How Do Payment Methods Affect Conversion Rates?
Alternative Payment Methods (APMs) are expected to comprise nearly 55% of global e-commerce payments by 2019. For merchants across many industries, APMs are driving cross-border e-commerce and also mobile payments.
APMs are defined as non-card payments and include bank transfers, direct debit, digital wallets, cash on delivery, e-invoices, digital currencies, and local payment methods. At the last count there were over 200 alternative payment methods, which begs the questions “which payment methods have a positive affect on conversion rates?”
As you might expect, the answer is not straightforward. Payment methods can be highly localised, even when they are globally available. For example, conventional credit card payments are globally recognised but market penetration varies around the world. Similarly PayPal is accepted as a global APM in over 200 countries but only supports 25 currencies, and market penetration in some of those 200 countries is low.
Therefore conversion rates depend on the market, country, consumer behaviour, and critically what payment methods consumers want. Comparing conversion rates for different payment methods will not help your business unless you are comparing them in highly targeted way.
What we do know is that providing the right payment methods for your target market has a positive impact on conversion, with the potential to increase conversion by as much as 30%*. Therefore to find the right mix of payment methods that will maximise conversion, you need an in depth understanding of your customers and the market.
Payment Methods To Maximise Conversion – Key Points
The following points illustrate how localised payment methods need to be and how important the maxim ‘think globally, act locally’ is for online merchants.
- Look closely at the country, industry, and the preferred payment methods of consumers in that market.
- Consider the type of device that is used by target customers in that market. APMs are particularly valuable for merchants whose customers favour mobile devices as these offer fewer friction points than conventional card payments.
- Choose payment methods that will build trust with consumers, especially if your brand is launching in a new market.
- Offer the top three payment methods for each market or country. Consumers generally have 1-2 preferred payment methods, offering three ensures that the majority customers will find one they trust.
- Keep reviewing payment methods and conversion. Payment data can be used to optimise and increase conversion rates by payment pages to meet customer demand. Dynamic tools can also be used that analyse data supplied by the customer and then offer appropriate payment methods.
Your payment service provider (PSP) should be able to provide valuable insights and guidance that will help your business or organisation optimise payment pages and payment methods to increase conversion. Ideally work with PSPs that have global payment expertise, that offer a comprehensive range of APMs, and can rapidly respond to the demands of the market, or your business, by enabling new payment methods when required.
For more insight into alternative payment methods, download our whitepaper here.
If you want to talk to a payments expert about payment methods and how to increase conversion in the markets and countries your organisation operates in, get in touch with our team. Call +44(0)8082564381 or email [email protected]
* Source: ACI Universal Payments