E-Commerce Payments – Should You Offer Multiple Options?
In the era of an ultra-connected age, consumers demand experiences that are fast, simple, and as seamless as possible, more so when it comes to online shopping.
In that regard, checkout is the crucial step of the sales funnel as any hiccups at this stage would lead to shoppers abandoning the payment. To ensure a smooth customer experience, making the buying process as effortless as possible for customers is paramount. And to achieve it, e-tailers must offer simple, safe, and diverse payment methods in their store.
Moreover, the innovations in fintech like e-wallets, in-app purchasing, and peer-to-peer lending and payments make it necessary for e-tailers to offer payment methods that match the times.
Here we are going to explore the benefits of offering multiple payment options and the basis on which e-tailers should choose payment options for their store.
Benefits of Offering Multiple Payment Options
Attract Wider Audience:
By offering numerous payment options, e-tailers can attract a wider audience. Different generations and demographics of shoppers prefer using different payment methods. For instance, Gen Z and millennials prefer payment methods like in-app purchasing mobile wallets and mobile payments, while shoppers from Gen X like to use debit or credit cards. Hence, setting up a range of payment options caters to a wider range of shoppers.
Convenient/ Hassle-free Checkout Process:
As we all know, cart abandonment is one of the crucial issues affecting e-commerce like a plague, and the abandonment rate is as high as 70% globally. One of the factors driving this substantial number is sluggish checkout processes (especially on mobile devices) that cause shoppers to drop and go elsewhere. Hence, offering mobile-friendly payment options would improve the user experience.
Better Brand Profile:
By offering multiple payment options, e-tailers can position themselves as customer-centric businesses and take the resistance out of making a purchase. It will increase the brand profile and credibility thereby increasing sales.
When e-tailers rely on a single payment method, they do not have much say and must depend on the mercy of service providers. Diversifying the checkout options will create a more independent business model and stop e-tailers from relying on just one or two sources. For instance, when e-tailers offer numerous options, technical glitches in one of the payment gateways does not have a direct impact on the revenue.
While offering every payment option imaginable might be tempting, it could make the checkout process messy while also hindering the performance of the website. To ensure the payment options offered will provide the best return on investment (ROI) while keeping the customers happy, choosing the right options is essential. E-tailers can approach the selection of payment options by considering the factors below.
Factors to be Considered while Choosing Payment Options:
Understand Target Segment:
As mentioned earlier, different age groups or demographics prefer different payment options. By understanding the customers based on buyer personas, and data based on previous purchases or customer engagements, e-tailers can make an informed decision on which payment options are best suited to their target audience.
Keep Products Offered in Mind:
Customers choose payment options depending on the financial value of the product they purchase. It might be because of the transaction limits set on the payment options, or due to security reasons. For instance, while purchasing high ticket items like jewelry, shoppers use debit/ credit cards. On the other hand, while purchasing low-ticket items like groceries, shoppers tend to use wallets or the ones that have offers. Hence, e-tailers should offer payment options keeping the prices of their product portfolio in mind.
Know Available Options:
There can be multiple payment options available in the market. But it is advisable to choose those based on their popularity and success rate. Below are some of the well-known options in the industry.
- Digital wallets
- Credit/ Debit card
- Discount codes
- Cash on delivery (specific to some countries)
- Pay later methods
Once the chosen payment options are up and running, e-tailers should monitor sales sources and examine which payment options are performing the best. Any payment methods that are failing beyond a threshold or are barely used and taking up valuable space on the checkout journey can be replaced with more effective options.
While offering payment options that cater to a wider audience is good, but it is always best to invest the most time and resources into the four or five options that are most likely to resonate with the primary customers while attracting other potential shoppers as well.