Payment processing may not be the top priority for start-ups. However, customers payment options are an important consideration
It is increasingly the case that payment options are crucial elements in determining the success of a new online shop. Consumers expect their preferred payment method to be available when making a purchase – if not, they are less likely to be satisfied with their online shopping experience.
This was recently confirmed by a survey conducted by the E-Commerce-Center in Cologne: when asked why online payment is so important, 42 percent of respondents said that they would even switch to a competitor if none of their preferred payment methods were offered.
These five payment tips helps new online retailers
Their challenge is now to win over new customers, get them to return and therefore generate revenue. For this reason, it is important for new entrants to the e-commerce market to take into account the following advice:
Tip 1: Offer a range of payment methods
With the right mix of payment methods, a shop’s conversion rate can be considerably increased. This is the deciding factor in an online shop’s success as it reveals exactly how many visitors to the site actually made a purchase. The conversion rate is dependent on a number of factors, for example the product range, price and season.
So, how many payment methods should start-ups offer? A good rule of thumb for the perfect payment mix is: customers are more likely to find their preferred payment method if a shop offers three to five different options – whether online, by card or via alternative means of payment.
Consumers also prefer for all payment options to be visible at a glance. Even the positioning of the payment options in the online shop is decisive, as those methods which are placed higher tend to be the most commonly used.
Tip 2: Acquiring und risk management from a single source
In order to be able to offer a range of different payment methods, new businesses should work together with a payment service provider (PSP) and an acquirer. The PSP is responsible for the seamless technical integration of the different payment solutions into the website, while the acquirer possesses a bank license and can ensure that payments (by card for instance) can be accepted and processed. Ideally, one service provider can provide all services from a single source, necessitating just one contract.
Furthermore, e-commerce retailers should also safeguard against fraudsters, as any fraud can be costly, for example if merchants cannot chase up outstanding accounts. It is advisable to work with a payment service provider who can take on fraud prevention in addition to acquiring. This will allow for potential fraudsters to be identified prior to the transaction being carried out.
Tip 3: Beat the competition to the market
There are now automated tools for small and medium businesses which enable entrepreneurs to quickly set up a successful business in just a few steps. An important aspect of this is a effective checkout process. One way of setting this up for an online shop is by using the Wirecard Checkout Portal. The preferred payment methods can be selected in just a few steps using the online configuration tool, which additionally makes it possible for further services such as risk management processes and Google Adwords campaigns to be integrated.
This system is especially suited to marketplaces. As such, if a company operates a sales platform for a number of smaller merchants, they can quickly integrate the same payment options in their shops.
Tip 4: Have a clearly defined range and target market
In order to successfully grow, online business founders must have in-depth knowledge of their specific target market. Why? Because the appropriate payment options will vary considerably according to the target market. Male and female consumer behaviour differs; for example, clothes are bought online in a different way to software downloads. Age also plays a significant role in determining payment behaviour.
At the same time, business owners need to ask themselves: do I want to expand abroad? The domestic market is always the best place to start out, but what about in a year or two? It is important for businesses to know which European countries hold the key to growth potential. The key here is to remember the old adage: when in Rome, do as the Romans do – payment service providers have the expertise to ensure that your business offers the right payment methods.
Tip 5: Offer a mobile sales solution
Online shopping is fun for most people – at least, until it’s time to pay. Consumers may have second thoughts when they get to the checkout, especially on lesser-known online platforms. For this reason, the online payment page should be harmonised with the site’s look and feel. If merchants also wish to extend their offer to mobile devices, the site obviously needs to be supported and mobile-optimised while maintaining the same design.
Especially when starting out, shipping products may be handled internally. This process too should reflect the online shop’s innovative capacity. So what happens if the customer wants to pay by card at his front door? For such instances, it is useful for merchants to have a mobile point of sale at hand. Using these mPOS devices, a smartphone or tablet can be reconfigured to function as a point of sale in the blink of an eye. The advantage over traditional point of sale terminals is that the merchant is only required to pay a transaction fee if the device is used. The monthly running costs do not apply.