When was the last time you used cash to pay for items at checkout? If it’s been years, you are not the only one. A report by McKinsey shows that more than four in five Americans paid for purchases and services using some form of digital payment.
The global payments landscape has been constantly evolving to meet the changing customer needs. With more customers shopping online than ever before, the payment industry has been forced to adapt.
To accommodate these changes, merchants and eCommerce businesses are also pushing their payment processors to improve their checkout conversions and reach new customers. Therefore, if you are running an eCommerce enterprise, you should be aware of the latest trends shaping the global payment system.
Here are four top payment trends in the eCommerce world.
Buy Now, Pay Later (BNPL)
For years, electronics and furniture retailers have offered their customers installment payments. However, today other businesses in other sectors have also taken up BNPL which allows customers to buy an item and spread the payments over a defined period of time.
Data by Statista shows that BNPL now has a global market share of 3%. It’s becoming an attractive model of payment because there’s no interest fee and it’s easier to get approval than traditional credit cards. For example, if a customer makes a $100 purchase and uses BPNL at checkout, they can pay $25 upfront and then pay three installments of $25 spread out over six weeks.
This global payment method benefits customers who need short-term credit without necessarily paying interest. Due to rising inflation, it’s a manageable payment option for most people. In addition, with rising global freight rates, customers are looking to lower overall costs by using alternative payment methods such as BNPL.
For businesses, BNPL services like Afterpay and Klarna help in attracting customers seeking alternative payments at little cost. This is essential because it results in a smoother eCommerce checkout experience which boosts customer loyalty and higher conversion rates. Customers are attracted to businesses that cater to their needs and user experience.
The coronavirus pandemic has made contactless technology via digital wallets more attractive. More people are shifting to contactless payments via smartphones because they are fast, convenient and secure. Tools like Google Pay and Apple Pay are becoming more common over credit cards because customers can pay quickly with just their phones.
With mobile self-checkout, customers don’t need to queue for long to shop because mobile wallets are fast and don’t require a lot of interaction with cashiers or sales clerks. Because of this, a lot of retailers have added point-of-sale (POS) systems that support these payment methods. To cater to this, there’s a growing demand for software-based POS technology by both large and small businesses.
Thanks to these changing trends, there’s a wide range of mobile wallets coming up across different markets. By 2025, one in two people will be using a mobile wallet globally as more consumers ditch cash and cards. Therefore, as a business with international customers, you need to know the preferred payment methods in the respective countries.
Additionally, there are also a variety of apps that have been developed and made available for consumers to choose. As an eCommerce business owner, you need to be prepared for new developments.
The rise in cryptocurrency allows customers to pay for goods and services using blockchain-based digital currencies. Major platforms have added these digital currencies as a payment method. For instance, you can now use Bitcoin on a platform like PayPal which is convenient if you are looking for an alternative payment option. The underlying blockchain technology also has many important business implications.
If you add the latest payment methods like cryptocurrency to your business, customers who already use this currency to transact might make purchases, become loyal, and are less likely to cancel orders. This protects your business from incurring costs from the return process if the customer feels well taken care of – though they need to be loyal to you and the crypto you’re considering.
Countries are also developing their own digital currencies; therefore, cryptocurrency is increasingly becoming a legitimate form of payment. Reports show more than 90 countries are already exploring the possibility or have already launched a central bank digital currency (CBDC). These are generally more secure from a business perspective, but like all cryptocurrencies there is potential for significant swings in value. None has so far proven stable enough to be a replacement for national currencies.
As national governments increasingly develop an interest in stablecoins and cryptocurrency, it might become a preferred payment method globally in a few years. Therefore, as an eCommerce business owner, you should consider looking into including it down the road. Look to see if your audience is engaged and then start your journey.
Offer More eCommerce Payment Options For A Better Experience
The more payment options you provide for your eCommerce, the better it is for everyone. Customers are shifting their payment methods to keep up with the latest trends; therefore, allowing more options makes your business attractive. This is also one of the strategies to boost customer loyalty and increase your sales.
Research and partner with upcoming payment processors to strategically position your business a step ahead of your competitors. If you are planning to expand globally, start by accepting locally preferred payments and integrating these methods into your website.
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