6 Reasons Not to Accept Credit Cards Only (And Alternative Options to Go For)
Do you know how many credit cards are there in the world? If we would all take them out of our wallets and lay them on the ground, we would circle the planet Earth for a total of 3.5 times. That’s how much is this payment system popular today. However, this doesn’t mean that it’s the safest method of paying for goods and services. On the contrary!
More than 40% of financial frauds is related to use of credit cards. According to a research paper published by LexisNexis in 2013, more than $2.1 billion USD was lost in 2012 because of the misuse of our trusted plastic. Just for comparison – for that kind of cash, one could buy two islands in Papua New Guinea, the entire LA Lakers team, and still, have some walking around money left.
Furthermore, you should know that by the time you finish reading this sentence, more than $100,000 USD will be generated via e-commerce payment systems, globally. In average, more than $1,200,000 passes through e-commerce payment platforms every 30 seconds.
So, do you think that it’s smart to limit your payment methods solely on credit cards? Even if you do believe that this is the most widely accepted method, all chances are that your customers don’t share that opinion. Here’s why.
1. Online Credit Card Frauds Will Continue to Grow
We already mentioned that more than $2.1 billion USD was lost due to credit card frauds in 2012. In 2016, this sum will surpass the astonishing figure of $4 billion USD. According to Julie Conroy, the research director of Aite Group, the new EMV chip cards will just cause scammers to target online transactions even more. Financial advisors of this consulting company expect that this will result in more than $14 billion lost due to credit card frauds by the year 2020.
2. Identity Thefts Are Skyrocketing
More than 17.6 million of US residents were victims of an identity theft during the year 2014. More than 14% of them lost at least $1000 USD due to this particular type of a credit card scam. When compared to the year 2013, this is a slight increase (less than 1%). However, according to the Federal Trade Commission, identity theft complaints increased for an astonishing 47% in 2015! In average, 9 out of 10 victims aren’t even aware that their identity was stolen, and they usually don’t find out until their credit card report arrives in the mail.
3. The Real Cause Behind Data Breaches
Although we all assume that hackers and common criminals are usually the ones behind data breaches, in reality, they only accounted for a total of 47% cases during the year 2015. In fact, employee negligence is the number one cause behind data breaches. So, before you start pointing fingers and accusing international hacking groups in case of an attack, check if your own personnel is properly educated about online threats and how they can lead to data breaches. Furthermore, if you think that banks will protect you from this malpractice – think again! With the rapid increase of data breaches, banks look to retailers and online stores to bear the losses.
4. Millennials Simply Don’t Want to Use Credit Cards
Believe it or not, 2 out of 3 Millennials don’t own a credit card. Approximately, 64% of US citizens in the range of 16 to 34 years of age do not own a credit card. Why is this the case? Simply because we are entering an era of smart consumers. Millennials witnessed how their parents struggled with debt and credit cards are simply a synonym for financial troubles for them. Furthermore, the use of credit cards is in a constant decline, and with every new generation, we can expect to see less and less of them in circulation.
5. Hidden Charges Are Enormous!
According to Finder.com, which is an Australia-based company of independent financial experts, banks can acquire more than $2.11 billion from credit card holders during the summer season, in hidden fees only! Ironically, this figure surpasses the amount that hackers and fraudsters managed to steal during the year 2012. This is just one more reason why people simply choose not to use credit cards when they are paying for goods and services and why more and more people avoid them altogether. In order to compensate for their losses, banks choose to charge more to paying customers in order to keep making money.
6. Dealing with Declined Transactions
In average, every e-commerce store will lose 2 to 5% of their sales due to declined transactions. The real problem is the fact that banks cannot process non-valid transactions from credit cards in real time. In 95% of the cases, they simply accept the transaction and deal with the acquisition of the actual funds afterward. This naturally results in a huge amount of sales being lost for the retailers, and the “best” part of this misfortunate oversight is the fact that the e-commerce companies have to deal with the loss themselves. In average, retailers manage to obtain the funds in only 30% of the cases.
Alternative Payment Methods
Here at AlternativePayments, we take pride in connecting e-commerce retailers with their customers on a global scale. We are well aware of the fact that credit cards amount for a total of 7% of online transactions in the EU alone. Furthermore, the use of credit cards will continue to decline in the US and globally in the next five years. Providing alternative payment methods to worldwide consumers isn’t just a fad anymore. It is a necessity.
This is why we excel in delivering comprehensive platforms to our clients, in order for them to offer high-quality service to their customers and accept a wide range of payment methods.
Here are a few that you should consider providing to your visitors today.
They provide a fast, easy to use and trusted method for consumers to make payments directly from their bank account. There is no need for consumers to sign up, register, use a credit card or to provide additional personal information. They simply select their bank upon checkout and enter their usual online banking information during a secure session to finalize their transaction. Merchants greatly benefit from bank transfer payments because they are economical, faster, with low risk of returns, and account and purchaser account information is verified to reduce erroneous transactions.
- DirectPayMax – if your customer base is located within the US, or if you are receiving a lot of transactions from Brazil or Germany, you’ve probably heard about DirectPayMax payment option. By providing this method, you are enabling your customers to pay you directly from their bank accounts.
- eps, iDEAL, giropay, POLi, Bancontact, Przelewy24, safetypay, TrustPay, etc.
A direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her bank to collect an amount directly from another account. Upon purchase, funds are directly debited from the consumer’s bank account.
- EuroDebit®/SEPA–this payment method will allow you to reach more than 520 million consumers within the EU. This processing system is popular for both single and recurring payments, and the best part is – you don’t even have to open a bank account within the EU to accept this payment method.
Upon purchase, the consumer receives a pre-filled form and then authorizes the payment via their own online banking and the funds are then directly debited from their bank account.
- DirectPayEU & DirectPayUS – a credit transfer payment method made at the initiative of the consumer, and the payment is “pushed” to the bank account of the merchant.
- Boleto Bancario, TelePay, etc.
Consumers don’t have to enter any personal information or bank account or credit card details.
- Paysafecard – one of Europe’s most popular and proven online prepaid payment methods. paysafecard that lets consumers pay quickly, easily, and safely.
- AstroPay, etc.
E-wallets are the fastest growing payment type around the world. They’re easy to use and increasingly popular.
- QIWI Wallet – it is an electronic wallet payment method through which consumers can store, send, receive funds and also enables customers to make secure payments online.
We are capable of offering all of these and many more payment options to your clients through a fully customizable platform that will match the look of your website. So, contact us to find out more about how can we connect you to your target market today.