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This article answers the question, “why are online payment services necessary on e-commerce websites to boost revenue?” and showcases the benefits and disadvantages of accepting them.
In the era of digitalization, you can use almost everything on your phone; these innovations have made life easy. Due to such innovations and digitalization, businesses now have multiple ways to enhance their revenue. Under this, we are going to talk about one of the most significant innovations of this era: online payment methods.
If anyone had brought up this topic in the late ’90s, when even making a smartphone might have seemed like a joke, no one would have believed it was possible. But today, smartphones and the expectation to pay online are both a reality.
What Is An Online Payment?
When you make an online payment, you are engaging in an electronic exchange of currency via the Internet. Typically, this exchange of currency for a product or service occurs by transferring funds between a buyer’s bank account or credit card balance and a seller’s bank account.
Online payments can be one-time or recurring. Recurring payments are typically for subscription-based services, such as Netflix or Patreon. Customers pay a certain amount each month to use a service, receive access to specific software or platforms, or receive products.
How Online Payments Can Benefit Your Business
So, why are online payment services necessary for your business? Just like having a social presence is important for your business, it is important to accept at least one online transaction method.
Here are some benefits of accepting online payments on your e-commerce website:
Increase Customer Reach
In this era, consumers prefer the instant gratification that comes from being able to purchase something online and having it shipped quickly. This is opposed to either going to a store in person or having to mail in payment, wait for it to process, and then wait for the product to be shipped. If you don’t take online payments, such as mobile payments, chances are consumers won’t purchase from your business and will go in search of another one that does. In fact, studies show that in 2019, over 209 million U.S. consumers shopped online.
Increase Your Sales
Your online consumer traffic will drive your sales. According to Statista, the total transaction value of digital payments was projected to reach $8.50 trillion by the end of 2022 and is projected to reach $13.91 trillion by the end of 2026. This demonstrates that consumers prefer the convenience of purchasing online, which can lead to increased sales.
Provide Additional Convenience
If you’re an e-commerce business, chances are that you want to grow your business in terms of new customers and keep current customers coming back to your site to purchase products or services. One way to do this is to provide additional convenience. Through tokenization, your site can store a customer’s payment information, so they don’t need to enter it each time they want to make a transaction.
Payment processors, such as Apple Pay and PayPal, are examples of platforms that utilize tokenization. With the simple click of a button, users can log into their accounts with stored information and complete their transactions in a few quick and easy steps.
Since e-commerce sites began accepting online payments, several people have raised concerns about fraudsters and online transactions. These days e-commerce has incorporated secured payment options which enhance and protect customers’ transactions.
After automating businesses and processes, e-commerce has saved time and effort. Offering easy online payments reduces or removes manual tasks like data entry, managing customer disputes, and paper invoices. In fact, some online payment methods automatically generate online invoices, which saves time and money.
Challenges During An Online Transaction/Payment
Nothing is perfect, and you will find different types of cons everywhere. This section will discuss some challenges you might encounter while accepting online payments. Also, we will be discussing some ways in which you can address them.
Shopping Cart Evacuation
Online shopping seems easy for consumers; you can simply go to any online platform to check prices and add them to your cart. If you like that item, you can buy it; if not, you can leave them in the added cart. The average percentage of people do this; they abandon their carts after adding items to them.
But if you want to avoid such things, small businesses try these marketing tactics. You can send your shoppers regular notifications to let them know that they have put their favorites in the cart. You can also notify them about a price drop on the product if it’s happening. You can send reminder emails to potential customers and offer easy customer service through chat, email, or any dedicated toll-free hotline.
With modern innovations come modern threats; these days, frauds are common. People usually get tricked into entering their payment information into insecure or unencrypted sites, which results in the loss of money. Small businesses can now utilize payment security technology that provides such services that help them be aware of such fraud. You might need to enter some security pins before making any transactions, and these are required to make a secure online payment gateway for users out there.
A chargeback is when a credit card company or banking institution requires you to refund money due to a fraudulent or disputed transaction. This can be a huge loss of revenue for businesses.
Consumers will report fraudulent or dispute transactions if they’re not satisfied with what they received or do not receive the product. Therefore, you need to keep a watchful eye on your shipping methods.
Fortunately, the increased security and encryption many online payment platforms include makes you less likely to experience fraudulent disputes.
Why Online Payment Services Are Necessary For A Competitive Edge
The digital payment brings a lot of opportunities with it. With the help of innovation and digitalization, payment methods have accelerated a lot. Online payment has boomed since customers started to go cashless and started using online payment methods. Statistics say that over 420 billion transactions worth 7 billion have shifted from cash to cards. It’s all due to digital payment methods, and by the end of 2023, it is estimated that over 48 trillion dollars in transactions will happen.
An online transaction can boost the smallest payment performance and help such organizations come in above the bottom line. If you look at some big brands, they have also shifted their payment from a cost center to a strategic function. So these payment methods provide more than just a mere business necessity; they can propose a competitive benefit.
When merchants use better data and engage deeper insight into payment cash flow, it can unlock more revenue and help in the launching of innovative new products. This also helps to develop good customer experiences. Merchants using better data and garnering deeper insight into their payment flows can unlock more revenue, launch innovative new products, and create more memorable customer experiences.
When it’s about unlocking, revenue merchants need a payment services provider (PSP) which can offer such customized advantages solutions. It requires full data transparency and services related to the consultation, which helps with innovations. These services combined help in revenue generation.
The Final Thought
It’s the 21st century, and the world is growing at a rapid pace; innovations are at every level. Online payment services are one of the basic necessities in today’s world. You do not need to carry your cash or card if you require to make any payment.
As your consumers are becoming cashless, you should also start working on the same path. This directly means online payment methods will help your e-commerce website boost revenue. But remember, it won’t happen in a day or night; these things take time, so in the meantime, focus on providing good customer service.