When setting up an online store, finding out which types of payment methods to use is essential for your business. Not only because there are different types to choose from, but certain types are optimized to maximize revenue opportunities. Here’s a short checklist to help you figure out which types of payment methods will work best for your ecommerce business.
Payment method types
As a global payment solution, credit cards are the most common way for customers to pay online. Merchants can reach out to an international market with credit cards, by integrating a payment gateway into their business. Credit card users are mostly from the North America and Europe, with Asia Pacific following suit.
A popular payment method in countries with low credit card and banking penetration, mobile payments offer a quick solution for customers to purchase on ecommerce websites. Mobile payments are also commonly used on donation portals, browser games, and social media networks such as dating sites, where customer can pay with SMS. Majority of mobile payments are done in the Asia Pacific, with 64 million users expected by the year 2016.
Customers enrolled in an internet banking facility can do a bank transfer to pay for online purchases. A bank transfer assures customers that their funds are safely used, since each transaction needs to be authenticated and approved first by the customer’s internet banking credentials before a purchase happens.
An ewallet stores a customer’s personal data and funds, which are then used to purchase from online stores. Signing up for an ewallet is fast and easy, with customers required just to submit their information once for purchases. Additionally, ewallets can also function in combination with mobile wallets through the use of smart technology such as NFC (near field communication) devices. By tapping on an NFC terminal, mobile phones can instantly transfer funds stored in the phone.
An alternative payment method, commonly used by minors or customers with no bank accounts. Prepaid cards come in different stored values for customers to choose from. Online gaming companies usually make use of prepaid cards as their prefered payment method, with virtual currency stored in prepaid cards for a player to use for in-game transactions. Some examples of prepaid cards are Mint, Ticketsurf, Paysafecard, and Telco Card. It appears that age rather than income is the trait that affects the adoption of prepaid cards, according to Troy Land’s research.
Direct deposits are when customers instruct their banks to pull funds out of their accounts to complete online payments. Customers usually inform their banks on when funds should be pulled out of their accounts, by setting a schedule through them. A direct deposit is a common payment method for subscription-type services such as online classes or purchases made with high prices.
Fiat, or physical cash, is a payment method often used for physical goods and cash-on-delivery transactions. Paying with cash does come with several risks, such as no guarantee of an actual sale during a delivery, and theft.
There are different types of payment methods to choose from. But by understanding how each one functions, and knowing who your target audiences are (particularly, where they are located), can help you decide which payment methods to integrate. If you need help on setting your business up with appropriate types of payment methods, send us an email at email@example.com.