The ECC Payment Study vol. 21 shows what online merchants need to know about payment to avoid discouraging shoppers.
- What payment methods are most popular in Germany, Austria and Switzerland with e-commerce customers – and why?
- What are the payment methods of the future – and how intensively are they currently being used?
By Sabine Risse, ECC / IFH Köln
These were some of the lead questions post in a recent ECC Köln survey. We are experts in retail in the digital era and operate as part of the renowned Institute of Retail Research, the IFH Köln.
For our payment study, we asked a representative group of over 1,700 e-commerce shoppers from the three biggest German-speaking countries Germany, Austria and Switzerland, also known as the DACH region. In addition, we talked to nearly 350 merchants in Germany. Finally, we took a closer look at the payment methods offered by the 100 top online shops in DACH.
Here are the top five interesting findings of our study that might be most relevant for readers of this blog:
1. Payment: What are customers’ most important requirements?
We asked online shoppers about why they prefer certain payment methods.
Not surprisingly, customers considered it essential that payments are fast and secure. In addition to that, our researchers found that convenience plays an increasingly important role: online shoppers want payment to be simple and comfortable. Not to mention people stick to a payment method – such as invoice or credit card – simply because they are used to it and have made good experiences with it in the past.
2. These are the 5 “must-offer” payment methods for merchants
Many of the surveyed online shoppers apparently are traditionalists: over 40% of them say classic invoicing is their favorite. But their second favourite payment method is rather a modern one: nearly 30% prefer PayPal; followed by credit card, direct debit and “Sofort Überweisung” transfer.
Our study points out that offering these five payment methods is so to speak obligatory for e-commerce merchants – or else customers might be discouraged from buying. This means, with some mouse clicks online shoppers might switch to another online shop offering the same goods and prices, but with the favored payment options. This why it is safe to say that for merchants, finding out and offering their customers’ favorite payment methods is critical for success – especially because payment preferences can vary per target group.
What are the “big 5” payment methods in the DACH Region? [click to enlarge]
3. The payment market is in motion again
There is some movement within the payment market! While in the last years the average merchants offered little more than five payment methods, now an average choice of over than six payment options has established itself. Furthermore, in 2016 merchants planned to introduce on an average nearly two further payment methods in the near future, which is more than during the last few years.
The payment market is in motion again [click to enlarge]
4. Newcomers to keep an eye on within the payment methods market
Now which are the payment methods which are most frequently added to the online shopping cart options?
Firstly, many web shops which don’t offer the above-mentioned “big 5” payment methods are keen to fill up this gap quickly. Conversion rates can suffer noticeably from it especially if an online merchant in Germany, Austria or Switzerland doesn’t offer the highly popular payment by invoice. This is why for example, in the last two years, this payment method has been added by nearly one of five online merchants.
Secondly, new and convenient payment solutions such as Amazon Payments or – on a smaller scale – Paydirekt are on the rise.
Merchants introduce more payment methods – most notably, the secured invoice is experiencing a boom [click to enlarge]
5. Payment Service Providers (PSPs) are on the Upswing
As we saw, payment per invoice is extremely popular. But from a merchant’s point of view, it involves a high risk, especially when dealing with a customer for the first time. This is why the so-called secured invoice is very attractive for them.
Secured invoice can be offered as a payment method thanks to a payment service provider, in short PSP. This is why more and more merchants are collaborating with PSPs – more of half of them are either already working with a PSP or have concrete plans to do so. Only 22.5% of merchants say they are currently not interested in contracting a PSP; the rest of them already do, plan to do so in the near future or are generally interested without having specific plans.
Those who benefit from working together with a PSP say that the most important advantages are an increased customer satisfaction, a lower risk for themselves, a low integration effort, less accounting efforts, less purchase cancellations, and more. In addition to that, PSPs also offer a secured version of hire-purchase, a payment method that is still popular e.g with students or other people who like the possibility not to pay the full balance at once.
More and more merchants work together with PSPs – these are the benefits [click to enlarge]
PSPs make online shopping more secure, convenient and satisfactory for both merchants and customers
Quick takeaway: The online payment market in the DACH region in a nutshell
- For online shoppers, not only speed and safety matters, but increasingly also convenience
- Online merchants should make sure to offer the following top 5 must-have payment methods: invoice, PayPal, credit card, direct debit and (to a lesser extent) SOFORT Überweisung transfer. Nonetheless, one should always keep in mind that payment preferences can vary per target group
- As a reaction to the ever more demanding customers, merchants offer more payment methods than in the past and are planning to introduce even more
- Apart from the five most popular and established payment methods, also newcomers like Amazon Pay or Paydirekt might become more important in the future
- Payment Service Providers are becoming more and more popular as they offer more payment options, less risk and more customer satisfaction
Would you like to learn more?
Sabine Risse is Team Leader at ECC Köln which is part of the IFH Köln market research group. As an industry insider, IFH Köln supplies information, research and consultancy for market research-relevant questionnaires in the digital era.