3 Alternative Payment Methods You Need for Your Online Store
October 5, 2020
It can be hard, period, to get a prospect to the point where they're adding items to their cart.
Before you reach that stage of the sales funnel, it usually costs a small fortune in direct advertising and organic search engine optimization to attract visitors to your store. On top of that, you'll need to invest in high-quality web design and marketing copy in order to convince them to consider making a purchase.
Reducing your cart abandonment rate by even just a few percentage points would result in much more revenue for your store. Below, we'll review one of the most effective ways to lower your abandonment rate: offering multiple payment methods.
The Benefits of Offering Multiple Payment Methods
Offering multiple payment methods in your online store isn’t optional anymore — it’s a necessity.
Consumers expect to have multiple payment options to choose from during checkout. Some of them will even leave your website without completing their purchase if their favorite payment method isn’t available. In fact, 6% of all abandoned shopping carts are abandoned because shoppers couldn’t use their preferred payment method.
Offering multiple payment methods creates a more convenient shopping experience for your customers. This, in turn, helps to reduce cart abandonment and improve conversion rate, allowing you to generate more revenue from your customers.
Supporting multiple payment methods is also a great way to secure your business from any issues that may arise with a particular payment method, whether this is due to a technical glitch or a scandal. In case of an issue with one of your payment options, you can simply direct shoppers to use one of the other payment methods you support.
To determine which specific payment methods you should add to your store, you'll need to consider the demographics of your average customer. For example, it's important to have a PayPal option if your customers are relatively young, as PayPal is used by 32% of millennials. If your customer base is on the older side, American Express is a must-have payment method — 28% of seniors own an Amex card.
What to Look for When Deciding on a New Payment Method
So, you’ve decided to expand your business’ payment options by adding a new payment method. However, you’re not sure which payment method you should implement.
Here are factors to consider.
When deciding on a new payment option, you should first consider which payment methods your customers use.
A great way to do this is to email your customers a quick survey where they can tell you which payment methods they prefer, as well as which ones they’d like to see implemented in your online store. You could write out such a survey manually, but ideally you'll have an email marketing app with a survey feature to make this process easier.
Apart from customers’ preferences, you should also consider fees when evaluating a payment method.
You’ll want to find out what costs are associated with accepting payments with a particular method, including setup, maintenance and transaction fees. Also, keep in mind that your ecommerce platform may offer special rates on certain payment gateways — for example, the BigCommerce Plus, Pro and Enterprise plans have reduced PayPal transaction fees.
Off-Site or On-Site Transaction Processing
Additionally, consider how you’d like transactions to be processed. Are you fine with having shoppers directed off-site to complete their purchase, or would you like them to stay on your website throughout the entire checkout process?
If it’s the latter, this will limit the number of options you have available when it comes to choosing a new payment method to implement. But this more seamless interaction is also better for customer experience.
Going further, if you get orders from customers located all around the world, you might want to consider opting for a payment method that supports multiple currencies and allows customers to pay in their local currency. Indeed, this feature is absolutely necessary for stores that depend on international sales.
Finally, your new payment method should have a plugin that makes it easy to integrate with your ecommerce platform. There would ideally be no need to develop a custom integration solution, although it's possible to add any payment method that has an API available.
Top 3 Ecommerce Payment Methods
While the best payment methods for your store will depend on your specific needs, a few options stand out as being a good fit for just about every ecommerce business.
In this section, we’re going to cover three such payment methods in detail.
Apart from being convenient, Google Pay is also a very secure payment option that uses virtual account numbers to avoid sending customers’ card details to merchants. Plenty of businesses have already implemented Google Pay and seen great success by doing so. A great example is LARQ.
Two-thirds of LARQ’s transactions are completed using mobile devices, which made the company look for payment options that would simplify mobile checkouts. After implementing Google Pay, the brand experienced improved checkout speed and accuracy, increasing its conversion rate by 20% and resulting in reduced cart abandonment.
Another example is Thrive Market, which used Google Pay to improve customers’ monthly order frequency by 27% for customers paying with Google Pay. This resulted in a 17% increase in customer monthly spend.
Then there’s SpotHero, which experienced a 20x increase in conversions, a 150% improvement in customer retention rate and a reduction in the amount of customer support calls — all thanks to Google Pay.
There are no fees for merchants or shoppers to use this payment method. Another benefit is it's usually quite easy to integrate with your ecommerce platform. For example, in Shopify you can activate Google Pay as a payment option with just a few clicks. And it's also available on BigCommerce and Magento.
2. Amazon Pay
Amazon Pay is designed to simplify checkout for existing Amazon users. It completely eliminates the need for a customer to enter their billing or shipping details when checking out because it uses information already available in their Amazon account. This significantly speeds up the checkout process, allowing you to convert more shoppers and reduce your overall cart abandonment rate.
Using Amazon Pay is also a great way to associate your business with Amazon’s brand, making the 197 million consumers who regularly shop at Amazon feel more confident about buying from you.
Another benefit of using Amazon Pay is that it includes Amazon’s A-to-Z Guarantee. Through this, shoppers are eligible to receive a reimbursement of up to $2,500 of the item’s purchase price if a merchant failed to deliver the order within the maximum estimated delivery date or delivered a defective or damaged item. Knowing that their purchase is protected by Amazon, shoppers will be feel much safer making a purchase through your business. Thanks to Amazon Pay, they’ll also be able to track their order on Amazon.com, regardless of which website they used to make a purchase.
Amazon Pay integrates effortlessly with most major ecommerce platforms, including Shopify, BigCommerce and Magento. And for each Amazon Pay transaction, there's a 2.9% + $0.30 transaction fee.
As an online retailer, you’ll also want to know that Amazon offers 24/7 support for merchants using Amazon Pay. It also provides them with an easy way to manage disputes and chargebacks through the Amazon Pay dashboard.
Here are just some of the businesses taking advantage of the benefits of Amazon Pay:
Felix Gray: In an effort to reduce checkout friction and create a faster checkout experience, this eyewear brand implemented Amazon Pay in its online store and improved checkout speed by 60% while increasing the repeat purchase rate by 25%.
NatoMounts: After implementing Amazon Pay, 47% of the brand’s customers started using it as their preferred payment option. These customers have shown to be 11.4% more likely to become repeat buyers.
Apple Pay is a great payment option for all the Apple users in your customer base. It’s convenient and allows users to check out using either Face ID or Touch ID, which greatly simplifies the checkout process.
Apple Pay is compatible with most modern Apple devices and is currently enabled on more than 383 million iPhones worldwide. Apart from online, Apple Pay can also be used offline at locations that accept contactless payments. It supports guest checkout, too, allowing shoppers to complete their purchase without having to create an account.
Apple Pay is also a very secure payment option. It uses a token system that takes advantage of an encrypted payment token containing all the information that’s needed to complete a particular transaction, including a device-specific account number, the order amount and a unique cryptogram.
This means there’s no need for your business to handle customers’ credit card information.
Merchants have used Apple Pay to boost mobile conversions by 20%, as well as increase desktop conversion rate by 15%. Some retailers have also seen an increase in average order value for mobile customers. Additionally, Apple reports that businesses that implemented Apple Pay have experienced increased purchase frequency and customer loyalty, as well as reduced checkout time.
There are no fees involved with using Apple Pay, and it's also easy to activate on ecommerce platforms such as Shopify and BigCommerce.
Implement Additional Payment Methods and Boost Your Conversion Rate and Revenue
If you run an ecommerce business, you most surely already accept credit card payments. Perhaps you even allow customers to check out using PayPal.
However, if you want to boost your conversion rate, reduce shopping cart abandonment and provide a better shopping experience for your customers, you’ll want to look into implementing additional payment methods.
Google Pay, Amazon Pay and Apple Pay — these are just the start. As more payment methods are introduced and consumer behaviors evolve, you'll want to look out for additional ways to serve users and may it easy for them to buy from you.
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Boris Mustapic is a writer and content marketing specialist with a decade of experience in the digital marketing industry. Having built his own successful ecommerce business, he likes to share his knowledge with ecommerce enthusiasts. Apart from writing about marketing and ecommerce, Boris also enjoys a good book and a glass of red wine.