Alternative payments to credit or debit cards are becoming more popular in European ecommerce due to increased safety concerns. According to Research and Markets, European ecommerce customers prefer to use cards to make purchases, but the growing concerns over card theft have turned many people away from inputting their card information to pay for goods.
Another reason for this slow but consistent switchover from cards to alternative payment methods is that merchants are tired of paying the card processing fees that come with credit and debit cards. Ecommerce stores are offering other forms of payment and encouraging people to use them. According to Instore, typically ecommerce companies have to deal with three types of fees: interchange fees, assessments and merchant service company fees. In all, this can cost ecommerce businesses anywhere from 2 to 5 percent of a transaction, which over the course of a year can be thousands of dollars.
Alternative forms of payment
Luckily, other forms of payments exist and they're becoming more widely accepted by ecommerce customers. While ecommerce stores still need to offer credit and debit card payments to stay competitive, someday it might not be that way. Here are a few common alternative payment methods:
- ACH payments
Automated Clearing House payments are basically an electronic check. When a customer pays with this method, the transaction is processed using the customer's account and routing numbers. It is more of a direct payment than a credit or debit card payment, and the processes card payments use are bypassed, meaning fewer fees. ACH payments typically charge a flat rate for every transaction instead of a number of percentage-based fees. Because ACH payments bypass the process that credit and debit card payments go through, they are typically safer as well.
- Prepaid cards
While cards that are preloaded with money don't save the ecommerce store anything on processing fees, they are safer for the customer simply because if they are stolen, the thief only has access to the funds loaded on the card. Prepaid cards are very convenient because they're accepted anywhere debit and credit cards are, which is most retailers.
- Virtual wallet payments
Virtual payments are still pretty new, but they are gaining popularity. Virtual wallets actually save payment information so customers can pay quickly and easily. Ecommerce stores have to offer the payment option to be able to accept these types of payments. Fees associated with this type of payment are very low, but currently security is still a concern.
- Local payment options
Although ecommerce stores can get by without offering local payment options, it's not a bad idea to offer some. Businesses should research where the majority of its customers are geographically located and research what payment options are common there. If a business has many international customers, offering a payment method that is local to them could help increase sales.
Alternative payment methods are steadily gaining ground and bringing down the amount of credit and debit card payments. According to yStats, this trend is likely to continue. While it can be difficult to offer the payment option all your customers want, it's a good idea to at least give them several options to choose from. That way, you'll hopefully be able to provide customers an option that suits them best.
Brought to you by PacNet Services, your one-stop global payment processing solution.