What alternative payment methods to offer? A five-step checklist

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Alternative payment methods (APM) are gaining popularity with customers. In Europe, 80% of consumers expect to be able to pay with a payment method other than cards. The same is true in Asia-Pacific, where 94% of consumers will consider using APMs this year. In the Middle East (MENA), digital wallets should soon be the preferred payment method.

As the demand for APM grows, you need to have a strategy to implement the right ones in the right markets at the right time. Here are five ways to make sure you’re offering the right alternative payment methods to your customers.

1. Build on local knowledge

Consumer preferences differ between and within regions with respect to the APM of choice. Businesses need to integrate local knowledge and information to offer their customers the right payment method in the right region.

Even countries in the same region can have big differences in consumer payment preferences. For instance, Polandcustomers want to pay using Przelewy24. Whereas in the Nederlandsthe most popular payment method is Ideal. In the MENA region, Qpay is popular in Qatar but not in Egypt, where Wildcat is a popular payment method.

It’s just scratching the surface. Even within countries, there are demographic and geographic nuances. And these are not always clear at first sight. That’s why businesses should leverage their local resources and expertise as much as possible for their payment providers to uncover this information.

2. Consider your industry

Offering the right payment method is not a one-size-fits-all approach. Each business will need to consider their industry, needs, and customers to find the options that are right for them.

For example, a business receiving multiple small transactions will be primarily concerned with cost per transaction as it operates on tight margins – even a slight increase in transaction cost can wipe out profits. Therefore, these companies should offer and encourage customers to use the most cost-effective and successful payment methods, such as direct debit.

In comparison, buy now, pay later (BNPL) transaction fees tend to be higher. However, retailers who offered their customers BNPL saw a 50-200% increase in units per transaction. So there’s a math to be done to determine whether or not this is a payment option that makes sense for your business and its sales strategy.

There are also other variables at play. Take a subscription business for example. He can thus see a greater conversion offering a particular payment method. But the business is fueled by recurring revenue and if this payment method results in more churn is probably not the right thing to offer.

3. Stay nimble

The landscape of payment methods is rapidly changing as innovative players throw their hats into the ring. Keep an eye on future payment trends and be ready to pivot when the data suggests.

However, always be aware of the purpose behind offering a new payment method. Whether you’re using it to reach a new market or to entice existing customers to spend more, a clear goal will prevent you from adding unnecessary new ones.

And remember that simply offering more isn’t the solution for APMs either – no one wants to be faced with 20 different options at checkout. Adjusting your strategy to include a new payment method may mean removing one that no longer serves you.

4. Focus on customer expectations

Your business goals are important when developing an APM strategy. Ultimately, however, it is the expectations of your customers that must also be taken into account. You should make it as easy as possible for them to pay.

For some of your clients, BNPL allows them to spend more and split their payments into smaller installments. For others, the loyalty programs offered by Alipay encourage people to pay for everyday items online. And, if mobile is your primary sales channel, digital wallets offer the most seamless payment experience for customers.

Digital personalization in e-commerce could bring retailers up to $2.9 trillion within 10 years. Personalization of the end-to-end shopping experience includes the payment methods you offer. APMs should be considered an integral part of any plan to innovate or develop new business models.

5. Access data and make smarter decisions

Whether you’re wondering which APMs are most popular with your customers, which ones are best suited for what you’re selling, or how much each is going to cost, the key to answering all of these questions is data.

First, review market data to understand payment preferences, industry benchmarks, and comparative APM costs. Second, leverage your internal data – in other words, what are the transactions going through your business telling you?

And, if your company can run all of its APMs on one, unified API platformit will have the luxury of a consolidated view of all data and the tools to turn insights into action.

Read our guide to learn more about alternative payment methods and how you can develop the best strategy for your business to deliver the methods consumers want today and tomorrow.

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