Small firms paying out thousands in refunds in 2020


Date: 8 December 2020

As online shopping has increased during the pandemic, so too has the number of shoppers returning items to get a refund.

Changing consumer behaviour - including a fall in cash payments and a rise in online shopping - is driving an uplift in the number of shoppers seeking to return their purchases. New data from Paymentsense has revealed which parts of the UK are hotspots when it comes to shoppers asking for refunds.

According to Paymentsense, pre-pandemic shoppers were returning a huge £7 billion purchases every year. Its data shows that this year (between May and October), many businesses in towns and cities across the UK were having to pay out hundreds of pounds in refunds.

The biggest hotspot in the UK is Bolton - businesses there paid out £1,300 in refunds per month between May-October this year, almost twice as much as any other UK town or city. Milton Keynes refunded just £265 per month.

The top ten hotspots for high levels of refunds are:

  • Bolton (refunding £1,330 per month);
  • Southall (£686);
  • Reading (£562);
  • Oxford (£549);
  • Bromley (£491);
  • Preston (£484);
  • Walsall (£475);
  • Perth (£465);
  • Romford (£412);
  • Ipswich (£392).

One of the biggest problems facing small businesses is the number of unscrupulous shoppers who ask for their money back on an item that they have actually received, claiming that the parcel has not been delivered.

One so-called "serial refunder" said: "I always say my parcels haven't been delivered. I look through the hole in my door and if the courier doesn't take a picture of the item to prove it's been delivered, I would just say I didn't receive the item. I don't make it obvious though, maybe one in every four parcels I get I will try and get a refund for. Works every time."

Out of the UK's largest cities, Bradford, Derby, Newcastle, Southampton and Portsmouth are costing small businesses the most in refunds. The data also shows that shoppers are seeking the most refunds from home and furnishings businesses, at an average of £787 per month.

"With the pandemic still restricting access to high street stores, consumers have turned to online shopping. With this increase, naturally, we've seen more refunds," said Jon Knott, head of customer insights at Paymentsense.

"Many ecommerce retailers have made their returns process easier - through couriers, drop off points and signing up to Buy Now, Pay Later schemes. So shoppers could be buying more, knowing that they can send items back at the click of a button."

However, Knott has warned shoppers that refunds are not without pitfalls. "Shoppers need to be aware that refunds aren't processed and deposited straight away," he said. "It's always worth giving a company's refund policy a read before purchasing, to avoid overspending before payday, or being left with unwanted vouchers."

Written by Rachel Miller.

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