The Internet has become an immensely powerful marketplace that keeps transforming the financial services industry. With the global e-commerce space projected to grow at 15% CAGR through 2018, payment systems need to adapt to the changing business landscape.
Namely, as businesses and consumers move to online channels, financial services need to support their expectations in terms of availability, security and reliability. This refers to providing more options for online transactions that allow consumers to shop anywhere and anytime they like. Similarly, online retailers and other businesses that operate globally need to implement the most effective payment solutions that meet the demands of international consumers.
Although the traditional payment options such as credit cards are predicted to plummet significantly, their innate design is not entirely adequate for the online monetary exchange. Correspondingly, e-commerce businesses have started looking for alternative payment solutions that can streamline transactions regardless of buyers’ location or preferred currency.
1. Alternative payment options don’t turn their back to credit card users.
With the rise of cross-border e-commerce, online businesses are given the opportunity to expand internationally and increase their market size. However, once they hit the global dimension, they often face the problem of supporting e-payment models that drastically vary among countries.
Just consider the case of the abovementioned credit cards. Although there is still a popular belief that they are the fundamental and inevitable payment option, in most European countries, this has never been the case. For example, while the average American charges over $4.236 to their credit card per year, 64% of the Europeans having credit cards are not comfortable with using them for online purchases. Instead, they are using local alternatives to PayPal, which greatly changes the game for many international merchants.
Therefore, one of the major perks of alternative payment models is that they help e-commerce businesses meet the needs of millions of customers that don’t use credit cards. Moreover, these methods allow you to properly tailor your payment options in accordance with the target market, as well as track shopping patterns and payment details.
2. Locally preferred payment systems make your business more customer-friendly.
E-commerce competition is on a steady rise in all industries and one of the major issues retailers face is shopping cart abandonment. This is suggested in a recent web research, which reveals that over 67.45% visitors in online stores leave without making a single purchase.
Namely, the most common mistakes commercial websites make is not investing enough time and resources in customization and user-friendliness. According to Statista, an astounding figure of 13% of customers leaves for no other reason than prices being presented in foreign currency. Additionally, 17% of them have concerns about the data privacy, often because a website lacks transparent security indicators. Put simply, when combined this makes almost one third of all website visitors which is not a force to be trifled with.
With all of this in mind, it is more than obvious that this burning issue needs to be addressed as soon as possible. In order to find the right solution, numerous alternative payment services started working on significantly improving customer satisfaction in these areas. This usually encompasses managing to provide your customers with global options specifically packed for a particular local market.
- Website personalization. One of the major benefits of local payment models is that it provides all customers with personalized experience. Namely, by offering transactions in their customers’ currency and by providing customer support in their native language, e-commerce businesses will manage to increase conversion rate. This will not only attract more customers to your website, but also help keep them there.
- Trusted payment method. Web applications handling payments are often perceived as having numerous compliance and privacy issues, which is why security has become one of the basic concerns that restrict customers and organizations to purchase online. In order to solve this problem, the majority of localized payment systems provide customers with the opportunity to make purchases directly from their own, local bank accounts. This is probably the most significant step towards achieving the utmost fraud prevention and online privacy protection during every transaction or sale. In relation to this, an earlier research has shown that logos of trusted payment options on the shopping page can additionally enhance consumers’ trust.
Given the sensitivity of the payment process, online retailers need to design pages that inspire trust and make consumers comfortable interacting with it. As one of the factors that contributes to consumers’ perceptions of the business, familiar payment solutions can considerably improve overall business outcomes.
3. Familiar options contribute to the increase in conversion rates.
Another important difference between credit cards and their alternatives is that the latter ones provide your website with numerous payment models. Furthermore, e-commerce businesses that provide more than four payment options are more likely to have a higher conversion rate. Coupled with the fact that offering a local currency can minimize shopping cart abandonment, implementing alternative payment options bring results that you get may be indeed astounding.
Just a decade ago, speaking about the abandonment of credit cards as the main paying method would seem as a piece of bad fiction. Today, however, it has become reality. From all the aforementioned data, it is more than obvious that the entire notion of commerce is getting tightly related to the digital landscape. The only choice e-commerce businesses need to make in order to stay competitive is how to implement the advanced credit card alternatives with their target demographic.
The accelerated development of eCommerce and a growing value of digital business strategies have triggered some radical transformations in the field of online payments. Both consumers and retailers have a greater variety of options at their hands when it comes to shopping or selling online. However, choosing the most adequate payment solution to implement on a website remains a critical decision for online retailers. By taking into account alternative payments solutions, they stand more chances of improving their market size, conversions and, eventually, profit.