The growth we witness in ecommerce payment solutions are one of the factors accelerating the growth in Ecommerce. The ecommerce companies witnessed the growth in their potential once they make the payment options easier for the customer. Choosing the right payment options is one of the critical steps to decide your conversion rate of an customer.
A study states the issuer declined error or other issue with payment processor alone lead to loss of 20% of conversion. So it becomes a necessity to provide customer with an alternate payment solution which is quick, secure and a couple of clicks to complete the transaction.
We can categorize the available solutions as:
Need to Have:
- Credit Cards
- Debit Card
- Net Banking
Good to Have:
- Virtual Bank accounts
- Cash on Delivery
80% of online sales are processed by credit cards via payment gateways. Even though the processing charges are high when compared to other payment processing solutions, as most of the customers prefers to pay with credit card as customers could pay their bills later. This flexibility provided by credit cards makes them at the top of the payment processors pyramid and makes it a must to have option while building up your ecommerce payment solution. Factors to be considered while picking your ecommerce gateways are processing fees, chargeback fine, chargeback tolerance, percentage of successful processing, ease of integration, how long the credit card company holds the fee, how easy to process refunds etc. These payments are usually processed through Visa cards, Master cards, Amex and Discover.
The credit card penetration is too high in United States, but in almost other countries people with bank account have access only to debit cards. As people pay their own money using debit cards, the purchasing volume with debit cards are comparatively lower than the credit cards. Debit cards are usually enabled by networks like Visa, Master, Maestro, and Rupay in India. As debit card works almost like credit card, except the fact that you pay the bills later, the way of choosing the right payment processor remains the same as like in credit cards. Surprising fact is most of the credit card processors process the debit card too. Debit card processing is also cheap when compared to credit cards. So we can see many e commerce company pushes the option to go with debit card payment. As many people use debit cards as their second most preferred way of paying , it comes and must to have solution for payment processing.
Even though bank transfers are not quick and hard to process and keep a track in a fast paced ecommerce environment some ecommerce sites provide the optioin to pay with bank transferrs. In some of part of the world, where the volume of transactions low, credit card processing is too costly to afford, where people don't accept credit cards for online payment, bank transfers are still in use as an online payment system. The dis-advantages are being it takes 2-3 days to realize that the customer has initiated the payment and advantage being there is no processing charge involved if it is going to be a local transfer. In case of cross border payments, currency conversion charges are applicable. Currency conversion charges are inevitable even in credit card or debit card processing if you are making a cross border payment.
Net banking feature is not widely available in all parts of the world. But it is one of the famous methods of payment in India. It works very simple. When you click on checkout, you have the options, credit card./debit card/Netbanking. When you choose net banking, there will be the list of major banks in your country. When you choose your bank, it will redirect the payment page to the bank site, you just type in your netbanking user id and password. Post which you authorize the payment in your bank site using 2 factor authentication. The integration is easy, the processing charges are very negligible.
Sofort is a payment processor widely used in Germany, where it acts as a payment gateway to process netbanking feature. Netbanking feature is not available in countries like Germany, Netherlands, Baltic countries. Sofort method comes into place to fill the gap. With this method, the customer can just type in their bank account login details and authorize the payment with 2 factor authentication. The processing charge is less when compared to credit cards. This makes SOFORT to have it as a must to have option in the ecommerce site.
The ewallets are innovative way to pay for your ecommerce and POS purchase as well. The ease of payments not only increases your conversion percentage but also the entire shopping experience for the customers. With the technological disruption, features like fingerprint scanning, iris scanning adds additional layer of security, simultaneously making the payment process much easier. As this is a new technology into the payment space, most of the population are not really into wallet services as they are pretty new and consumers are not sure how it works, even though eWallets are self explanatory.
Visa Checkout, Masterpass, Apple pay, Samsung Pay and many other companies have their footprint in eWallets and the payment processing space is awaiting for a huge disruption to happen in eWallet space. This is a good to have option for an ecommerce site.
Virtual Bank accounts
When you are a miniscale player with a small shopify store online and if you want to export your products and services to Europe and US, virtual bank accounts could be a best option which suits your needs perfect. These virtual bank accounts are super quick in receiving the payments in comparison with traditional banks. Credit card companies hold your payment for 3 days. But virtual bank account providers like B2B Pay does not hold payments. Need not to worry about chargebacks at all. Cheaper than the banks, no processing charges, just the currency conversion charges are applicable.
Providing options like these to customers, not only provide the feel of ease and secure feeling for them, but also helps you to improve your profit margins. This would be a good to have payment option for your ecommerce site.
COD (Cash on Delivery)
When you have to deal with customers having lot of skepticism using credit cards over internet or when there is less online payment trend penetration, there is always a way to solve these problems. Cash on delivery acts as a solution for these kind of pain points. The customer can always purchase the product online and pay in cash to the delivery associate. It has lot of problems associated with it. Many customers turn down the purchase once they are asked to pay on their doorstep. This results in more logistics cost and incur costs to the company. But still, to increase the conversion percentage, it is always a good to have option.