Online retailers in the UK lose around £1.8 billion annually due to inadequate payment methods. A study revealed a vital need for online retailers to offer multiple payment methods. Around a quarter of the respondents also said they would abandon a purchase if they could not use their preferred method to pay.
As a merchant, it is becoming more pressing to have various payment methods available for your customers to make purchases according to their payment preferences.
What types of payment methods are available?
Due to the existence of a large variety of payment methods, it can be hard to keep track of which ones your customers are using to pay for their purchases. Some of the most popular payment methods are:
Debit and credit cards
Digital wallets
Buy-now, pay-later (BNPL) options
Cryptocurrencies
Most online business owners think they must choose a single payment gateway or provider to start a successful e-commerce business. However, this approach does not always work for all businesses. Having multiple payment methods is crucial for online retailers to grow their customer base and make their operations more profitable.
What are the common payment methods?
Some of the most popular payment methods include:
1. A wire transfer is a type of electronic money transfer that can be made between an organisation or an individual. It can be done through a cash office or a bank account.
2. With PayPal, people and businesses can easily send and receive funds online. It is currently regarded as the world's leading online payment platform.
3. An automated clearing house (ACH) is a network that enables financial institutions to send and receive funds through a standardised settlement timetable and initiation format.
4. An e-cheque is an electronic form of a paper cheque that combines the security and processing capabilities of an electronic transaction. It is also the first and only payment method that can be used for high-value transactions online.
5. A credit/debit card is a type of card that allows people to make payments using their bank accounts.
Benefits of having multiple payment methods
Some benefits of having multiple payment methods include:
Appeals to a wider demographic
People have different payment preferences. For instance, some prefer to use their debit cards as their main payment method. Others prefer to use digital wallets or PayPal to make purchases.
Although it is not always possible to separate a customer's demographics based on their choice of payment method, it is generally beneficial for online retailers to have multiple payment methods available to appeal to a broader demographic.
Also, one of the most effective ways to attract new customers to your business is by explaining that it processes payments using traditional methods while embracing the latest technology to appeal to a younger demographic. This strategy will allow you to retain customers and attract more by allowing people to pay using various payment options, such as PayPal or Venmo.
Sales via smartphones are growing, hence the need for multiple payment methods
Due to the coronavirus pandemic, the number of people shopping online has increased significantly. In addition to traditional desktop sales, the number of people making purchases with their smartphones has also increased. According to a study byOberlo, more than three out of every four dollars people spend on online purchases are now made using a mobile device.
While traditional methods such as credit and debit cards are still commonly used, other payment options, such as mobile-only platforms, are becoming more accepted. Mobile payments have become an integral part of the lives of millennials and Gen Z. They are often used to make purchases through apps and mobile wallets that allow users to earn loyalty rewards. To cater to this demographic, many retailers are now offering payment gateways that allow users to make purchases conveniently.
Increased conversions and sales
One of the biggest reasons online retailers have multiple payment methods is to increase their conversion rates. If customers add products to their shopping carts after visiting your site, you want to ensure that they will continue doing business with you by offering their preferred payment methods.
Being able to offer multiple payment methods can also boost customer loyalty. People are more likely to make repeat purchases if the payment process is made easier.
Security
It is important to protect the information your customers provide before they share their banking details with you. A PCI-compliant payment gateway can ensure that your customers' data are safe. Having multiple payment methods provided by PCI-compliant providers will allow your customers to understand that their information is sent and received in an encrypted manner.
Decreases cart abandonment
If there is a high number of abandoned carts on your site, then a lack of available payment methods may be causing the issue.
Another common reason people abandon their shopping carts is due to the high cost of shipping. Also, window shoppers might add products to their carts to remember them or try to figure out what payment options are available without following through with the purchase. Multiple payment methods can help to decrease the number of people abandoning their shopping carts. They will no longer be reluctant to make a purchase because their preferred payment method is available.
Enhanced brand perception
Being able to offer multiple payment methods can also boost the credibility of your brand. The availability of multiple options on your site's checkout screen can make it look more professional and secure. After all, trust in a certain company is transferred to you through association.
How to use multiple payment methods online
Getting the best possible return on your investment while maintaining customer satisfaction is very important when offering payment methods. Unfortunately, offering multiple payment methods can also complicate the purchasing process. Before you start offering multiple payment methods, it is important that you thoroughly understand your customers and their needs. Having the right tools and resources can also help you manage the process.
By conducting thorough research on your potential customers, you will be able to identify which payment methods are ideal for them. This step will also help you gather information about your buyers' past purchases.
When you are fully operational with your payment methods, keep an eye on your sales sources to see which options are performing well and which ones are taking up too much space in your checkout process.
Checkout with multiple payment methods
If omnichannel retail is about fulfilling a customer's desires in any way possible, should "pay in any way" be added to the definition? It is clear that customers prefer to pay with the most convenient options, which is why you should offer various payment methods, both traditional and emerging technologies. Most customers prefer to use a channel and method they are comfortable with, which is why you must make the checkout process as easy as possible. Limiting the number of payment methods can make it feel like customers are being cornered or frustrated. Ultimately, people want to have more options.
Our e-commerce multiple payment solutions
The goal of a payment solution is to maximise conversion rates and minimise costs and lengthy efforts associated with it. By integrating the best providers globally, you can achieve this objective.
At APEXX, we can help you optimise your online payment setup, build an aggregate tool for BNPL services, and centralise your payments flow to simplify a complex payments ecosystem for you.
