If you're an existing online e-commerce store owner or someone planning to get started, various things call for your attention to make your business successful. But, the most important of it all is your payment gateway.
Why do we say this?
As per surveys, 25% of people opt out from completing a purchase online due to the absence of their preferred payment method in an e-commerce store.
In this blog, we'll go over what payment modes are, why offering multiple methods is essential, and some of the popular channels your store needs to have.
What are payment modes?
Payment modes, aka payment methods, are mediums used by buyers, online and offline, to purchase goods or services in exchange for money. These payment modes are made of different payment channels.
Depending on the store, a buyer can pay using traditional choices like debit or credit card and cash, or modern options, such as mobile and digital wallets, cryptocurrencies, and buy now, pay later.
Why should you have multiple payment modes?
It opens the door to a large audience base and consumer needs
Online shopping looks different for everyone, as does the payment method they'd like to use. Studies have found that about 44% of buyers are more inclined to trust and consider businesses that provide a preferred payment provider.
So when you offer multiple payment methods, you open doors to attracting a broader demographic of your target audience - millennials who prefer online payment modes like net banking to Gen Z who may choose popular digital wallets.
Provides a competitive advantage & helps cater to new generation needs
Every store puts its best foot forward regarding the deals and discounts they offer online shoppers. While there's a lot of competition in that space, one thing can give you an advantage - offering deals and discounts based on the payment mode chosen.
This psychologically makes the purchase much more lucrative to online shoppers who want to use a preferred payment mode.
It decreases cart abandonment and improves conversions
According to reports, 49% of cart abandonments happen due to significant additional charges, ranging from shipping to taxes and fees levied by payment providers.
So, when you implement multiple payment options, it allows the customer to choose their preferred payment mode and complete a purchase. This has helped businesses reduce cart abandonment rates significantly, driving higher conversions.
It makes mobile shopping much easier
There are a lot of things that have changed in the online shopping space in recent years. One is the growing mobile shopping trend, with about 4 in 10 retail e-commerce dollars spent on the same.
Along with this, Millennials and Gen Z are the highest contributors to mobile shopping with an affinity towards modern payment options, such as mobile wallets and payment apps.
A report by World Pay Global estimates that by 2025, e-commerce will account for 12% of all consumer spending globally, with mobile devices accounting for 59% of all e-commerce transactions.
So, when you add a mix of traditional and modern payment options to your ecommerce store, you are opening doors to business growth.
Less dependency on a single payment provider
Technical glitches come unannounced, and their repercussions can directly impact your e-commerce store. So, if your business relies on only two or three payment options, you're setting yourself up for failure.
With multiple payment methods, you and your buyers don't have to rely on a single payment gateway. The shopper can easily switch between different payment gateways and complete a purchase in a few clicks instead of abandoning it.
Popular payment modes for online shoppers in the US
With over 429 million users worldwide, PayPal is one of the most popular payment methods. Paypal is a digital/mobile wallet that lets users send and receive money without exposing their financial information.
PayPal users can utilize their bank accounts, saved credit cards like MasterCard and Visa, or preloaded monies in their PayPal account to make payments.
PayPal claims that compared to other payment methods, merchants using PayPal have 82% percent higher conversion rates.
Visa is one of the most well-known online payment systems and the biggest credit card brand in the world that uses the Visa network to process payments. In addition to credit cards, Visa has expanded its services beyond credit cards to include debit, prepaid, and gift cards.
Visa card users also get the chance to win rewards, take advantage of travel benefits, receive cash back, and establish a credit history that boosts the purchasing decision. It also charges the lowest processing fees compared to other traditional card options.
Discover is a global credit card brand with roughly 55 million members in the USA. Discover cards function similarly to MasterCard and Visa and can also be used for online transactions.
Discover cards are typically issued by discovery banks rather than credit card companies. These cards are contactless, which makes it easy to complete payments.
A market leader in global payments and technology, Mastercard links consumers, companies, merchants, issuers, and governments. Mastercard offers its card to consumers and businesses that can be used by millions of merchants worldwide.
The card comes with various benefits, including fraud protection, lost card replacement services, and cash back on certain purchases.
American Express (Amex) is a credit or charge card used worldwide. Amex is especially attractive to premium and high-end companies since its cardholders spend, on average, three to four times as much as Visa and Mastercard cardholders.
American Express provides online fraud protection but charges the highest processing and additional fees compared to other payment methods.
The Apple Pay payment system enables customers to make contactless, in-app, and desktop payments. Customers can safely save credit and debit card information in their Apple Pay wallet and authenticate payments by simply scanning their fingerprint on Touch ID or Face ID on an Apple device.
Google Pay is a UPI-based real-time mobile wallet from Google. This platform, which has millions of users, allows users to make payments offline and online using credit or debit cards that are saved in their Google accounts. Using a QR code, UPI Id, or phone number, customers can complete purchases in just a few seconds by entering the MPIN.
Best practices to follow when setting up payment modes
Understand your audience
Every customer has a different buying journey and payment preference; hence, you must start by knowing your audience and their pain points to offer the best solution.
Research their payment preferences
With many payment options available, every buyer will use a different payment method. So, you want to ensure that your online store integrates with the most commonly used payment option.
Look into the nitty-gritty of each channel
Before moving ahead with any payment option, research some basic features like prerequisites, commissions, fees, taxes & charges, etc., to identify their impact on your e-commerce store.
Activate only the ones your customers use
After conducting your study, you should have a list of the top payment gateways. Either integrate them all or go ahead with the most prevalent ones keeping your business goal in mind.
Ensure proactive order status and tracking
An efficient and timely after-sales experience is just as crucial as your customers' purchasing journey. The payment gateways on your online store must stand by their commitments to avoid cancellations, returns, disputes, etc., so check out some reviews to make an informed decision.
Find the most suitable payment options for your business
The need to integrate multiple payment methods has never been more apparent. If your online store is stagnant with limited payment options, the impact will come sooner than later. It will affect your sales and ultimately contribute to the failure of your company.
So, unleash the power of the best payment methods that help attract new customers, improve conversion rates and make customers feel confident about your brand.
While doing so, ensure your objective is to identify the best payment solutions for your ecommerce store, rather than overstuffing your online store with unnecessary payment gateways.
Use the facts and payment methods mentioned above as a starting point to quickly expand your brand awareness and increase revenue.
Do you have PayPal on your online store to receive order payments?