Payment Methods Optimization
Each market can be uniquely characterized according to what it sells, the customers it attracts, and how it targets them, which makes good sense in the context of business opportunities. But it varies widely from one country to another. In some countries it’s common to make purchases via second-hand servers and auction portals (eBay, Allegro), while official online stores often thrive elsewhere. When should you use the services of auction portals and when is it better to rely on your own web solution? What types of payments should definitely be in your portfolio?
Nowadays, there are a lot of possibilities available, and the ready money in your wallet is not the only way to pay for a new TV. In addition to cash on delivery, you can pay for goods in several other ways — bank wire transfers, using one of the credit systems, e-wallets, and other alternative payment methods. And every customer is different and has their own preferences when it comes to making that final transaction. Some people are willing to enter the number of their credit card directly, while others may be more confident using hard currency, especially in countries with a deeply rooted cash on delivery system. If you’re not offering it for some reason then, maybe you’re “stealing” from your own business.
Is it better to have more or fewer methods available? Let’s take a look at several different payment types now.
- Collection order
Direct transfer via card is one of the fastest transfer methods. The buyer is invited to enter initials of his debit card (VISA, MasterCard, etc.), which are sent to the bank and the money is then taken directly from the account. This method is not very popular in many countries, most notably because of the need of entering the card number each time, possible misuses, information leakages, etc. The exception to this is Germany with its ELV (Elektronisches Lastschriftverfahren), which is accessible to holders of German banks’ accounts, and requires a registration. The ELV is used by more than 35% of shoppers.
- Offline transaction
Another commonly used alternative are offline transactions. After the order is completed, the payment instructions are sent to the buyer via email. They validate the transaction manually via their internet banking. This method of payment is generally perceived as a safer route due to lower risks of having personal info stolen online. This remains very popular in Germany, Spain, and Sweden.
- Paypal
With its simplicity and emphasis on data protection, Paypal has become the most widely used payment method in many countries. It works on the principle of a customer’s wallet being linked to their bank account. Transactions proceed through these Paypal accounts and are charged a nominal fee in return. This is a very popular method which is used in more than 200 countries.
- eWallets
The majority of eWallets work similarly to Paypal, where users have their own accounts linked to bank accounts. They can transfer the credit on these accounts and then pay for preferential conditions or use the transfer directly from their own bank. This is a widespread payment method, especially popular in England where wallets are used as direct payments via credit card and manual offline bank transfer system. Usually such eWallets also come with affiliate programs.
- iDEAL
This payment system is used mostly in the Netherlands. Users enter their payment information via Internet banking where the iDEAL transactions are implemented. This possibility is offered by all Dutch banks in a standard package, and the volume of payments via iDEAL is more than half of all transactions made in eCommerce. The advantage of iDEAL is its data security. No sensitive data is broadcast to the receiver — such as card number, expiration date, etc. Due to the large volume of transactions, the service also sets down the transfer fees, making it a popular choice for a majority of customers.
- Cash on delivery
Surprisingly, this is still one of the predominant payment methods in eCommerce. Its main advantage is clear — the actual payment is done after the delivery of goods. The customer can therefore be assured of the credibility of their transaction, and also avoid both fraudulent online stores or the risk of a package being damaged or lost along the way. The downside for online stores, especially when sending abroad, is the possibility of an unsuccessful delivery and the associated cost of shipping. Due to these disadvantages we recommend reading the warranty terms from various transport companies thoroughly beforehand.
- Mobile payments
Mobile wallets are a convenient and unified method for both online and offline purchases. It’s faster and easier as a tap-to-pay purchase than typical card payments — all you and your customers need is an Internet connection / Bluetooth. Incorporating mobile wallets for merchants means having another communication channel available as well as a valuable data source. And this, in turn, makes it even easier to include personalized promotion or create loyalty programs.
The next step is to take a hard objective look at your own business model and consider the sorts of changes that will contribute to making the shopping process more convenient and accessible. Go to your data and design a solution for a specific group of customers. And at the end of the day, the love and care you’ve extended to your customers will be reciprocated. We’d recommend you go to the All-In-One Dashboard app to see statistics of your own payment methods. The app displays a detailed overview of all the methods you use, and you can track and compare them with other segments such as shipping types, products, revenue, or customer ID to see preferences.
It seems necessary to try as many payment methods possible. Test what fits your business and customers best, and cut off the worst performing methods as you go. Customer satisfaction is a major predictor of a firm’s financial health. Consumers expect simplicity, convenience, and relevance when shopping online or via their mobile device. Optimization of your payment methods will help you increase your ROI. Consider optimizing the design of your payment pages (add security badges, make sure your return policies are clear and convenient, etc.). Try adding local forms of payment to unlock new customer segments.
Choosing the right payment gateway is a marathon, not a sprint. The best method can differ for each online store, so it is advisable to try as many of them as possible (either simultaneously, or individually over time), especially when selling online to multiple countries at once. Make sure you offer enough payment options to satisfy all types of customers. What is absolutely essential is that your payment is secure, so having reputable options such as Paypal available will go a long way towards ensuring that your customers are comfortable with making transactions on your site.
Generally speaking, card payments are more and more seen as a convenient and secure method of payment for goods. At the same time, always be aware of the exceptions which exist from country to country, especially special systems of payment. Whatever route you take, always keep the customer in line, and do your best to accommodate those changes will help bring them to your store and earn their trust.
