The payments landscape has evolved quickly from physical payments such as cash and credit cards to digital payments like Google Pay, PayPal, bank transfers and more. Much like omnichannel capabilities give shoppers agency over their experience, when brands offer multiple ecommerce payment options, they remove barriers to purchase and empower the customer.
Here’s how multiple ecommerce payment options can benefit brands, how to choose the right payments and the various payments favoured by today’s consumers.
The Benefits of Offering Multiple Ecommerce Payment Options
Offering multiple online payment methods benefits customers and brands. Customers get the secure and streamlined shopping experiences they want. Brands and ecommerce businesses achieve a positive impact on conversion rates, cart abandonment, customer loyalty and international sales. Here is a closer look at four benefits of offering multiple payment methods on ecommerce channels.
1. Improved Conversion Rates
DTC ecommerce channels can see conversion rates increase by 30% simply by providing a variety of payment methods. Multiple payment options make it easier for customers to complete their transactions, resulting in less cart abandonment and a streamlined shopping experience that customers enjoy. This amounts to a significant improvement in customer loyalty and retention that can boost sales figures and profit margins.
2. Expanded Audience Appeal
Different shopper segments prefer different payment methods. For instance, Gen Z and Millennials prefer alternative options like mobile wallets, while Gen X and older tend to opt for payment systems like credit and debit cards. By offering a mix of traditional and alternative payment options, brands can cater to more shoppers and attract a wider audience of consumers.
3. Increased International Sales
Multiple payment methods make it easier for ecommerce merchants to attract international shoppers. In addition to different currencies, payment method preferences vary by region and nation, and brands should know what works where. Offering preferred payment methods can give online brands access to lucrative global markets.
4. Better Customer Experiences
Multiple ecommerce payment options ensure a secure and hassle-free purchase that improves the overall customer experience. Customers who have a positive shopping experience are more likely to return again and again to make additional purchases. This type of loyalty leads to a higher purchase frequency, which is a key driver of growth. Happy customers may also recommend an ecommerce store to others, resulting in additional customer acquisition and increased revenue.
How to Decide Which Payment Methods to Offer
So how do brands with DTC ecommerce channels go about choosing the best payment methods to offer to each market? Making the right decisions is critical to ensuring that payment options provide the best return on investment (ROI) while keeping customers happy. Here are a few things to keep in mind when offering multiple payment options.
Know the Audience
Market research helps brands better understand the customer in each region – including their payment method preferences. Since each market has its own unique characteristics and payment preferences, knowing some of those distinctive differences helps. For instance, gender, income level and location can influence payment preferences. Some markets are largely unbanked and rely on cash payments while customers in other markets have enthusiastically embraced Buy Now Pay Later (BNPL). Ultimately, data-driven customer analysis can go a long way in helping DTC ecommerce channels make informed payment option decisions.
Know the Choices
Researching payment choices and how many to offer is critical. As noted, payment preferences vary from customer to customer, so knowing the ins and outs of the various payment methods will help ecommerce channels decide which to offer. In addition to customer preference, brands should understand their own tech stacks and the capabilities of each vendor and what resources are required to add a particular payment method. Here’s a rundown of today’s most popular online payment methods.
- Traditional credit and debit cards. Credit and debit cards remain online consumers’ go-to payment method. Card-based payments accounted for 85% of digital transactions in 2022 and will remain above 84% through 2023.
- Digital wallets. Nearly two-thirds of adult consumers worldwide are now using digital wallet payments. Statista findings show global digital payment gateway transactions will reach $14 trillion by 2027. The most used digital wallets include PayPal, Stripe, Apple Pay, Google Pay, Alipay, Venmo, Dwalla and Zelle.
- Buy Now, Pay Later (BNPL). Research shows nearly 360 million global online customers used BNPL service providers in 2022. That number is growing in the U.S., where 43% of consumers use popular BNPL options like Affirm, Klarna PayPal Pay in 4, Sezzle, Afterpay, Apple Pay Later and Clearpay.
- Cryptocurrencies. Cryptocurrency’s frequent value fluctuations have many ecommerce retailers doubting its long-term viability as a reliable payment method. Still, with 48% of millennials and 32% of high-income consumers using crypto as payments, online stores are increasingly accepting popular cryptocurrencies like Bitcoin, BitPay, Coinbase Wallet, Ethereum and Solana.
Best Practices
- After choosing payment options, brands should closely monitor their performances and examine which payment options customers utilise most. Barely-used payment options take up valuable space in the checkout journey and should be replaced with more effective alternatives.
- While offering every available payment option may be tempting, a “more is better” approach is not advised. Too many options could complicate the checkout process and slow down a website’s performance. It’s best to choose four or five options that will resonate with existing customers while attracting potential shoppers.
- Prominently displaying payment method logos on the checkout page will leave no doubt about the various options available to customers. It also will establish an online brand as a world-class retailer that only partners with the best. Customers will feel good knowing their purchases will be handled safely and securely.
ESW Can Help With Ecommerce Payments and More
Choosing the right payment options is an important decision that might be best handled by ecommerce experts. ESW offers multiple localised payment options in more than 200 markets, which can benefit brands looking into global expansion. Our solutions can help with all aspects of ecommerce payments, including accepting local payments, localised checkouts, and duty and tax calculations. Contact us today to learn more about ESW’s industry-leading ecommerce solutions.
