A few years ago, an eMarketer report predicted that e-commerce would account for 8.8 percent of total retail sales by 2018, and concluded that the United States is a world leader in e-commerce markets (which composed over 55 percent of worldwide Internet sales in 2014).
Well, it’s 2018 now, and e-commerce is more popular than ever. One reason is convenience: people are taking advantage of delivery services that enable them to shop from the comfort of their homes. Online orders are often more customizable, too—if there is only one version of a product in a physical store, a customer may leave disappointed, but e-commerce gives retailers more time to meet their wishes.
Another reason for e-commerce’s boom is that it offers multiple payment methods. Everyone has a unique situation and comes from a different socioeconomic background, so flexibility is essential for many purchases that only online platforms allow. When businesses give customers more than one way to pay, they open up room for an expansive group of new consumers that previously had limited or no access to their products and services.
Cash, credit cards, and checks are all useful methods—but if businesses want to grow, they need to accept alternative forms of payment that anyone can use.
Benefits of multiple payment systems
Standard payment methods are often suitable, but even the sheer fact that a company allows for other payment modes bestows it with a unique form of credibility. Consumers want to purchase from vendors that are professional and reliable, so even if they do not plan on using anything other than debit or credit cards, accepting payments via PayPal or e-checks communicates that the company wants to make life as easy for their customers as possible.
Some methods are more convenient, too—not everyone has a credit card, so something like wire transfers may be a customer’s only option. There is also the issue of surrendering credit card details, which not everyone is comfortable with. Business Insider notes that in 2016, 46.1 percent of shoppers who abandoned their carts did so at the payment stage and 37.4 percent did so at the checkout login stage. Sometimes this is due to caution, and other times it is simply because users are unwilling to endure the logistics of typing in information. PayU advises that merchants approach this challenge by offering payment options that do not require entering personal information, such as e-wallets and one-tap methods.
Control.com mentions that 50 percent of regular shoppers cancel their purchases if their preferred payment methods are not available. Not forcing consumers to pay a specific way is a beneficial technique for retaining customers: increasing customer retention rates by 5 percent can potentially boost profits up to 95 percent. When customers see that they have a variety of options, they know that a company is doing its best to take care of them.
What are some available payment methods?
There are several alternative methods to credit and debit cards. Here are just a few:
PayPal: PayPal is a famous and trusted electronic payment platform with a friendly user interface. Transaction fees are often involved, but it has built-in trust that customers will feel comfortable with.
Wire Transfer: This method is an electronic funds transfer directly between transactors’ bank accounts (or through cash transfer at a cash office).
e-Checks: Tipalti describes e-Checks as “a payment tool which combines the security, speed, and processing efficiencies of electronic transactions. It is the electronic form of the more traditional paper check, meaning that it has a sound legal infrastructure and business process associated with it.”
E-Checks are trustworthy enough that even the United States Treasury Department has chosen them to be the first (and only) electronic payment method for transacting high-value payments over the internet. Civilians and businesses can acquire them from resources like Deluxe E-Checks and skip the paper hassle.
Cryptocurrency: This route is not exactly mainstream yet, but it is gaining traction. Many companies are hosting Initial Coin Offerings, meaning they develop personal forms of digital tokens that have their own value system. Cryptocurrencies like Bitcoin are famous for their dramatic price fluctuations, but accepting them opens the door to a new kind of tech-savvy consumer—including people who have made fortunes off of these value changes.
Another benefit of cryptocurrency is that it uses blockchain technology. Blockchain is a transparent public ledger, so it removes the need for third-party verifiers and records all transactions made with its system. Cryptocurrency does indeed carry unique risks, but it’s a viable option for consumers hesitant to make exchanges that can be lost thanks to poor cybersecurity or bureaucracy.
There are many methods to make payments in the digital age. Credit and debit cards have their uses, but they also have their shortcomings. Enabling consumers to pay in a variety of ways allows for a broader pool of customers, improving both customer loyalty and profits.
