With a CAGR of 11.80%, the digital payments industry is projected to reach US$14.78 trillion globally by 2027, according to Statista. In the US alone, at least 9 in 10 Americans have now adapted or are engaging with multiple digital payments.
So it’s clear as day that integrating a wide array of digital payments into your ecommerce business is critical not only for improving sales but also to sustain your business for a long term. But what are the different options available and how do you integrate digital payments into your online business?
Now that’s the question we’ll be addressing in this article.
What are Digital Payments?
Digital payments refer to the transfer of funds through online or digital channels without any physical exchange of cash. It refers to transactions where the parties involved utilize electronic means such as mobile phones or computers to exchange money.
Apart from being fast and convenient, digital payments are also secure and reduce the risks associated with carrying cash. It includes the use of mobile money, bank transfers, and various payment cards such as debit, credit, and prepaid cards.
In order for a digital payment to occur, both the payer and payee must possess a bank account, along with an online banking method, a payment-enabled device, and a medium for transmitting the payment.
With these key elements in place, digital payments can offer a secure, efficient, and convenient method for transactions between individuals and businesses alike.
Why Should Digital Payments Become Part of Your Ecommerce Strategy?
Here are 5 reasons why:
Enables Faster Transactions
If the processing of an order takes too long, you can be sure that your customer will take their business elsewhere. Digital payments ensure that your customers never have to wait for their orders as they are much quicker than traditional payment methods like cash or checks. This accelerated checkout process is highly sought-after by online shoppers and will undoubtedly increase conversions due to its speed and simplicity.
Improves Customer Experience
It’s no secret that first impressions are lasting, especially when it comes to digital payments. To ensure your online store stands out from the competition and leaves a positive impression, you must provide customers with an effortless payment experience — one they won’t soon forget.
A great customer journey establishes trust between your business and consumers; thus ensuring their loyalty for years to come. After all, what better way is there for customers to spread a good word about your company than through consistent satisfaction?
Reduces Cart Abandonment
69.99% is the average cart abandonment rate across the ecommerce spectrum, according to Baymard Institute. In the same survey, 18% of respondents said they didn’t trust sites with their credit card information and 17% of respondents said their checkout process was too complicated.
The best way to reduce cart abandonment is by improving your checkout process and offering customers a wide array of digital payments options. Permitting customers to pay using Apple Pay or Google Wallet will encourage them to finish their orders, granting shoppers a sense of satisfaction and positivity.
Makes Accounting Easy
From managing your purchase & sales orders to auditing taxes, COGS, and accounts receivable, ecommerce accounting has multiple facets to it. And quite often, even an experienced bookkeeper or CPA can feel exhausted when analyzing the hundreds of daily transactions that take place in an online store.
By integrating digital payments in your ecommerce store, you’ll be able to easily record and document transactions into your accounting software. It removes manual data entry and therefore, improves your audit trail and month-on-month reconciliation.
Digital payments allow your business to skip the potential human error and increase efficiency while reducing costs. All you have to do is pay a flat fee for your service provider, making payment processing more automated than ever before – saving time, effort and money!
By utilizing digital payments, you can merge your payment processes into one cohesive system. This will not only empower your business to offer better rewards and promotions, but also drastically reduce the chances of fraudulence.
What are the different digital payments options available?
Here are 4 widely-used options:
Also known as Electronic Wallets or Digital Wallets, eWallets are a convenient payment option for online shoppers. The shopping experience is quick and effortless with eWallets – letting you complete a payment with just one or two clicks. This online payment service allows users to deposit money into the wallet application beforehand or link to a bank account, eliminating the need to repeatedly enter payment information for each purchase.
For example, Wallet Factory offers eWallets that facilitate digital transactions and enable ecommerce businesses with a cloud-based digital financial ecosystem. Basically, it means that using this digital tool, users can access all their payment tools in one wallet.
eWallets can also store your funds as well as the customer’s information. Another benefit is the ability to track and manage spending. By having all payment information in one place, users can easily see their transaction history and budget accordingly.
Buy Now, Pay Later (BNPL)
Make your purchases now and pay later – that’s the promise of Buy Now, Pay Later (BNPL) systems. This type of loan provides customers with an opportunity to buy items without needing to make a payment upfront, often at 0% interest. BNPL is perfect for those who are looking for convenience and flexibility when it comes to buying goods online or in-store.
It’s estimated that consumer spending using BNPL services will increase to $437 billion dollars by 2027. BNPL apps such as AfterPay, Sezzle, and Klarna, continue to be favorites among millennials and gen z, though there is a significant increase of usage among baby boomers too.
These solutions tend to increase your customer lifetime value across ecommerce businesses as they can buy your products easily and then pay back at their convenience.
Alternate payments such as PayPal, Square, and Stripe have been lifesavers to many ecommerce businesses as they process payments without the need to store a user’s banking information. It reduces storage costs and increases customer trust. They’re also fast and convenient as users get to complete their transaction in a few clicks, without the need to key in too many details.
Initially most ecommerce platforms, such as Shopify or eBay, had native systems in place to process payments. However, with the increase in the number of stores and the demand of customers, almost every ecommerce platform has now made these alternate payment options a part of their payment gateway.
If your store has not started accepting these payment methods, then you should make them part of your checkout process today!
Mobile POS systems or mPOS are rapidly becoming a popular choice among online merchants who also operate a physical store. Simply put, mobile POS systems provide merchants with a more flexible and cost-effective option for managing their finances.
With an mPOS, business owners can install software onto a tablet or smartphone and take it with them wherever they go. This means that they can process sales no matter where they are, providing them with greater mobility and flexibility. In fact, a shop that has an mPOS system may not even need a checkout counter at all.
The hardware required for a mobile POS system is minimal. All that is required is a smart device such as a tablet or smartphone and a mobile card reader. It also reduces the wait time to check out a customer as the payments are completed within a few seconds.
How to Integrate Digital Payments Into Your Online Store?
Depending on your ecommerce platform you use and the digital payment you want to integrate, the process of integration can be either smooth or a bit complicated. However, let’s look at some common steps involved in making a digital payment a part of your payment gateway.
Step 1: Check for Compatibility
As we’ve seen above, there are quite a lot of digital payments available but not all of them may be supported by your store. For example, if you’re using Shopify then you get to choose over 100 different payment options based on your location. However, Shopify Payments – a popular payment option powered by Stripe – is only available in select countries.
You should also check if the digital payment supports multiple currencies. For example, if you’re a merchant based in Europe and you want to offer your products in Asia then you may want to check if the digital payment offers multi-currency exchange options. You should also consider the exchange rates involved during the transactions and payouts.
A few other aspects that you need to check are the compliances required, monthly fees, and chargebacks. Once you’ve found the right option based on these parameters, you can then begin your integration process.
Step 2: Choose The Method of Integration
When it comes to integration, it predominantly boils down to two options – hosted and non-hosted integration.
With non-hosted integration, you can establish a secure connection to digital payment through the API they provide for your eCommerce website. In simple terms, it means customers stay on your site without being redirected elsewhere. It’s an excellent idea since it won’t hamper conversion rates and will keep them engaged with no disruption.
Nonetheless, this approach puts you in charge of the security and privacy of your customers’ data. Most likely, it is best to enlist a professional programmer to manage most non-hosted (or integrated) gateways since this task requires technical expertise that won’t be easy for someone who’s not experienced with coding.
On the flip side, hosted payment gateways transfer the transaction from your website and onto a secure, third-party processor – granting you relief from worrying about PCI compliance or private data. For example, if you’ve ever used PayPal to checkout from a store then you’ll notice a different screen popup to complete the payment. However, there are some potential drawbacks to utilizing hosted payment gateways as customers may lack trust towards these platforms, or they might not want to leave your site before completing their purchase which can lower conversion rates significantly.
During the integration process, it’s also critical to access the documentation of the digital payment platform. For instance, if you’re looking to integrate Wallet Factory’s Digital Wallet platform to your eCommerce store, check for the necessary documentation that can help improve the process.
Step 3: Check in Test Environment
When you start integrating the payment option into your eCommerce store, it’s critical to first test the application in a test environment. It helps you identify any technical errors and perform quality checks for a smooth payment process.
Though it’s a standard procedure with any technical development, it’s important to keep in mind that even a single error can cause irreversible damage to your store.
You can use any sandbox environment to test the new integration. For example, you can ask the Wallet Factory team to run your eWallet or customer rewards platdorm in the sandbox to estimate how well it has been developed while testing various app modules.
Step 4: Obtain Necessary Compliances
Depending on the type of integration you’ve chosen, you’ll have to obtain necessary compliances before you use the payment method in your live store. For example, almost all hosted digital payments require PCI DSS compliance. So you’ll have to obtain this compliance before initiating any payments.
These are the four basic steps that you’ll need to consider when integrating a new payment method into your ecommerce store.
Adapt Modern Payment Methods to Boost Your Sales
It takes a lot of effort to bring in necessary traffic to your store, generate leads, and then convert those leads into paying customers. Despite this effort, one major reason for shopping cart abandonment during the final stages of the purchasing process is the lack of varied digital payments.
With the increasing popularity of digital payments, it is crucial for ecommerce stores to adapt and offer different types of digital payments to their customers. By doing so, you can not only increase your sales but also improve your inventory management processes and avoid losing potential customers to competitors who offer better payment options.