If the objective of generating storefront traffic is to achieve a high conversion rate, it makes sense to examine any obstacles that may interfere with the outcome. Limiting a business to just one payment method can mean fewer conversions, and ultimately, less profit.
A study of North American online businesses found that offering more than one payment method increased conversions by twenty percent! Shoppers would add items to their cart, proceed to check-out, then fail to complete the transaction if their preferred method of payment was not available.
Clearly, offering multiple payment options is a convenience that consumers seek and a simple way for business owners to increase sales.
Credit cards remain the most frequently used method of payment. However, some people choose not to use them for online purchases, creating the need for alternative methods. PayPal, with an estimated 50 million users worldwide, has filled that need. Other methods include electronic checks and, of course, good old-fashioned cash in the form of a check or money order by mail.
Each method obviously has advantages and disadvantages for the business owner. Credit card transactions carry fees that the merchant must cover, but as the most preferred payment method, accepting this form of payment ensures a healthy number of completed transactions.
PayPal is widely used among internet shoppers, and allows the merchant to accept payment by electronic check as well as credit cards. Fees are also assessed to the merchant for this type of transaction.
Accepting payment by mail opens the door to the small percentage of shoppers who do not trust even the most secure shopping cart when it comes to releasing personal information. The downside is the time delay in waiting for the check to arrive and then to clear before shipping the order.
One thing analysts agree on is that conversion is about the customer. When considering what options to offer shoppers, such as alternative payment methods, the business owner must think about the people behind the numbers. Without conducting a full-scale demographic study, it is possible to develop a composite of the type of people who are likely to buy. What are their habits, their likes and dislikes, their preferences and concerns? The answers can help business owners decide what factors might prevent completion of a transaction, and more importantly, which options facilitate a sale.
A business can be successful even if it accepts only one form of payment. But providing shoppers with options simply removes one of the most common reasons for abandoning a shopping cart without completing the transaction. Offering multiple payment methods to potential customers will ultimately lead to higher conversion rates, increased sales, repeat business, and word-of-mouth referrals from satisfied customers.