Alternative Payment Options: Provide to your Profit, Ignore at your Peril
As online shopping, banking, and bill payment become more common and global e-commerce grows, consumers are pickier than ever about their online payment experiences. Research shows that the demand for alternative payment methods in online transactions is growing strongly, and the more tech-savvy a consumer is, the more likely they are to abandon an online purchase if their preferred payment method isn’t offered. Therefore, online merchants can increase conversions by offering a wider spectrum of payment options that ensure their customers complete the checkout process.
Online Retail Today and Tomorrow
According to projections from eMarketer, online and mobile purchases will have amounted to $1.672 trillion in 2015, or 7.3% of all global retail sales (totaling $22.822 trillion that year). By 2019 eMarketer projects that online purchases will grow to more than double their current volume at $3.551 trillion out of a global total of $28.550 trillion, or 12.4% of worldwide retail sales.
All About Asia
The Asia-Pacific market is growing 35.2% year-over-year, fueling the overall global e-commerce year-over-year growth of over 25%. In North America, eMarketer projects e-commerce sales will grow 14.3% in 2015, from $328.6 billion in 2014 to $375.89 billion. Long story short, online and mobile transactions are quickly becoming ubiquitous around the world.
Alternative Payments Around the Globe
Credit cards are still the most popular payment method for online purchases. However, several alternative methods are gaining steam, and various world regions show strong preferences for specific alternate payment options. In India, for example, over 50% of online shoppers prefer to pay by cash on delivery (COD), while over 30% in Canada prefer to pay by PayPal. In Peru and Chile, more online shoppers choose alternative payment methods over credit cards. In China, the world’s largest online shopping market, online payment through third-party providers such as Alipay are the most popular method. Other payment methods such as bank transfer, direct debit via eCheck, and digital (or “virtual”) currency are gaining market share across the globe.
Payment Options and Sales
How can offering a variety of traditional and alternative payment options affect a business? A 2014 survey in the UK found that a full 28% of online shoppers abandon online purchases solely because they do not find their preferred payments options offered. That number jumps to 32% for customers aged 18-24. This group is 8% more likely to abandon a transaction than consumers aged 65 and older (who clocked in at 24%).
The 18-24 age group is also more likely to use a digital wallet for purchases than any other age group, with 14% reporting that they use them for every purchase, and an additional 39% using them on a regular basis. Needless to say, this group’s purchasing power will only increase as their income and overall wealth grow with age, and it’s likely the next generation of young shoppers that take their place in this demanding group will be even more particular. In summarizing the impact offering alternative payment options has for online businesses, Skrill Vice President of e-Commerce Chantal Willis said:
“Growing numbers of consumers feel comfortable buying goods and services online and they want to be able to pay in the way that is familiar and convenient. They must ensure they have systems in place to cater for the half of the population who prefer alternative payment methods. Given online stores attract customers from anywhere in the world, the need to offer a wide range of payment options is absolutely crucial.”
Put the Cart Before the Horse
Providing alternative payments methods is critical to driving e-commerce sales. Of course, there’s more to user-friendliness and conversion than just payment options: slow website loading, up-front account registration, being asked for too much information, and a lack of trust in a website’s security as other major reasons online shoppers abandon transactions. So tighten up your user experience, stack your sales cart with as many options as you can, and watch the revenue roll in!