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 business idea 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 at the checkout. Clients want to have a seamless purchase flow each and every time.
Creating a perfect customer experience can’t go without providing the right payment solution. The customers prefer choosing from numerous options and selecting the ones that fit their needs perfectly. That’s why it’s important to be informed and updated about the ever-changing payments landscape.
Besides traditional payment methods (cash, Credit Cards, PayPal, etc.), there are a large number of alternatives worldwide. These alternatives can be anything from vouchers, prepaid cards, bank transfers, mobile payments, or even cryptocurrencies. Let’s start by explaining what alternative payment methods are and why customers prefer using them.
What are Alternative Payment Methods?
Alternative payment methods (APMs) can be defined as any non-cash or credit card payment method. They don’t rely on traditional payments. There are a few hundred alternative payment methods around the world, including SEPA direct debit, e-wallets, cryptocurrencies, and local payment options. One of the trends that highly impacts the rise of APMs is mobile internet usage. It is simply 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.
APMs are widely used all over the world for their simplicity and convenience. Customers enjoy the benefits of being able to make faster payments. Also, merchants can tap into new markets more easily by offering the right payment solution to their customers.
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. The 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 bounce rates.
The Benefits of Using APMs
People think of credit cards as commonplace, but it is not the case. Credit card penetration is only around 23% 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. Perfect 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 payment 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 are the customers’ preferences. Offering alternative payment methods is the key to become future-proof!