Customers Care About Value and Choice
The pandemic years have brought several lessons to e-commerce businesses across Europe, and the world. Consumer preferences that have emerged in the last two years clearly show that consumers care about value, choice, and flexibility. More consumers are exploring digital payment methods and at a rate never seen before. Understanding their payment preferences is key to converting them. Research shows that 60% of online shoppers across Europe and the UK will abandon their cart if they cannot pay with their preferred payment methods.
But that is not the only reason why the right payment mix is crucial. Using the right payment methods can lower transaction costs, improve your acceptance rates, and make payments more secure.
Europe has 500 million e-commerce users and a market penetration rate pushing 60%. E-commerce brands have to tap into the pulse of consumers and align with their needs to improve sales and grow. In this blog, we look at five ways how you can improve your payments, reach new customers, and supercharge growth this year.
1. Give More Choice To Customers
Letting customers choose how to pay, wherever they are, decreases cart abandonment and will prevent them from buying from your competitor. Whether a customer prefers to pay using a digital wallet or a Buy-Now-Pay-Later (BNPL) service, giving them a choice is crucial to converting the sale. Ecommerce shoppers want a seamless checkout experience, and offering them the option to choose their payment methods helps to improve customer experience and builds loyalty.
2. Localize Your Strategy To Reach Customers
Localizing your payments is crucial to reaching new customers in newer markets. But you have to offer the right mix of payment options based on your target customer demographic and the markets you operate in.
Payment methods vary across Europe; what payment methods work in one might not work for the other. For example, credit cards are the most preferred payment method in the UK, while in the Netherlands, it is iDEAL. Bancontact is the top payment method in Belgium, while Germany loves PayPal, Girocard/ Giropay, and invoice payments.
On the other hand, alternative payment methods like Buy-Now-Pay-Later are growing at a phenomenal rate, driven by demand from credit-averse millennials and customers who love the flexibility offered by installment plans. Global spending via BNPL services will reach €881 billion ($995 billion) by 2026, as per Juniper Research. BNPL providers such as Klarna, Clearpay, and Laybuy have become highly popular amongst European consumers.
As consumers choose comfort and convenience in their shopping experience, you have to offer the right mix of payment methods to the right customers.
3. Look At The Data
You can devise an optimized payment strategy by accessing payment and market data. This will help you understand which payment methods you should be offering in each market.
Market data can give you insights on payment preferences, sector policy regulations, and comparative payment method costs. Understanding the popular alternative payment methods in different markets should be an integral part of building your strategy.
Looking at your payment transaction data will help you understand customer payment preferences, which payment methods give the best checkout conversion and cost the least to operate. Or which have the best acceptance rates and can minimize chargebacks. In short, look at what your business transactions are telling you to understand what works.
4. Watch the Trends Closely
Consumer preferences and payment trends are constantly evolving. Innovation in the industry is leading to newer payment methods hitting the market all the time. While some work, some don’t. Yet some go on to become a PayPal or a Klarna. Consumers are spoilt for choice with many alternatives; knowing which payment methods are hot and which are not can give you a competitive edge.
Trends are often localized. And with cross-border e-commerce growing, you should tap into these trends to offer the right payment mix to attract new customers in newer markets. Survey your customers, engage with your network, and leverage the expertise of your payment service provider to stay ahead of the trends.
5. Remove Payment Complexity
Offering customers the choice to pay using their preferred payment method isn’t always as simple as it might sound. Businesses have to wade through a lot of complexity in dealing with separate agreements, legal and regulatory requirements, technical integrations, testing, and maintenance for the different payment methods they offer.
Hence, it is crucial to work with a PSP who can help you seamlessly add payment methods through one easy integration. The right partnership can help you solve the complexities that arise from supporting multiple payment methods.
How Can Novalnet Help?
A global payment service provider (PSP) like Novalnet can help you leverage these payment trends and stay competitive. With deep experience in European markets, we can guide you with the right strategy and tools that complement your business needs.
With Novalnet’s technology, you can accept payments globally in 125+ currencies in 150+ automated country-specific payment methods. You can set up your payments within minutes with our instant payment plug-ins. With our AI-based risk management solutions and advanced analytics, you can design the best payment experiences for your customers, and all of it in a PCI DSS-compliant environment.
Speak to us to know more about different payment methods and how you can develop the best strategy for your business.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.