With more people shopping online every day, businesses of all sizes have the potential to reach a global marketplace. However, while it doesn’t matter where you are or what you sell, your business has to be set up right. That means having an e-commerce website that meets the expectations of today’s online consumers.
Convenience and versatility are everything. Customers want a frictionless and secure online experience and expect to pay in a way that meets their needs. To make buying easy, you must think carefully about payment acceptance and payment service providers, and be prepared to integrate all the most popular payment methods into your e-commerce website. If you don’t give your customers enough choice and a smooth route to checkout, conversion rates will drop.
Take a look at these industry-wide figures from Baymard Institute. They reveal very high cart abandonment rates and an average non-conversion rate of almost 70%. Admittedly, some people will only be window shoppers, but others will certainly abandon a purchase if they’re not satisfied with your payment options.
In the battle for online sales, you have distinct advantage if you optimise payments – and not only because it makes life easier for your customers, but also because the right payment strategy will enhance operational efficiency.
Above all, if you want to be a successful international business, catering to all types of consumers and suppliers, you have to understand audience preferences.
Here are six online payment options together with a brief look at some of the names in the payment landscape.
Credit and debit card business payments are a must for any online business, particularly if you operate internationally and want to collect payments instantly and bridge the currency divide. Cards dominate in Europe and the Americas, as shown in a consumer payments survey from GlobalData Plc, while alternative methods such as digital wallets are gaining in popularity in the Asia Pacific region.
Cards facilitate immediate purchases and serve impulse buyers (for example, it’s far more demanding if you have to write a cheque). Consumers expect you to accept card payments, as it’s the norm for online business payments today, so you can’t run a fully-fledged e-commerce business without accepting credit and debit cards.
But, like all payment methods, cards have disadvantages as well as advantages. The trade-off for speed and convenience is processing charges, the risk of fraud, and the possibility of chargebacks when transactions are disputed. However, when accepting card payments with the support of a reliable payment service provider, your business will be in much stronger trading position.
If your business accepts regular payments or has a subscription model, direct debits are an efficient way to get paid. A direct debit allows you to take funds from a customer’s bank account with their agreement. Once a mandate is in place, money will be transferred seamlessly and automatically at defined intervals. Unlike standing orders, the merchant is in control of the payments and can amend amounts when required.
A direct debit is a flexible solution that minimises admin, increases the certainty of payment and helps with cash flow. A SEPA (Single European Payment Area) direct debit is a euro payment that works between different European countries, offering the same ease as domestic payments. However, SEPA is an exception. Normally, direct debits can only be made between accounts within the same country. So, if you have customers from non-EU countries, you should offer other payment methods as there is no global direct debit system.
A wire transfer is when money is moved from one account to another using the global banking network or is sent to cash outlets – a type of payment known as a remittance. Wire transfers are the traditional and long-standing way of sending money, and when money is transferred between banks it usually goes via a network such as SWIFT.
In addition to banks, other financial services companies can act as the money transfer provider for wire transfers. Although reliable, and largely safe, a wire transfer is not necessarily the cheapest or quickest method of payment. In particular, bank charges and inflated exchange rates can eat away at profits.
Statistics testify to the unstoppable rise of digital wallets. According to Juniper Research, half the world’s population will be using them by 2024, while Allied Market Research valued the digital wallet market at at $1,043.1 billion in 2019.
Digital wallets, otherwise known as e-wallets, allow online payments to be made from a secure software-based system, usually a smartphone app, which stores a customer’s payment information. Think of it is an electronic version of a payment card. Using the information in the wallet, customers have a ready-made method of electronic payment.
Digital wallets offer consumers a convenient and simple way to pay, allowing them to store credit cards and debit cards digitally. Although digital wallets are widely accepted, and growing fast, they are not fully available worldwide, so compatibility is still an issue in some places.
A merchant account is a basic requirement if you want to start processing card payments. It holds the funds from card payments until they are authorised and can be transferred into your business bank account. Having your own merchant, rather than via a third party, can mean a more tailored service and better transaction fees. However, it is more difficult to set up and not necessarily the best option for very small businesses.
If you don’t think your business needs a dedicated merchant account, you could use a third-party or aggregated account. While still a merchant account, it’s a shared one. The benefit is that you don’t need to go though the approval process required for an individual merchant account, and it’s often a better bet for smaller businesses with lower transaction volumes and who don’t need the level of customer support afforded to dedicated accounts. But, because third-party merchant accounts often limit volumes, and have slower settlement times, this might not suit your business.
Choice is what today’s consumers expect and choice is what online payment providers offer by integrating a wide range of traditional and alternative payment methods. For more insights into the changing world of payments and how you can strengthen your business, download Safenetpay’s guide to online payment systems.