Easier said than done, as any trader will attest. Especially when online retail is designed for multichannel. Retailers want to make online shopping and the point of sale equally customer-friendly. However, this requires appropriate solutions. There are also marketplaces like Amazon or Ebay. Social media giants such as Facebook and Instagram are also increasingly relying on e-commerce. The crux of the matter – each platform brings with it different customers and demands. Claims that differ from a single buyer within a channel. So it can happen that a customer first carefully considers a major purchase. He wants to look at the product first, so he goes to the stationary store and ultimately wants to pay the large sum in installments there. But the same customer can equally encourage an Instagram ad from the same retailer to make impulse purchases and digital payments.
Successful payment: Here too, customer needs count
Consolidating payment methods across different channels is time-consuming and costly. At the moment, it is often difficult for small and medium-sized traders to make larger investments. Which doesn’t mean they don’t have any options. For example, you can improve the existing infrastructure or use it better. Or switch quickly and free of charge to another service provider who offers you more options.
The secret to successful payment is: there is none. Rather, it is a lesson that has already been taught in school sports: Solo excursions are useless. Without a payment service provider, there are only two payment options: cash or bank transfer. A payment mix of these two is anything but contemporary. Because digital wallet solutions are already acting as payment providers. The right payment provider provides exactly the online payment methods that both customers want and make the most sense for the merchant.
Which online payment methods are worthwhile?
To answer this question, a rule of thumb applies: not all at once. It is best not to offer as many online payment methods as possible. As a rule, there are basic fees and a little-used payment method costs more than it brings in the long run.
For the right payment mix, retailers should think about three factors: the target group, the industry and the products. For a younger target group, it is worthwhile to have digital solutions and wallets on offer, and for older people it is definitely worthwhile to have bank transfers as well. In the case of higher-priced products, purchase on account is almost mandatory, as the customer first wants to examine the product. A look at the shops of the competition also helps: Which online payment methods are offered there that are not available in your own shop?
Data driven is the magic word: customer data provides information
The following applies to all payment methods: Merchants should always compare and analyze customer data in order to find the right screws for conversion optimization. This not only makes it possible to find out which online payment methods customers actually use, but also for which product types and for which shopping cart volume. Merchants who sell via omnichannel can thus recognize which online payment methods are suitable for which channels. It can make sense to offer credit card payment in the store, but not in the online shop, as customers there tend to pay digitally. It is worthwhile to compare when choosing the payment service provider: Which data is processed and available in the backend? It should also be possible to simply switch the online payment methods on and off on the checkout page.
But when you look at the backend, there are always surprises. Some payment methods are apparently extremely popular with customers. But if you take a closer look, you can see that they don’t pay off after all. The payment method is often used, but the basic and transaction fees are so high that they cost more per transaction compared to other payment methods. Likewise, other online payment methods may seem too expensive. Take purchase on account, for example: At first glance, it looks expensive, but many retailers find that this increases the conversion noticeably – especially with large shopping carts.
Online payment methods and claims are constantly changing
There is no general answer to the question of the right payment mix. Every retailer has to serve different customer requirements, has a different product range and a different average shopping cart size. That is why it is important to design payment “data-driven” and to rely on a payment service provider who offers a good and clear backend and provides meaningful data. Only then will merchants be able to offer customers the best payment method across all channels.
Finding the right payment method
The key to finding the right payment method is to experiment and analyze data. If merchants are not sure whether a payment method is suitable for the shop, testing helps – with a selected target group or for a limited period of time (or both). The conversion rate of the payment method should be compared with the average payment conversion as well as the fees and the average shopping cart size. This enables merchants to recognize patterns in the data; for example, some online payment methods convert better than others for high shopping cart amounts.
Also read: Open Banking via API – How bank data supports online merchants.
About the author: Niv Liran is Chief Product and Technology Officer at Ounce.