3 minute read
Alternative payments have gained popularity online because they not only increase retailer conversions but also give shoppers more flexibility. Alternative payments are any payment method that eliminates the direct use of a credit card. These come in a variety of forms such as customer financing, bitcoin, layaway, direct debit, digital wallets, and more.
Alternative payments are well on their way to being widely adopted because they give shoppers more control over how they pay. Here are three ways alternative payments can improve the online experience for shoppers and retailers alike.
1. Gives shoppers more ways to pay
Online shoppers want to see a variety of payments – almost three-quarters of shoppers said it’s “very” or “somewhat important” for retailers to offer more ways to pay other than credit cards. Unfortunately, retailers haven’t adapted quickly enough as a lack of online payments is still a common frustration among shoppers, leading to cart abandonment.
Shoppers expect a variety of ways to pay because not everyone has the same preferred payment method. For instance, Millennials are a big driver behind the growth of ecommerce, but only one-third own a credit card. If retailers want to access this demographic, they need to accept card-free payments.
Retailers that offer shoppers more ways to pay also perform better than their competition. PYMNTS found that top performing retailers offer almost 3 more payment methods than average retailers. By doing so, top retailers effectively grow their potential customers base and improve their sales.
2. Streamlines checkout
There are still a lot of friction points online – especially when shoppers are ready to check out. In fact a long, complicated checkout is the third most common reason shoppers abandon online carts. But what part do shoppers find the most frustrating?
Last year almost half of all shoppers that abandoned online carts quit at the payment stage. People leave empty handed for a variety of reasons. Some may not have their credit card on them while others may not enjoy typing endless strings of numbers on a small screen. Alternative payments eliminate the need to type 16-digit credit card numbers and CVVs, letting customers shop online without a credit card and often decreasing the fields they need to fill.
Because alternative payments help reduce friction at check out, there’s a major opportunity for converting more mobile browsers into buyers. For example, on Thanksgiving weekend almost half of all website visits came from mobile devices, but only one-third of online purchases were made on mobile. Typing on a small screen can be annoying, but retailers can use alternative payments to create a more streamlined checkout process and increase mobile conversions.
3. Increases big ticket sales
For almost three-quarters of online shoppers, cost is a main reason they abandon their purchases. Big price tags and high credit card interest rates cause many shoppers to debate buying expensive items. However, alternative payment methods can effectively lower shoppers’ purchase anxiety and make them more comfortable buying big ticket items online by giving them a more flexible way to pay.
In our recent study, we found that people are willing to spend more when they can pay over time. More than half of all respondents said they would be more likely to purchase a big ticket item if financing was available. Likewise, more than two-thirds of shoppers said the ability to break payments up would also increase their likelihood.
Customer financing and layaway programs are great alternative payment options which lessen the anxiety that comes with expensive purchases. Instead of a one-time payment, these alternatives let shoppers pay over time, making it easier to fit big ticket items into a budget.
What to do next?
Shoppers want more from payment options. They are looking for alternative payment options that have flexible payment schedules, no hidden fees, and low interest rates.
Not sure what type of alternative payment method will convert the most browsers into buyers? The best way to know for sure is to test, because even the smallest improvements in your conversion rate or AOV can have major impact on your bottom line.