Top 6 Payment Methods Used in eCommerce
Did you know that 7% of US shoppers have abandoned the cart because they didn’t find their preferred payment method? Add to them 18% of consumers that dropped the cart due to the poor checkout process that was too long and complicated. The result is a low conversion rate that translates to lost orders worth thousands of dollars.
The good thing is you can solve the problem by introducing online payment options on your platform that will appeal to most of your customers, ideally to all of them.
Let’s go over the best payment methods for a seamless, one-click checkout process that will take your business website to a whole new level.
Most popular payment methods for eCommerce
As eCommerce has evolved, so has the number and diversity of payment methods available to merchants and shoppers. If you want to boost the conversion rate and extend your customer base, you must be aware of diverse options potential customers have an interest in.
Thanks to the ubiquitous use of smartphones and the more accessible Internet, you can expect an explosion in digital payments. The worldwide pandemic has accelerated the adoption of mobile & e-wallet options as both merchants and consumers increasingly turn to contactless payments.
Read on for the details.
1. Digital wallets dominance
This is the fastest-growing payment method in eCommerce, projected to account for more than 52.2% of global eCommerce sales by 2023. The usage of virtual wallets will be more than all other payment options combined.
Digital wallets, also known as e-wallets, refers to all types of digital payment systems which allow performing money transactions without a physical card. To start using the e-wallet, a user needs to link the bank account or card once, following which the details are stored securely in a wallet. There is no need to input this data every time a user wants to complete a purchase. Hence, the checkout process is reduced and your consumers will definitely appreciate it.
Merchants that provide these methods enable shoppers to conclude a purchase faster and easier, thus improving checkout and minimizing abandonment.
PayPal, AmazonPay, ApplePay, GooglePay are some of the widely used digital wallets, which help the user authenticate faster by employing smartphone’s biometric capacities.
2. Credit & debit cards still rule
Card payments have been the most widely used way to pay on the web for around a decade until e-wallets grabbed part of their market share in the last few years. Nevertheless, they are likely to be among the preferred payment options for many consumers due to security. According to a Pew survey, customers consider credit cards the safest option for money transactions as they have been regulated for many years by global compliance standards.
Visa and Mastercard are the major international payment networks covering nearly 50% of all cards worldwide and more than 85% in Europe. There is a myriad of local cards used globally, like Deliver and American Express, which you can think of as well.
3. Bank transfers for extra security
This is a reliable and time-proven payment method with an extra layer of security. Each transaction requires authentication through the user’s internet banking since the payment is performed from their banking accounts with their own funds.
Bank transfer redirects the customer to their online banking portal to log in and confirm the payment. It takes only a few clicks to complete the procedure that is quite comfortable.
4. Mobile payments gain momentum
The adoption of mobile payment solutions is accelerating worldwide and is driving growth in cashless transactions. They offer a quick and frictionless way of making payments via smart devices.
There are dozens of free-to-use mobile payment apps available on the play store – Zelle, Xoom, mBill to name a few in addition to mentioned GooglePay and ApplePay wallets. After connecting the bank account to the app, a customer can make fast mobile purchases on eCommerce websites by approving the payment request.
Here is a table demonstrating mobile payment adoption by country.
5. Buy now, pay later
Buy Now, Pay Later is a point-of-sale (PoS) solution representing an alternative payment method that caught the interest of many shoppers, predominantly millennials.
Retailers providing this instant lending solution enable shoppers to buy a product and have it delivered while paying overtime in installments. This option often comes with extremely low or no fees for customers. Moreover, a user doesn’t need to open up a credit card. Plus, the pay later process is quicker and easier than a rigorous credit check.
Upon choosing this option, a customer will need to provide a little personal data like the name, date of birth, email, and billing address data for lending approval. Once it’s approved, the purchase is completed. For merchants, the sale is done as further the customer interacts directly with the lender regarding repayment.
As Worldpay Global Payments Report 2020 states, this payment method takes just 1.6% of all eCommerce transactions, though it’s projected to rise. Some PoS solution providers include Klarna, Affirm, Bodega, and others.
6. Cryptocurrency era approaching
Cryptocurrencies are the most exciting financial instrument making headlines today. Numerous virtual currencies are already widely recognized, such as Bitcoin, the most valuable coin, Ethereum, Bitcoin Cash, and many more.
They offer a lot of advantages to the eCommerce business. The lack of chargebacks and refunds as well as high-security features makes crypto attractive to merchants. Virtual currencies are beneficial for making pretty fast cross-border transactions charging the lowest transaction fees on the market. Crypto payments are most popular among a highly educated, tech-savvy customer base. However, its usage grows every day, and within a few years, it will be much more in demand as a payment method.
Well-known brands like Starbucks, Shopify, Overstock, and thousands of merchants are already accepting crypto, taking advantage of being first-movers and attracting technologically inclined shoppers. What’s more, you can start accepting cryptocurrencies with relative ease by using a platform like BitPay or mobile applications like Square Cash.
Payment gateways for an eCommerce site
To make the above-mentioned payment methods work, you have to implement one or several payment gateways. The choice of one depends on the quantity and the range of payment methods they support. So select the one that best suits your customer demands.
Consider integrating some of these top software systems that enable fund transfer authorization:
This is the best choice if you plan to accept different payment methods both online and offline. It supports card payments from all countries. It’s also possible to add ApplePay, GooglePay, Visa Checkout, and others by integrating them with the Stripe gateway. Additionally, it offers rich customization features that allow you to establish a frictionless checkout process.
This is a reliable brand company that has credibility in the eyes of many users. It’s easy to implement and start accepting some common payments, including cards.
Other popular eCommerce payment gateways to consider include:
- Amazon Pay
How ApexTech can help
Implementing some payment systems will require software development specialists. We have vast experience setting up e-wallets, Stripe, PayPal, and other systems with regard to industry regulations. ApexTech team will be happy to help you decide on the best fitting solution for your business and its seamless implementation.
Merchants should balance between providing choices for their customers and the resources needed to implement and manage all those payment options.
The advantage of offering multiple online payment options is an improved checkout process, which will ultimately result in boosted conversions and increased sales. Analyze your target audience to understand their preferences while keeping in mind the alternative options that slowly rise in demand. Being one of the first adopters of a new payment method may bring you a competitive advantage. It’s time to join the success story.