Why Offering Multiple Payment Methods Boosts Sales

Diverse payment methods have become crucial for business success in the 21st century. Early online stores primarily accepted credit cards, but today’s consumers expect various options, including digital wallets, buy-now-pay-later services, and cryptocurrency. This diversity caters to global customers and enhances accessibility.

This wide range of payment options available to customers online is now available to all businesses. In the 21st century, customers increasingly expect to pay how they want in all situations, from brick-and-mortar retailers to plumbers, hairdressers and bars. It’s more than about cash and cards these days. So, how ready is your business to reap the rewards of this brave new world? 

Different Payment Options For Customers

The rapid growth of the online finance marketplace means that a greater variety of payment options are available for consumers. Each one you don’t offer could result in not making that sale!

Credit and Debit Card

Credit card payments have now been around for more than half a century. They involve borrowing funds from a bank or financial institution to make purchases, which the cardholder repays later, often with interest, in the case of credit cards, and directly from their bank accounts in the case of debit cards. Debit cards provide the convenience of electronic payments without the risk of accruing debt. Both types can offer benefits like rewards and fraud protection. They’re widely accepted and offer secure, cashless transactions, enhancing the ease and efficiency of shopping. 

Digital Wallets

Digital wallets are electronic systems that store payment information for online and in-app purchases across various devices, including desktops and mobile devices. They facilitate transactions without needing physical cards. Examples include PayPal and Google Pay. 

Mobile Wallets

Mobile wallets are a subset of digital wallets designed specifically for mobile devices like smartphones and smartwatches. In physical stores, they enable contactless payments using technologies like NFC (Near Field Communication). Examples include Apple Pay and Samsung Pay. In essence, all mobile wallets are digital wallets, but not all digital wallets are mobile wallets.

Buy Now, Pay Later (BNPL)

Buy Now Pay Later (BNPL) is a short-term financing option that allows your customers to make purchases and pay for them over time, typically in weekly or monthly instalments. This service is often interest-free if payments are made on time. BNPL is popular for its convenience and flexibility, enabling shoppers to spread the cost of their purchases without needing a credit card. Providers such as Klarna, Afterpay, and Affirm offer BNPL options for both online and physical retailers. 

Account to Account (A2A) Payments

Account-to-account (A2A) payments are direct electronic funds transfers between two bank accounts, bypassing intermediaries like credit card networks or payment processors. These payments can be initiated by the account holder (push payments) or by a third party for recurring transactions (pull payments). A2A payments offer increased security and efficiency, making them a popular choice for both personal and business transactions.  

Subscription Payments

Subscription payments are recurring transactions for products or services billed and delivered regularly, such as weekly, monthly, or yearly. Businesses like streaming services, software providers, and subscription boxes commonly use this model. Customers benefit from convenience and continuous access to services, while businesses enjoy predictable revenue and greater customer retention.

Loyalty Payments

Loyalty payments are price reductions and other special offers to customers who can demonstrate repeat custom to a retailer. They have become one of the best ways to guarantee high customer retention and are straightforward to implement using modern technology. They have become particularly popular with large brick-and-mortar retailers such as supermarkets. 

Why Does Offering Multiple Payment Options Boost Sales?

The desire for convenience, speed, and security shapes customer behaviour in e-commerce. As online shopping has evolved, so have customer expectations, particularly regarding checkout.

Frictionless payment processes can result in higher conversion rates

Frictionless payment processes are crucial for higher conversion rates. These processes minimise the steps and effort required to complete a purchase, leading to a smoother and faster checkout experience. HubSpot says frictionless payments significantly reduce shopping cart abandonment and improve conversion rates. For instance, features like one-click purchasing and saved payment details streamline the process, making it easier for customers to complete their transactions.

Consumers abandon carts when their preferred payment option isn’t available

Cart abandonment is a major challenge in e-commerce, with an average rate of around 70%. One of the primary reasons for this is the lack of preferred payment methods. Statista reports that 28% of shoppers abandon their carts if their preferred payment method is unavailable. Offering multiple payment options, such as credit/debit cards, digital wallets like PayPal or Apple Pay and BNPL services, can significantly reduce this issue. A ResultFirst study found that providing various payment methods can lower cart abandonment rates by up to 10%.

Security is a big concern

Security concerns also play a role in cart abandonment. Approximately 17% of shoppers abandon their carts due to payment security concerns. Implementing robust security measures like encryption and fraud detection can alleviate these concerns and encourage customers to complete their purchases.

Understanding customer behaviour in e-commerce and addressing their needs through frictionless payment processes and multiple payment options can lead to higher conversion rates and reduced cart abandonment. By prioritising convenience and security, businesses can enhance the overall shopping experience and drive sales growth.

How to Integrate Multiple Payment Methods in Your E-Commerce Store

Integrating multiple payment methods in an e-commerce store is essential for catering to diverse customer preferences and enhancing the shopping experience. Here’s how businesses can achieve this:

Easy Integration Methods for E-commerce Platforms

• Shopify: Shopify offers a straightforward integration process through its App Store. Businesses can add various payment gateways by installing apps like PayPal, Stripe, or Klarna. These apps are easy to configure and provide seamless integration with the Shopify platform.

• WooCommerce: WooCommerce, a WordPress plugin, supports numerous payment gateways through extensions. Users can install and activate plugins for gateways like PayPal, Stripe, and Square directly from the WooCommerce marketplace. These plugins often come with detailed setup guides, making the integration process smooth.

• BigCommerce: BigCommerce provides built-in support for multiple payment gateways. Merchants can enable gateways like PayPal, Authorize.Net, and Amazon Pay from its control panel, and comprehensive documentation assists with the setup.

APIs and Plug-ins for Adding Multiple Gateways

• APIs: Application Programming Interfaces (APIs) allow businesses to integrate multiple payment gateways directly into their e-commerce sites. For example, Stripe’s API enables custom integration, providing flexibility and control over the payment process. This method is ideal for businesses with technical expertise or access to developer resources since it requires a degree of expertise to implement.

• Plug-ins: Many e-commerce platforms offer plug-ins or extensions that simplify the integration of multiple payment gateways. For example, WooCommerce and Shopify have plug-ins for gateways like PayPal and Stripe, which can be easily installed and configured. These plug-ins often include pre-built integrations, reducing the need for extensive coding.

The Benefits of Using Multiple Payment Gateways

A payment gateway is a technology which facilitates the transfer of payment information between a customer and a merchant, ensuring the secure and efficient processing of transactions.

Having more than one payment gateway is crucial for scalability and business continuity and several reasons:

• Redundancy and Reliability: Multiple gateways ensure that if one service experiences downtime or technical issues, transactions can still be processed through an alternative gateway, minimising disruption.

• Global Reach: Different gateways may offer better support for various regions and currencies. By integrating multiple gateways, businesses can cater to a broader international audience, expanding market reach.

• Cost Control: Different gateways have varying fee structures. Businesses can route transactions through the most cost-effective option using multiple gateways, optimising transaction costs.

• Better Customer Experience: Offering various payment options can reduce cart abandonment rates and improve the overall customer experience, as customers can choose their preferred payment method. 

The Role of Customer Trust and Security

With customers still somewhat wary of using online payment methods, trust and security are both important. When customers recognise and trust the payment options available, they are more likely to complete their purchases. Familiar gateways like PayPal, Stripe, and Apple Pay provide a sense of security and reliability, reducing hesitation during the checkout process.

Fraud prevention and data protection are critical components of building this trust. Secure payment gateways employ advanced security measures such as encryption, tokenisation and real-time fraud detection to protect sensitive information. For instance, 3D Secure adds an extra layer of authentication, ensuring legitimate transactions. These measures safeguard customer data and protect businesses from fraudulent activity and chargebacks.

A well-secured payment system reassures customers that their financial information is safe, which is essential for building long-term loyalty. Incorporating robust fraud protection mechanisms can significantly reduce the risk of fraud and enhance customer confidence. Additionally, compliance with industry standards such as PCI DSS further ensures businesses take the necessary steps to protect customer data. Offering familiar and secure payment methods and strong fraud prevention and data protection practices is crucial for building customer trust and ensuring a positive shopping experience.

Barriers Companies Face in Accepting Multiple Payment Methods

Of course, accepting multiple payment methods brings about multiple potential barriers. Some of the most common may include:  

Fees

Fees can hinder businesses from accepting multiple payment methods due to the added costs associated with transaction processing, currency conversion, and cross-border charges. These fees can accumulate the more parties are involved in the transaction, reducing profit margins. For small businesses, the financial burden of maintaining multiple payment gateways can be significant, making it challenging to offer a wide range of payment options without impacting overall profitability.

Expertise

Multiple payment methods may require multiple different sets of software and apps. Quirks and idiosyncrasies may have to be learned. Not everybody has the time, interest or application to do that, and this can limit the options that some merchants are, in turn, prepared to offer customers. If you are starting on this path and don’t have the technical expertise already on board, it is recommended that you do a lot of research into each payment method first to know what you’re getting yourself into. 

Build vs Buy

In a similar vein, build vs buy decisions can become a barrier because developing a custom payment solution requires significant time, technical expertise and financial resources. Conversely, purchasing a ready-made solution may involve high licensing fees and limited customisation. Both options can become costly and complex, making it challenging for businesses, especially smaller ones, to implement and manage multiple payment methods effectively without overstraining resources.

Localisation

Localisation hinders businesses from accepting multiple payment methods due to the complexity of adapting to different regional payment preferences, regulations, and currencies. Each market may require specific payment gateways and compliance with local laws, increasing operational costs and complexity. For example, integrating for, say, Chinese, British and American customers involves navigating three very different technical and regulatory landscapes, making it challenging for businesses to offer a seamless, localised payment experience globally. 

How Different Payment Methods Cater to International Shoppers

Different payment methods cater to international shoppers by addressing their unique preferences and needs, enhancing the overall shopping experience.

Regional payment preferences vary significantly worldwide. For instance, while credit cards remain popular in the USA, European customers often prefer digital wallets like PayPal or local options like iDEAL in the Netherlands.

Currency conversion and localisation are essential components of international transactions. Offering prices in local currencies helps customers avoid conversion fees and makes the shopping experience more transparent. Payment gateways like Stripe and PayPal provide dynamic currency conversion, allowing customers to pay in their preferred currency. This feature enhances trust and convenience.

To avoid international payment processing fees, businesses can use local payment methods and gateways offering lower cross-border transaction fees. Additionally, setting up multi-currency accounts can help manage exchange rate fluctuations and reduce conversion costs. Negotiating better rates with payment processors and leveraging bulk transaction discounts can also minimise fees.

There are some businesses for which multiple payment methods are essential, and others may be less so. Ask your customers what payment methods they prefer! 

While the costs can build up and there can be barriers, every sale that can’t be paid by a customer’s preferred method could be lost or result in the customer not returning. There are good reasons why so many businesses offer such a wide range of payment options nowadays. Perhaps it’s time you should be thinking about joining them!