By broadening your payment acceptance methods, you can cater to your customers' needs and, ultimately, help drive revenue. Here’s a quick look at how you can make alternative ways to pay work for you.
Give customers a choice
Consumers use a wide variety of payment methods, including mobile apps, digital wallets, cards, cash on delivery, and online bank transfers. When given the choice, consumers may favor businesses that accept their preferred payment method.
Digital payments vs. digital wallets
There are a lot of terms when it comes to alternative ways to pay. One of the most common is digital wallets but there’s also digital payments and alternative payments—so what’s the difference?
Digital payments are payments made via electronic methods, typically through eCommerce sites. The merchant and customers do not exchange cash.
Digital wallets are generally financial accounts that allow a user to store cards or funds on a device to make a payment. Examples include Apple Pay, Google Pay and Alipay.
And, finally alternative payments are any form of payment outside of traditional card payments. This includes bank transfers, direct debits and reference voucher cash payments. Sometimes alternative payments are only offered in a certain region, causing them to be more challenging to process outside of their local ecosystem. Alternative payments can also include popular payment methods such as eWallets, like PayPal and WeChat or installment payment platforms like Affirm or Klarna, which offer several Buy Now, Pay Later (BNPL) options.
Alternative payment methods
Alternative payment methods continue to rise in popularity. Heading into 2019, industry data predicted 55% of global eCommerce payments1 would be made using alternative ways to pay. With online payment regulations like PSD2 and open banking coming into effect, alternative payments have emerged as an excellent way to provide a convenient path to purchase, while also maintaining compliance. Additionally, these expanded payment methods can help improve the customer experience and are becoming popular with younger generations. According to PYMNTS’ Buy Now Pay Later Report (BNPL), installment payments are popular among Gen Z consumers as well as younger, credit-shy groups like millennials.2
Streamlining the customer experience
Consumers are adopting new payment methods to eliminate data entry and streamline their purchases. Digital wallets and alternative payment methods can offer a remedy for online friction in the digital checkout flow—streamlining the payment experience and helping boost customer loyalty and conversion rates.
Boosting your bottom line with broader payment acceptance
Not only is frictionless commerce providing a better experience for customers, it’s also pushing better margins for retailers.
In a recent survey:
- More than 25% of respondents said they would tolerate slightly higher prices for a simple check-out procedure or a “one-click” purchase4
- 40% said “fast and convenient checkout and payment options” would improve loyalty2
- More than 3/5 of digital commerce enablers said Digital wallets were driving up customer visit frequency2
- Approximately 25% of installment payment users (BNPL) have canceled their credit cards2
Overcoming common barriers
- Lack of knowledge. Determining which payment methods are relevant for your business and target markets is the first step. The top ten merchants average 10.5 accepted payment types6. If you aren’t sure where to start, feel free to reach out to us.
- Integration time and cost. Consolidating integration work for merchants is a must. With an all-in-one platform, you can make updates through a single API, allowing you to easily accept new payment methods.
- Complexity of relationships, contracting, negotiation. Consolidating contracting and negotiation is another must for busy merchants. By moving to one platform, you can more easily find the information you need regarding settlement and complex terms. With a single source of truth at your finger tips, you can streamline operations and simplify expansion.
So don’t let these common barriers stop you from accepting the payment types your customers prefer. Do your homework and know that we’re here to help.
1 Jordan Dooley. Why Alternative Payment Methods are Shaping the Future of E-commerce, Klarna, Feb 26, 2019
2 Buy Now, Pay Later Tracker©, PYMNTS.com, December 2019
3 Visa Global Merchant eCommerce Study, 2020
4 Voice of the Connected Customer: Digital Wallets, June 2019
5 X-Border Payments Optimization Index Q1, PYMNTS.com, 2017