Online selling, commonly known as e-commerce, is one of the fastest-growing segments of the global economy. As of 2020, the total amount of money consumers spend in all forms of e-commerce stores amounts to $4.2 trillion. Think about that for a minute. Only three nations in the world, Japan, China, and the U.S., have economies larger than that. That means e-commerce, if it were a nation, would be the fourth largest in existence. That’s a massively huge amount of money.
If you’re an online seller, you already know the importance of making life simple for your customers. Consumers of online goods and services want easy site navigation, competitive prices, high-quality goods/services, simple check-out processes, multiple forms of payment, and reliable payment methods. That’s a lot for any size retailer to provide, but it has to be done. Sellers who fall behind in any one of those areas risks losing prospective and current customers.
What’s the answer? It’s three-fold. Sellers need an effective payment system, must offer the most popular payment methods, and need to have a streamlined payment process in place to avoid abandoned carts.
What Makes a Payment System Effective?
An effective payment system consists of four characteristics, all of which work together with the aim of converting your site visitors into serious shoppers, buyers, and reliable payers. Successful payment systems are fast, flexible, secure, and offer immediate feedback to buyers. Here’s a bit more about each of the characteristics of excellent payment systems:
- Speed of Transfer for Funds: As a merchant, your site needs to have the functionality of rapid transfer of funds from buyers to you, from you to your financial institution, and from your financial institution back to you (in the form of access to the money in your account).
- Flexibility: A competent e-commerce site offers shoppers several methods of payment. Remember, not everyone has a credit card or online digital payment account. Millions, perhaps billions of global consumers prefer to pay with Direct Debit, cash-on-delivery, gift cards, or debit cards.
- Security: Security refers to safe transactions for you and for your buyers. Encrypted systems that are legally compliant are musts for every e-commerce seller.
- Immediate Receipt of Payments: Sellers should be able to receive payment quickly whenever a product or service is sold.
The Top 4 Payment Methods Consumers Prefer
How do your customers prefer to pay? That depends where they live. But no matter the country or continent your customers come from, they will likely opt for one of four payment methods. Does your e-commerce site offer them the option to use each of the following methods? If not, maybe it’s time to tweak your shopping cart and enable at least these four methods:
- Plastic: Globally, more than half of all e-commerce payments are done via plastic credit and/or debit cards. In North American and Latin America, plastic is the preferred form of payment as well. Plus, it’s a close second-place in the Middle East and Western Europe. The primary advantage is ease of payment, along with quick confirmation of payment for both parties. On the downside, the world of credit card payment still suffers from widespread fraud issues.
- DD (Direct Debit):Simply put, a DD is one kind of ACH (Automated Clearing House) payment method, but it only involves funds flowing from the payee (consumer) to the seller/merchant. Technically, DD is a subset of ACH because ACH includes money flow in one of two directions, either from seller to buyer, or from buyer to seller. DD is one of the fastest-growing forms of payment on e-commerce sites, especially in Eastern Europe and China, where billions of consumers prefer to use this one-way, highly secure form of payment.
- Digital: These super-efficient and fast ways of paying require consumers to have an online source of money storage from which to pay. There are no card details or other time-consuming authentication processes to go through because the money is simple moved from an existing, online location to the seller. For example, when consumers use PayPal to pay for a good or service at an online store, they’re taking advantage of a ready-made source of money to settle their bill with you, the merchant. Digital payment systems have one very large advantage: there are rarely any disputes about payment. They also have a downside in that they often have limits on the amount of funds that can be transferred for a single transaction.
- COD (Cash-on-delivery) In Eastern Europe, Africa, India, and the Middle East, COD is the preferred form of payment for online goods and services. What’s that mean for sellers? It means they need to have very detailed policies in place regarding delivery and shipment, spelling out exactly who pays for what if an item is returned. For buyers, this is the safest form of payment because they need not pay until they receive the item. For sellers, it’s not the most advantageous method but is sustainable, especially in geographic regions of the world where cash payment if preferred.
The Importance of Streamlined Checkout Processes
What does streamlined checkout do for you, the merchant? Plenty. For starters, it keeps shoppers from abandoning their carts when they run into a snag in the payment process. When shoppers have an easy time of viewing goods and placing items into their cart, they typically follow through with payment. That’s what you want, right? But what happens when your site either crashes or slows to a crawl? Unfortunately, that’s when people become impatient and say “Goodbye.” They leave and you lose the sale.
Likewise, when your shopping cart includes payment methods that instruct buyers to go to another site to complete payment, you stand to lose their business. Another reason people lose their will to purchase is when they see that funds are not immediately transferred or confirmed once they click the “Pay” button.
In short, anything that slows down the shopping or payment process has the potential to cut into your conversion rate, and eventually into your profits.
Putting It All Together
Merchants face a number of challenges when it comes to managing payments within their online marketplace. For one thing, there are several pieces to the puzzle. If any individual piece is missing or not working properly, it can throw everything off. Companies who want streamlined solutions can turn to a service provider like Metro Payment Technologies for all-in-one packages that solve the payment management challenge every successful seller faces.
In fact, at Metro Payment Technologies, we offer a full menu of products and services that make life easier for all merchants, no matter their size and no matter what they sell or do. For example, online sellers often need help with payment terminals, gateways, virtual terminals, e-commerce solutions, POS (point-of-sale) systems, wireless terminals, and e-check processing. We gladly offer all these products and many others to merchants who want to make shopping and paying hassle-free for their customers.
Additionally, we work with a global list of merchants who need services like payroll help, customer support, PCI compliance, chargeback handling, cash advances, leasing assistance, and much more. When you want to ramp up your e-commerce profitability with the very best products and services available to merchants, give the Metro Payment Technologies team a call. We look forward to contributing to your long-term success.