Why do you need alternative payment methods?
Back in the day, the payments landscape was much simpler. In the early 2000s, all e-commerce needed to succeed was a good product and a few payment options. Nowadays, with the rise of different payment methods, as well as the growing customer expectations, you need to be able to offer a variety of options. Clients expect you to offer all of their favorite alternative payment methods at the checkout.
In 2019, 55% of all global eCommerce payments will be made using alternative payment methods, as industry research predicts. The customers prefer choosing from numerous options and selecting the ones that fit their needs perfectly.
What are Alternative Payment Methods?
Alternative payment methods (APMs) can be defined as any non-card payment method. They don’t rely on traditional payments, such as credit cards. There more than 200 alternative payment methods around the world, including SEPA direct debit, SEPA credit transfer, e-wallets, cryptocurrencies, and local payment options. One of the trends that highly impacts the rise of APMs is mobile internet usage. It is not practical to enter card details every time you shop using a mobile device. That is why customers are switching to different apps, digital wallets or APMs.
The link between conversion rates and APMs
International eCommerce’s success is directly influenced by their understanding of local markets. They need to know how their customers find products, how they shop, and how they pay. Before the company even starts working on its payment mix, it needs to know which are the local payment preferences. Our advice is to offer at least three most popular payment methods in a given country. Research shows that it will increase conversions by up to 30%. Most of the shoppers will use at least one of them, which will result in lower cart abandonment rates.
The benefits of using alternative payment methods
We think of credit cards as commonplace, but it is not the case. Credit card penetration is only 17.6% globally. Also, more than three billion people don’t have a traditional bank account. In some European countries, alternative payments dominate e-commerce over credit cards. Examples are the Netherlands, Germany, Norway, and Poland.
Customers have changed their payment habits tremendously over the past two decades. They are able to choose a solution that works best for them. That is why they no longer feel restricted by traditional payment methods.
There are many advantages of using alternative payment methods, both for customers and merchants. Some of the main benefits of APMs include convenience, safety, speed, and simplifying the payment experience. Customers are able to checkout much easier and safer, by using one of many different APMs. Also, they no longer need to spend time adding all of their information for each purchase. These factors account for more sales and lower cart abandonment rates. Alternative payments providers had built trust by following the highest security standards and keeping their customers’ data safe. They also reduce chargebacks and are easy to integrate into the existing payment processing platform.
In order to stay competitive in the overly saturated eCommerce market, merchants need to differentiate themselves. The only way to stay competitive is to cater to the market’s desires. As technology evolves, so as the customers’ preferences. Offering alternative payment methods is the key to become future-proof.