Beating 2024 checkout abandonment benchmarks with effective payment solutions

The cost of checkout abandonment can add up for large enterprises. Below, learn the top reasons for abandonment and how payment providers can help mitigate it.

Conversion rate, average order value, customer acquisition cost, and lifetime value are all key performance indicators (KPIs) that demand the attention of enterprise leaders — for good reason. They’re essential for accelerating growth and driving revenue.

However, one often-overlooked metric could also be pivotal in 2024: checkout abandonment rate. Monitoring this metric can reveal insights into where sales might be faltering, allowing businesses to identify opportunities for boosting customer satisfaction.

Here’s how refining checkout processes and targeting common causes of checkout abandonment can help large enterprises meet their financial goals in 2024.

What is abandoned checkout?

Abandoned checkout occurs when a customer gives up on a purchase after they’ve started the process of entering their personal and payment information. The causes are multifaceted and include excessive form fields, lack of payment options, or lack of trust signals.

Understanding your business’s checkout abandonment rate is the first step to pinpointing where friction occurs in your checkout flow — which can help protect your bottom line as competition increases and customer expectations rise in 2024.

Abandoned cart vs. abandoned checkout

Abandoned cart and abandoned checkout are two terms that are often used interchangeably, but they refer to different stages of the shopping experience. To understand the differences, it’s helpful to learn the steps involved in payment processing and the buyer’s journey:

1. Site visit: A customer lands on your website via a search engine, clicking on a digital ad, or directly typing in your URL.
2. Browsing: The customer begins to engage with your website, looking through products or performing searches.
3. Adding items to cart: The customer finds something they like and adds it to their cart. They may continue adding, removing, and changing items before checking out.
4. Checking out: The customer hits the checkout button and is taken to a form page where they begin to enter their information.
5. Paying: The customer clicks “Confirm Purchase,” “Place Order,” or a similar call to action, triggering the payment process.
6. Confirmation or decline: If the payment is approved, the customer receives a confirmation notice. If it is declined, they may be prompted to enter different information.

Checkout abandonment rate refers to the percentage of customers who place an item in their cart but abandon the purchase after beginning the checkout process. In other words, they leave a business’s site after step four.

On the other hand, cart abandonment rate refers to customers who place an item in their cart and then abandon it at any point in the buyer’s journey, including while they are still browsing. Unlike checkout abandonment, cart abandonment often occurs because customers are not yet fully committed to the purchase and may still be comparing prices, researching better deals, or simply adding items to their cart for future consideration without an immediate intent to buy.

What is a good cart abandonment rate?

Cart and checkout abandonment benchmarks in 2024 vary by business size and industry. For example, smaller businesses often face higher abandonment rates due to less-optimized checkout processes, whereas larger enterprises may benefit from more streamlined operations and customer trust.

Similarly, industries with quick purchase cycles like fashion tend to have lower abandonment rates compared to sectors like electronics, where customers may require more time to research and compare products.

Below are the average cart abandonment rates for different industries:¹

• Luxury and jewelry: 79.04%
• Home and furniture: 78.80%
• Fashion, accessories, and apparel: 76.03%
• Beauty and personal care: 72.80%
• Multi-brand retail: 68.79%
• Consumer goods: 64.89%
• Food and beverage: 57.41%
• Pet care and veterinary services: 55.87%

Beyond business size and vertical, cart abandonment rates are also affected by how shoppers check out, whether on desktop, mobile, or tablet. The latest data shows that mobile, which accounts for 68% of all e-commerce sessions, has the highest cart abandonment rate at 85.65%.² This is followed by tablet, which has an 80.74% average cart abandonment rate, then 73.07% for desktop.²

Potential causes for discrepancies between devices include:

• User experience: Shopping on mobile devices can often be less optimal than on desktop due to smaller screens and slower loading times.
• Checkout processes: The checkout process on mobile can feel more cumbersome, with more steps and smaller form fields making data entry more challenging.
• Security: Shoppers may feel less secure entering payment information on mobile devices.
• Convenience: The convenience of browsing on mobile often leads to more casual browsing sessions, where users add items to carts without a strong intent to purchase immediately.

Top reasons for high cart abandonment rates in 2024

Normal checkout and cart abandonment rates for enterprises can vary, but customers’ reasons for ditching their carts typically remain constant. Consider how your payments platform could help address the following customer pain points.

Lack of preferred payment methods

Simply offering the payment methods your customers want could help you seal the deal. In one survey, 13% of respondents said they abandoned a cart in the last three months because there weren’t enough payment methods.³

For example, while many large enterprises offer traditional debit, credit, and ACH payments, they may be missing out on customers who prefer digital wallets (such as PayPal, Apple Pay, and Samsung Pay). With nearly 80% of Gen Z consumers using digital wallets, understanding and catering to the payment preferences of these shoppers is essential to reducing cart abandonment rates.⁴

This trend is mirrored with buy now, pay later (BNPL), with 40% of BNPL shoppers saying they’re likely to abandon a purchase or buy a less expensive product if BNPL is unavailable.⁵ That’s because BNPL offers consumers the flexibility to spread the cost of their purchases over time without taking on an immediate financial burden, making larger purchases more accessible. This is particularly attractive to younger consumers who may not have extensive credit history or who prefer not to use traditional credit options.

To help prevent abandoned checkout, PayPal can connect your business with the above alternative payment methods, including digital wallets and BNPL, as well as Venmo (available in the US only) and cryptocurrency.

Additional fees and inconvenient returns

The most common reason for shopping cart abandonment is customers getting hit with unexpected costs — 48% of US consumers have abandoned their online purchases during checkout in the last three months due to additional costs, such as shipping, taxes, or handling fees.³ Inconvenient returns also rank high, with 18% of shoppers saying they’ve abandoned their cart in the last three months because of unsatisfactory return policies.³

These reasons for cart abandonment reflect growing economic concerns among consumers. Shoppers are increasingly feeling financial pressure — new data from February 2024 reveals that in the US, people are saving money at their lowest rate in over a year, while spending outpaces income growth.⁶ When customers see unexpected fees or feel they won’t be able to get their money back easily, they may decide against a purchase during or just before the checkout process.

Leveraging abandoned cart emails to offer discounts to potentially lost customers can help mitigate these losses. PayPal’s Store Cash feature, for example, sends an offer email to PayPal customers who abandon their carts. All you need to do is choose the discount amount, and shoppers will automatically receive the deal when they complete their purchase with PayPal.

Complicated checkout processes

Customers want frictionless shopping and checkout experiences, and many don’t have the patience or time to fill out long forms, navigate confusing interfaces, or create accounts they feel they don’t need. Every extra step or obstacle in the checkout process can deter potential customers — and increase your abandoned cart rate.

In fact, 26% of consumers report abandoning their cart in the last three months because a site asked them to create an account, a process that can add precious time to the checkout process.³ Another 22% of consumers say they’ve recently abandoned a cart because the checkout process took too long or was too complicated.³

PayPal can help streamline this process with PayPal Wallet, Venmo, and other supported payment methods: 54% of shoppers who choose to check out with PayPal over other checkout methods attribute their choice to checkout speed, while 50% cite the simple payment experience that PayPal offers.⁷

Lack of trust

When it comes to causes of cart abandonment, lack of trust ranks just as high as long, complicated checkouts. Among survey respondents, 25% of consumers report abandoning their cart in the last three months because they didn’t trust the site with their credit card information.³

But how can an organization gain customers’ trust? Here are some steps that can help:

• Create transparent practices. Being open about your business practices and privacy policies helps build trust. Transparency includes clear, understandable information on how customer data is used and stored.
• Implement robust security measures. State-of-the-art security protocols such as SSL certificates, encryption, and regular security audits can help reassure customers that their data is protected against breaches.
• Demonstrate your commitment to data security. Certifications and compliance with standards like PCI DSS (Payment Card Industry Data Security Standard) can help give customers peace of mind.
• Communicate clearly and directly. Keeping customers informed at every step of their interaction with your site, especially during the checkout process, helps build trust and reduce anxiety about the security of their transactions.
• Provide recognized payment options. Offering payment methods that are universally acknowledged for their reliability, such as credit cards, PayPal, and Apple Pay, adds a layer of trust. In one survey, 61% of PayPal shoppers said they prefer PayPal to alternative checkout methods due to their confidence in the brand’s security.⁷ In particular, 40% of customers reported feeling more confident that their payment information was safe and secure with PayPal.⁸

Beyond just checkout options, PayPal also offers Fraud Protection Advanced on eligible transactions to help large enterprises mitigate fraud, protect themselves from illegitimate chargebacks, and keep customers’ data secure.

Poor mobile experience

The rise of mobile is a top payment technology trend: as of Q1 2024, smartphones made up 77% of global retail site traffic and were responsible for two-thirds of online shopping orders.⁹

However, this shift from desktop to mobile also contributes to checkout abandonment rates. Mobile shoppers often struggle with:

• Buttons that are too small: Small buttons can be challenging to tap accurately on mobile devices, leading to frustration and potentially causing shoppers to abandon the checkout process.
• Inconvenient form fields: On mobile devices, entering information into tiny form fields can be cumbersome, especially without a keyboard.
• Slow load times: Mobile devices sometimes have slower internet connections or less processing power than desktops, which can lead to longer load times for web pages. Slow loading can test the patience of shoppers, increasing the likelihood of cart abandonment.

Payment processors like PayPal can help enhance and optimize your mobile checkout experience with scalable checkout solutions for both web and mobile. Integrating with streamlined payment options like PayPal, Venmo, and digital wallets can further simplify mobile transactions by minimizing the amount of information customers need to manually enter.