated button for those services is another great way to personalise the checkout experience and improve conversion.
What about accepting payments in different currencies?
If you’re selling to the Swedish market, you’ll need to accept payments in Krona, or your customers may be hesitant to purchase from your store. It’s fairly simple to process payments in multiple currencies, but settlements for UK-based businesses are usually made in GBP, which may add prohibitive exchange fees.
Larger companies—Amazon is a well-known example—set up different local entities for each market in which they operate. This can help reduce exchange and settlement fees and also increase trust, as companies will be able to list a business address in the customer’s location.
This tactic is quite advanced and outside the scope of a smaller e-commerce operation. However, if implemented correctly, it’s possible to reduce fees dramatically. If you’re currently turning over under £30k per month, I’d suggest expanding into a new market for a period of time before setting up a separate entity—at least until you have a good idea of how well things are progressing.
Speaking of expanding into new markets, how does Open Banking fit into the equation?
Open Banking can work well for businesses looking to scale in new markets, as it gives access to the majority of UK and European banks via single integration, offering a hassle-free way of accepting cross-border payments.
Other advantages include minimising the risk of fraud and data breaches, extremely fast transfers and greater settlement options. Fees also tend to be lower than you’d expect with card payments, for example.
For customers, Open Banking offers a major speed advantage over debit cards, as they can pay directly via their local banking app, instead of manually inputting card numbers, CCVs and expiry dates. Consumers place a high degree of trust in their bank, so this payment method can also improve conversion.
I believe Open Banking will grow in popularity, as it’s a win-win technology for businesses and consumers alike. Once people begin using it to pay their taxes or a big player such as TFL integrates the technology into its app, we’ll see awareness and adoption grow significantly.
Want to hear more about the evolving e-commerce payment landscape?
If we’ve inspired you to turn these fintech insights into action, connect with Exactly.com payment expert Saran Talasila at the Retail Technology Show (ExCel London, 2nd-3rd April 2025) and take your e-commerce expansion strategy to the next level!
