As a business owner, selecting the appropriate online payment methods is not just about facilitating transactions - it's also about enhancing customer experience and boosting your revenue. Studies have even shown that accepting credit card payments can significantly increase sales.
By understanding the options available and tailoring them to your specific business needs, you can create a seamless payment process that benefits your customers and your business. Let's explore online payment methods and how you can navigate them effectively to support your business growth.
The Importance of Choosing the Right Online Payment Methods
Selecting and effectively implementing the right range of payment methods will impact your customers' checkout experiences and, therefore, your business overall.
Greater Cash Flow
Providing popular electronic payment methods at checkout has a significant impact on conversion rates. When customers can pay with the method they are most comfortable with, it increases the likelihood that they will complete their purchase, ultimately leading to more sales for your business. Some companies have even reported after beginning to accept credit card payments alone.
Exploring payment options can also impact your global business. Different payment methods are preferred in different parts of the world. By offering various payment options, such as an ecommerce merchant account, you cater to customers' online transaction preferences and habits in various regions.
Staying Competitive
The ever-evolving nature of payment methods also makes it essential to stay updated and adapt to new trends. New payment methods are constantly emerging, and embracing these innovations can give you a competitive edge. By keeping up with the latest payment options, you can meet your customers' evolving needs and expectations.
Online Payment Methods
When it comes to online payments, there are a handful of key options to understand. By offering a variety of popular payment methods, you give your customers the flexibility to choose the method that suits them best, increasing the likelihood of completing a purchase.
1. Credit and Debit Cards
Credit and debit cards have become the go-to payment method for people worldwide who shop online. These cards provide convenience and security, making them an ideal choice for customers and businesses.
With credit card transactions, companies like Visa, Mastercard, American Express, and Discover cover the cost, allowing customers to pay their card balance each month or over time. Using credit cards, customers can make big purchases without necessarily having a lot of cash in hand.
On the other hand, debit cards deduct money directly from the purchaser's bank account, ensuring that customers only spend what they have available. With debit cards, insufficient funds in their account will lead to a declined transition. This helps consumers stay within their means and manage their finances responsibly. As one of the closest things to direct cash payments, these debit cards offer a low risk of fraud overall. If you're setting up this payment type for your business, our guide to debit card processing walks through rates, interchange, and what to expect at setup.
Both credit and debit cards offer speed and convenience compared to other payment methods like bank transfers or checks.
From a business standpoint, offering customers the option to use credit and debit cards can significantly increase revenue. Research shows that customers spend more when using credit cards than cash. However, it's important to note that while common payment methods, credit and debit card payments come with transaction fees. For merchants, debit card transactions generally incur a fee of less than 1% of the purchase price, while major credit cards may have fees of up to 3.5% of the purchase price. As with most fees, these are handled by payment processors but will affect merchant profits, especially for high risk merchant accounts.
2. Mobile Wallets
Digital wallets like Apple Pay have revolutionized how we make payments, and their popularity is expected to grow in the coming years. According to The 2021 Survey and Diary of Consumer Payment Choice, 66 percent of consumers had already used a mobile payment option for their purchases or to transfer money to others by 2021.
Today's contactless payment services like Apple Pay, Google Pay, Samsung Pay, Venmo, and Cash App link to a customer's credit card, debit card, or bank account. These apps are generally found on smartphones or other smart devices like smartwatches or tablets. They allow customers to easily "tap-to-pay" at point-of-sale terminals in-store or in online shopping carts. They can also easily transfer funds directly to friends and family.
Even with the growing popularity of digital wallets, many businesses have yet to take advantage of the alternative payment method. While it's true that businesses might incur a significant cost to upgrade their point of sale (POS) terminals to accept the "tap-to-pay" feature, it may be a worthwhile investment. By embracing mobile wallets as key electronic payment methods, companies can stay ahead of the competition and offer customers a more convenient and modern electronic payment option.
3. BPNL
Buy now, pay later (BNPL) is another alternative payment method that has gained immense popularity, especially in online shopping. It allows customers to make purchases on credit without needing a credit card. With BNPL, customers can spread their payments over time, typically in installments, making it a convenient option for those who want to manage their expenses.
The popularity of BNPL has led to increased options available to customers. Today, there are several well-known providers in the market, such as Shop Pay Installments from Shopify, Affirm, Afterpay, Sezzle, PayPal's Pay Later, and Klarna. Providers don't require any upfront fees, making it even easier for customers to use this payment option.
Customers who opt for BNPL typically pay back the loan in installments, usually without any interest, as long as they make their payments on time. This flexibility encourages customers to spend more than they might with cash, debit cards, or even traditional credit cards. While this can be advantageous for customers, they must stay on top of their payment schedule to avoid additional fees or interest charges.
From a retailer's perspective, partnering with BNPL providers can be beneficial, as it opens up new opportunities for sales. However, it's essential to note that BNPL providers often charge higher percentages to retailers compared to traditional credit card providers. This can range from 2% to 8% of the purchase, significantly higher than other options.
4. Bank transfer
Bank transfers are a popular method for making large purchases, especially in real estate. They involve transferring money from one person or business account to another through the Automated Clearing House (ACH) network or via direct bank-to-bank transfers, known as wire transfers.
One of the main advantages of bank transfers is their high level of security. When a payment request is initiated, the funds are transferred directly from one account to another without the need for intermediaries or third-party processors. This makes bank transfers a trusted option for those who prioritize the safety and confidentiality of their transactions.
Unlike other payment methods, bank transfers typically involve a one-time fee rather than a percentage-based commission. This fee, which may apply to both the sender and receiver, covers the costs of processing the transfer.
Drawbacks to bank transfers start with their much longer processing time compared to other payment methods. The transaction can take several days to clear, making bank transfers impractical for small online purchases and immediate payment requirements. Additionally, the one-time payment processing fees associated with wire transfers are relatively high, making them less feasible for smaller transactions.
5. Autopay
Autopay has become the bread and butter for various services, from credit card bills to utility bills, monthly subscription merchant account payments, electronic bill payments, and even scheduled charitable donations. This electronic payment option allows customers to schedule automatic purchases, eliminating the need to repeatedly authorize payments for recurring expenses.
Customers and businesses alike benefit from autopay for its convenience and consistency. Customers can avoid late payment fees and enjoy subscriptions without the hassle of re-purchasing every month, and businesses can retain customers easily.
Selecting Your Business's Online Payment Methods
When it comes to choosing the right online payment solution for your business, carefully evaluate these factors so that you can select the online payment methods that best suit your company:
User Experience:
User-friendliness should be at the top of your list for electronic payments. Providing your customers the option to use their preferred payment method will smooth their experience and increase customer satisfaction.
Options that integrate into your existing e-commerce platforms will also make it easier for internal personnel to use, ensuring greater success. A payment gateway can help connect your online checkout to your payment processor, securely transmitting payment information so customers can complete their purchases.
Security
Security features and compliance should also be a priority. Compliance with industry standards such as PCI DSS is non-negotiable. Additional security measures should include fraud protection and encryption.
Processing Time
Payment methods that process transactions quickly and settle funds promptly can enhance operational efficiency and customer experience. On the other hand, delays in payment processing may result in customer frustration and potential sales loss. Ensure that the payment options provided offer customers efficient and prompt service.
Customer Support
Select payment methods with strong customer support, such as various communication channels and fast response times. Dependable service helps address issues promptly, minimizing business disruptions and upholding customer trust.
Accept a wide range of payment methods with Zen Payments
Accepting a wide range of payment methods is crucial for any online business, and you can do just that with Zen Payments. Our custom payment processing plans are tailored to your business needs, ensuring you have the flexibility to meet your customers' preferences.
Don't wait any longer to streamline your online payment process. Contact Zen Payments now and take the first step towards making your online business more successful. Let us be your trusted e-commerce partner.
Josh Phelps is an experienced sales professional with eight years of expertise, including four years in payment processing. Throughout his career, Josh has successfully secured approvals for thousands of businesses, demonstrating his skill in navigating and optimizing the payment processing landscape.
