By Casey Bullock, General Manager – North America Worldpay
As the digital age produces more gadgets than ever thought possible, the amount of payment options has skyrocketed. However, this can create a disconnect between businesses and their consumers, especially in the ever-growing global e-commerce market. When customers adopt new payment options, businesses are often left scrambling to keep up with shopper payment preference.
Merchants cannot ignore the demand for these new payment methods. According to Worldpay’s 2017 Global Payments Report, 78 percent of consumers say their online payment experience affects their willingness to return to a retailer’s website. To boost e-commerce sales, merchants must make the payment process as frictionless as possible. Here’s a look at how businesses can adapt to this new wave of payments.
The Rise of E-Wallets and Mobile Wallets
As shoppers are familiarizing themselves more with e-wallets, such as PayPal, Alipay and Tenpay, this payment method has become increasingly popular in the e-commerce market. In fact, e-wallets are currently the second most popular payment option in the U.S., having surpassed debit cards for the first time in 2017. Within the next five years, e-wallets are even expected to outpace credit cards, becoming the number one payment option in the U.S. E-wallet popularity extends globally as well -- they are set to be the most popular payment method for nearly half of the world’s e-commerce market by 2021.
Merchants need to prepare their business for this new wave in the payments landscape. Failing to adopt e-wallets could potentially result in loss of sales, as consumers may go elsewhere if their preferred payment option is not available.
It’s important for businesses to understand their customers by first understanding why e-wallets are so appealing. They’re easy to use, as shoppers only have to enter their payment information once before they can use the platform to make future purchases. E-wallets are also accessible and fast -- one push of a button lets the customer purchase an item in seconds.
Mobile wallets have also gained popularity, as platforms like Apple Pay, Samsung Pay and Android Pay have taken over more of the payments industry. The Global Payments Report predicts that m- commerce will rise at a rate of almost 20 percent in the next five years, making global m-commerce worth $2 trillion. Merchants need to be ready -- both online and in-stores -- for customers to pay with mobile wallets, as the U.S. has the second largest m-commerce market in the world, and will hold that position for the foreseeable future.
Preparing for the Next Wave of Payments
It can be difficult for merchants to keep up with the ever-changing payments landscape. However, it’s important to stay on top of the latest trends to ultimately convert browsing into purchasing.
Nevertheless, businesses do not need to accept every form of payment possible, instead they can analyze their markets to see which payment preferences are the best fit. For example, by accepting credit cards, PayPal and other mainstream e-wallets, U.S. businesses can cover 80 percent of preferred payment methods.
Additionally, offering mobile payments will be vital, as they will increasingly come with value-added services, such as additional transaction information within the payment app, budgeting features and integrated loyalty schemes. Mobile wallets are being extended to in-app purchases, creating a simplified and secure buying experience. This makes it easier than ever for customers to use businesses’ apps to seamlessly make purchases. In-app money transfers from companies like Facebook also mark a significant step in delivering a ubiquitous consumer buying experience and creating a frictionless payment experience for consumers.
In-app payments are a major opportunity for businesses, as customers don’t need to leave an app in order to make a purchase. Merchants can now promote and sell their products within their app, making the payments process shorter and easier for consumers.
As always, merchants also need to make security a top priority when it comes to offering different payment options to customers. Security remains a major issue for consumers, as nearly a third of households avoid online purchases due to concerns over data security.
One Size Doesn't Fit All
The world of payments continues to remain fragmented, with no one-size-fits-all solution. As a result, businesses must do their homework and find the best options for the specific company and its customers.
This particularly affects global corporations, as different payment options are popular in different regions. In the U.S., for example, debit cards are the fifth-most used payment option, while in the U.K., debit cards are the second-most popular payment method. This shows how international businesses will need to be more scrupulous about which payment options they are offering as well as where they are offering them.
Switching to or implementing an additional payment method can take time, usually requiring technical development time on the company website, new contracts with each payment provider and sales process redesign. Despite the investment, merchants will be able to accept the payment options that consumers want to use -- ultimately increasing sales, as shoppers will enjoy the frictionless payment experience and return to the site to make more purchases.
Businesses need to offer the right mix of payment methods that are tailored to the needs of consumers in their priority markets. Again, it’s not about offering every single payment option available. Merchants will be most successful by focusing on the payment methods that will complement their customers’ preferences, rather than the latest trend, and recognizing the increase in sales will justify the operational overhead associated with adding new payment options.
Mobile payments and e-wallets are becoming more prevalent with consumers. Merchants will need to work quickly to keep up with this trend, as these payment options are only set to become more popular in years to come.
About the Author
Casey Bullock is General Manager – North America for Worldpay. Current responsibilities include managing all commercial personnel working directly with Worldpay’s clients in the North America region. Prior to Worldpay, Mr. Bullock was VP, GM Fraud Solution for Chase Paymentech focused on the creation and delivery of enterprise-class fraud prevention capabilities into the e-commerce marketplace. Mr. Bullock spent 10 years serving in senior sales and sales management positions with CyberSource Corporation focused on providing enterprise-class payment and fraud management solutions to many of the industry’s most recognized brands. He has over 20 years of combined technology sales and sales management experience including positions at Harmonic, Inc. and Silicon Valley Communications.