Have you ever walked up to a restaurant, seen a sign that says “Cash Only” on the door, and walked away? The online version of that situation is customers abandoning shopping carts because their preferred method of payment isn’t available. The ease of adding payment options to ecommerce shopping platforms, and the opening up of international markets, has made alternative payments mandatory for ecommerce merchants, not just nice to have.
Over 80% of online shoppers report that they have used an online alternative payment service (payments other than credit cards, such as PayPal, Amazon Payments, or Google Wallet) for an online purchase in the past 12 months, according to Javelin Strategy & Research’s Online Retail Payments Forecast 2013-2018 report, released on March 5, 2014.
Here are the top four alternative payment options, according to the report:
1. Not surprisingly, PayPal is the top alternative payment system, used by 87% of respondents, making it a must for online sellers. PayPal has over 130 million active registered accounts, and is available in 193 markets and in 26 currencies. PayPal’s popularity is helped by the fact that it’s owned by eBay (though the two will split in 2015 to be two separate public companies), and eBay requires all payments to be processed through PayPal. It’s also free for merchants to open a PayPal account, and they pay 2.9% per U.S. sale and a $.30 processing fee, which can be reduced with a high volume of transactions.
2. Do you buy items on Amazon? Most people do.That’s probably why Amazon Payments were used by 33% of respondents in 2013. Formerly known as Checkout by Amazon, Amazon Payments has 215 million active Amazon customer accounts.You don’t need to sell on Amazon to accept payments through Amazon Payments. Instead, you can offer those 215 million customers the ability to use their stored credit card information on Amazon to pay for products on your online store. Merchant fees are the same as PayPal’s.
In addition, Amazon has aggressively targeted online retailers by launching a promotion this past April, where they’re offering free payment processing for your first $10,000 in transactions over 12 months.
3. Bill Me Later is in third place, with 15% of online respondents using it in 2013. Bill Me Later is a separate service offered by PayPal that provides your customers with access to 6-month financing, on purchases of $99 or more. PayPal provides a free banner ad to help you promote the financing option, and seller fees are the same as using PayPal. A 2013 PayPal study showed that sales increased as much as 18% for sellers advertising Bill Me Later.
4. In fourth place is Google Wallet, with 8% of online respondents using it last year. Google Wallet allows customers to store their credit card information digitally and have access to it from wherever they shop.Especially powerful is the ability for merchants to create a fast checkout experience for their mobile sites and apps with Google Wallet Instant Buy. Setting up Google Wallet is free for merchants.
If you’re not offering these four alternative payment methods, you’re probably losing out on sales. Adding new payment methods is easy with many sales platforms. In a matter of minutes, you could be on your way to more sales!