Choosing payment methods for your online store has a significant impact on your eCommerce success. Not sure what to select? We have checked out the most popular ways that are convenient for both merchants and customers and collected tips for accepting online payments.
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Payment by credit card
Recent research shows that 75% of clients select to pay by credit or debit card when shopping online and live. Therefore, let’s look at this method first. Visa and MasterCard are the leaders among bankcard brands and must-haves among payment options.
Also, don’t forget about the local credit cards used by your target audience. The presence of payment methods familiar to your customers increases the chance of a conversion.
Bank cards, QR-code, or mobile banking?
Although credit cards, mobile banking, and QR code options look like 3 separate payment methods, they all execute the same transaction – from the customer’s card to the dealer’s bank account. The difference is the experience of using but the money is withdrawn from the same source.
Advantages of using card payments
- Easy transactions. No funds conversion is required; money comes from the client’s financial institution.
- The payout is done automatically. It doesn’t require filling out additional forms manually. You can choose the frequency of payouts yourself, for example, once a week.
Disadvantages of using card payments
- Transaction fees are high. The credit card option requires high fees compared to other payment methods. Though, it depends on the PSP. Also, the type of your business affects the transaction fees. The higher the risk of chargebacks, the less affordable prices.
Payment with e-money (PayPal, WebMoney, Skrill, Stripe)
Electronic payment companies like PayPal, WebMoney, Skrill, and Stripe are popular and good alternatives to credit cards. Your clients don’t have to use his bank account; they log into the aggregator and make a payment with it. The transaction is processed and regulated by the payment system itself.
Advantages of electronic payment systems
- Minor transaction fees. Electronic aggregators have lower remittance fees compared to bank card payment processing.
- Easy integration with websites. The process of setting up payment acceptance for the systems like PayPal, Skrill, e.g., easier than for credit cards.
- Recognition and trust. Most online shoppers know about electronic payment aggregators like PayPal. Brand awareness guarantees a customer’s trust.
Disadvantages of electronic payment systems
- Funds need to be converted. The client pays for the purchase not with ordinary money that the merchant can immediately use, but with so-called quasi cash. You can have PayPal dollars that need to be converted into real dollars, which leads to the risk of losing part of the funds.
- Not all countries are available. Electronic payment systems are not allowed in all countries. Usually, you won’t be able to use most of them, if you live in Africa, Asia, the Middle East, or Eastern Europe.
- Manual payouts. Most aggregators don’t have automatic payouts. You will have to fill out a request regularly.
- Payouts limits. PayPal security policy allows the withdrawal of a restricted amount of funds. Sometimes, you may need confirmation of the user who made the payment. Electronic payment systems are no less demanding than banks.
Payment with remittance systems (SWIFT and SEPA)
This is considered the easiest way to transfer money. In short, funds go from your client’s bank account straight to your bank account. SEPA and SWIFT are the most popular remittance systems. Integrate both of them into your site.
SWIFT is controlled by American Financial Services but is actively used around the world. The main currency is dollars, so it is convenient for trading in the US.
SEPA is suitable for trading in Europe and transfers euros. It’s not well suited for US-based organizations. However, the remittance system provides financial freedom and flexibility in use. SEPA requires high processing fees but is appropriate for merchants who transfer thousands of dollars and more.
Disadvantages of SWIFT and SEPA
- High transaction fees. This fact makes remittance systems inaccessible for small dealers.
- Long payment transaction time. You can expect the arrival of money for up to 3 days. It can be risky for merchants who need to send their products immediately. However, you get “live” funds and don’t have to convert them.
Over the past few years, cryptocurrency has become a popular option for accepting online payments. After the merchant has received the payment in crypto, he/she can convert it to the usual money in a crypto-exchange service or PSP.
Advantages of cryptocurrency
- Low payment processing fees. It will cost you very cheap to transfer payment in cryptocurrency.
- No chargebacks. If you take payments in crypto, no refund is possible. It’s good for merchants.
Disadvantages of cryptocurrency
- Digital wallets aren’t popular. Not many users use cryptocurrency and E-wallets, preferring more familiar payment methods. However, the situation might change in the coming years due to the strong demand for alternative payment options.
- Redirection on an E-wallet payment page. To make a purchase using cryptocurrency, the client will be redirected on the payment page in his digital wallet. The payment process gets more complicated and takes longer. Internet users love quick and easy solutions. So far, crypto payment is not possible directly on merchant sites.
- Unstable crypto exchange rate. You can lose or win from another cryptocurrency swing during its conversion to dollars or euros.
Payments through ACH
Accept online payments with electronic checks. Automated Clearing House (ACH) conduct money transactions between financial institutions. Funds are transferred from the sender’s bank to the recipient’s bank through the FRS (Federal Reserve System). Transactions usually take 2-3 days.
Advantages of ACH payments
- Low transaction fees. Traditional payment methods require a large fee because transactions go through many stages. Several parties participate in the process, and each charge a certain amount of your money. ACH is a more beneficial financial solution. Regardless of the amount of money, you won’t be asked to pay more than 1% per transaction.
- It’s user-friendly. ACH is a simple payment system. To make a purchase, your customers need to enter only their banking information. Manual confirmation, bill payment, and additional efforts are no longer required. After entering the date, money is automatically withdrawn from the account.
- No credit cards. They are considered unreliable due to a large number of fraud cases. Also, unlike bank accounts, cards can expire.
Payments with mobile banking
Add a mobile payment option to your platform. Carry out multiple transactions using your smartphone. Pay utilities and internet bills, pay off loans, recharge your gaming account, etc. You can be confident in the security of Internet transactions with data security protocols. Each transaction must be confirmed by a user with micro-calls on the mobile phone.
Advantages of mobile payments
- Quick transactions. It takes a few clicks of buttons to confirm the payment. The operation is processed quickly and without problems. The ability to pay by phone increases customer’s loyalty to a merchant.
- High level of protection. The security of data transmission during money transactions is a priority for mobile banking programs. They use the encryption system for transactions. Thus, the personal information of cardholders is safe.
- Physical protection. In case of loss of the phone, unauthorized persons won’t be able to access the data in it. The latest generations of smartphones are equipped with different types of protection, from PIN-code to biometric approval.
- Global support. Large retail chains in developed countries always support mobile payments. In big cities, you can find many places for mobile payments.
What is the best online payment method?
You can find each e-payment method to be beneficial, depending on your business and needs. There is no right answer to this question as every case is different. Here are tips for picking up the best solution for payment processing:
- Bank card payments for small businesses with a focus on sales within their regions. Find a popular local bank for comfortable use.
- Electronic payment methods and cryptocurrency as a financial solution for high-risk businesses.
- All types of businesses that trade globally must provide a diverse range of payment options. Take the time to choose a PSP. WELLCOINPAY allows you to track your business transactions in one place, accepting payments around the world using a large number of payment methods.
- If your target audience is millennials and Gen Z, mobile banking is a must-have. Young adults will be predisposed to make purchases.
- SEPA will come in handy for all types of European businesses.
- US brands with low and middle-risk sales can accept SWIFT payments.