A complete guide to types of payment methods
As the landscape of online purchases continues to evolve, catering to the diverse preferences of online consumers becomes increasingly crucial for providing a satisfactory customer experience. The choice of payment methods varies significantly based on geographical locations, making it essential for businesses with global aspirations to understand and accommodate these preferences.
Navigating the realm of e-commerce payment methods may seem overwhelming initially, but identifying and implementing the right payment solutions is pivotal. This guide aims to shed light on the latest payment methods, helping businesses create a secure, reliable, and user-friendly checkout experience optimized for successful transactions.
Common Payment Methods:
- Cards – Cards are linked to a bank debit or credit account. To make a payment online, customers enter their card information at checkout.
- Recurring payments: Yes
- Return option: Yes
- Payment Confirmation: Instant
- Wallets – Wallets can be linked to a card or bank account, or store a specific monetary value. Example: Google Pay, Apple Pay, PayPal.
- Recurring payments: Yes
- Return option: Yes
- Payment Confirmation: Instant
- Direct Debit – Allows the customer to make a money transfer from their own bank account.
- Recurring payments: Yes
- Return option: Yes
- Payment Confirmation: Delayed
- Bank Transfers – Bank transfers add a confirmation step to make a direct debit. Instead of entering their bank account information, customers provide their online banking credentials to authorize payment.
- Recurring payments: Yes
- Return option: No
- Payment Confirmation: Instant
- Buy Now, Pay Later – Buy Now, Pay Later is a growing category of payment methods that offers customers instant financing for online payments, always paid in fixed installments over time.
- Recurring payments: No
- Return option: Yes
- Payment Confirmation: Instant
- Vouchers – With cash vouchers, customers receive a scannable voucher with a transaction reference number which can then be taken to an ATM, bank, convenience store or supermarket to make the cash payment.
- Recurring payments: No
- Return option: No
- Payment Confirmation: Delayed
- Cash on Delivery – The most common payment method in our latitudes, about which we do not need to talk much, because everything is contained in its name.
- Recurring payments: Yes
- Return option: No
- Payment Confirmation: Delayed
Trends in Payment Methods:
The absolute minimum nowadays with cash on delivery (cash on delivery) and card payments. Cash on delivery enables unlimited shopping. Older people are still used to using card payments, and quite a few of them don’t even have debit cards. Therefore, we cannot do without cash on delivery.
In order to avoid the mass choice of cash on delivery, more and more online stores put an additional amount that the customer is obliged to pay when choosing this payment method. In this way, they include card payments or the easier and more convenient wallet payments, and at the same time you eliminate part of your losses on unclaimed/unaccepted shipments.
Paying by card gives more credibility to consumers while shopping.
We also mentioned wallet payouts. They are becoming all the more recognizable and preferred as they offer the ease and speed of payment. Much of this happens through the use of biometrics for verification – facial recognition or fingerprint, which literally reduces payment to 1-2 clicks. Therefore, they are all the more preferred choices of younger and fast-paced consumers.
Buy now, pay later is the payment method that is gaining popularity among online stores offering more expensive goods such as appliances. Apple also announced that it is offering functionality through Apple Pay, but not yet in all countries where Apple Pay service is active.
Choosing the right payment methods for your business:
Recommended for ecommerce and marketplaces: Cards; wallets; buy now, pay later; bank transfers; cash on delivery.
Recommended for on-demand services: Cards; wallets; cash on delivery.
Recommended for SaaS and subscription businesses: Cards; wallets; direct debit.
Recommended for professional services (where a single payment failure or dispute could result in significant revenue loss): Cards; direct debit; bank transfers; cash on delivery.
