Your guide to different types of payment methods
The growing popularity of online services and stores has resulted in the development of various payment methods. Cash and card payments, e-wallets, and Pay-by-Bank transactions — the market offers a multitude of options. How do you choose the correct ones for your business?
This guide will explore common payment types, their roles in boosting conversion rates, and how businesses can select the optimal methods to enhance their operations.
- The role of payment methods for your conversion
- Cash-based payment methods
- Credit cards
- Debit cards
- Digital wallets
- Bank transfers
- Buy now, pay later (BNPL)
- Payop’s Pay-by-Bank
- How to choose payment methods for your business
- Preferred payment methods for different industries
The role of payment methods for your conversion
Choosing suitable payment methods is crucial for businesses, especially in e-commerce, as it directly influences conversion rates. Customers look for convenience, security, and flexibility when it comes to payments. Offering various payment options tailored to their preferences can decrease cart abandonment rates and enhance the overall customer experience. This not only helps in retaining customers but also attracts new ones by simplifying the checkout process.
Cash-based payment methods
Cash payment methods, while seemingly outdated in a rapidly digitising world, are still relevant in specific economic sectors and geographic regions. These simple and anonymous methods include traditional cash transactions, cash on delivery (COD), and prepaid cards.
Methods like OXXO or Neosurf bridge the gap between cash and digital payments, catering mainly to markets where consumers may lack access to banking services or prefer not to use online payment methods due to security concerns. However, the significant disadvantage of such methods is the lack of a refund option, which should be taken into account by both customers and businesses.
Credit cards
Credit cards remain one of the most widespread payment methods globally. They offer consumers the flexibility to make purchases and pay for them later, which can be attractive when purchasing expensive items. Plus, many credit cards offer rewards like points, cash back, or travel perks, making every dollar spent feel a bit more rewarding.
Although digital payment methods have significantly overtaken card methods in popularity, this option is still necessary for most businesses that want to sell globally. And despite card fees, the advantages—like reaching international markets and boosting sales—usually make it worth it.
Debit cards
Another classic option is debit cards. They offer a convenient way for consumers to purchase directly from their bank accounts, avoiding the risk of debt since spending is limited to the available balance.
For businesses, accepting debit cards is cost-effective because the transaction fees are generally lower than those for credit cards. This can be especially beneficial for small to medium-sized enterprises looking to save on transaction costs. Payments are processed swiftly, reducing the risk of delays and chargebacks. Additionally, modern debit cards come with robust security features, making fraud more difficult.
Digital wallets
Digital wallets, like Pix and PayDo, have transformed how consumers and businesses handle transactions, offering a secure and convenient alternative to traditional payment methods. These electronic services securely store payment information, such as credit card and bank account numbers, on a digital platform, allowing users to make payments online using their mobile devices.
Consumers enjoy the convenience of digital wallets, which replace the need to carry physical cards and cash. Additional benefits include easy spending tracking and advanced security features. For businesses, digital wallets speed up checkout processes, improve the customer experience, and reduce cart abandonment rates, all while building trust through robust security features.
Bank transfers
Bank transfers involve the direct movement of money from one bank account to another. This method is particularly popular for B2B transactions or when large amounts of money are involved. It is considered one of the safest payment methods, as it requires authorization from the account holder and is monitored by banks, reducing the risk of fraud.
Buy now, pay later (BNPL)
“Buy now, pay later” plans, like Afterpay, are an emerging trend that allows customers to purchase goods immediately and defer payment through structured installments. BNPL services can attract customers who may not have the total amount at the time of purchase but can manage smaller, periodic payments.
Offering BNPL can significantly boost conversions, especially among younger consumers who prefer not to use traditional credit. It can also increase the average check since customers are more likely to make larger purchases if they can pay in installments.
Payop’s Pay-by-Bank
Payop’s Pay-By-Bank leverages open banking to allow direct payments from bank accounts. It serves several European countries, including Germany, Austria, the Netherlands, and the UK. The process is straightforward: users select their bank at checkout, log into their bank’s app to authorize the transaction, and both parties receive instant payment confirmation.
Pay-by-Bank reduces transaction costs and eliminates chargeback risks while enhancing conversion rates by avoiding standard card payment rejections. This payment method also supports a wide range of industries, including iGaming. With higher transaction limits and a user-friendly, mobile-optimized interface, it provides an efficient solution for both consumers and merchants looking for a reliable payment system.
Learn more about the benefits of the Pay-by-Bank solution.
How to choose payment methods for your business
Selecting the right payment methods involves understanding your customer base, their preferences, and the nature of your transactions. Here are key considerations:
- Customer preferences: Tailor your payment options to the trusted methods of your target market.
- Security concerns: Ensure that the payment methods you choose are secure, minimizing the risk of fraud and breaches.
- Fees and costs: Consider the transaction fees associated with different payment methods and how they impact your pricing strategy.
- Geographical reach: If your business operates internationally, consider payment methods widely accepted in different regions.
Top payment methods in different regions
All regions have their own peculiarities and different rates of development. Somewhere the use of cash has been almost forgotten, and somewhere the level of penetration of smartphones and the internet still leaves a significant part of the population without access to basic banking services.
When choosing methods to expand your business to other countries, it pays to study these peculiarities. When you work with us, you get detailed and reliable analytics across all regions.
Preferred payment methods for different industries
Depending on the industry, businesses may have a different set of requirements and expectations of payment methods. The same goes for their customers.
E-commerce
For e-commerce and online marketplaces, versatility in payment options is key. Credit and debit cards are standard, but including digital wallets can cater to mobile shoppers and those looking for a quick checkout process. BNPL services are also becoming popular, especially for larger purchases, as they allow customers to commit to bigger transactions without immediate financial burden.
Marketplaces
Online marketplaces require particularly flexible payment solutions that can handle transactions from a variety of sources and currencies. Integrating digital wallets in addition to credit and debit cards helps facilitate quick and easy payments across different vendors.
Adding localized payment methods that cater to specific geographic regions can also enhance the user experience, allowing buyers to use their preferred payment methods. Like in e-commerce, BNPL options can be beneficial for attracting larger purchases.
iGaming
The iGaming industry requires payment methods that offer both privacy and quick access to funds. Digital wallets and cryptocurrencies are increasingly favored in this sector due to their anonymity and ease of deposit and withdrawal.
Traditional methods like credit cards and bank transfers are also widely used but can be supplemented with prepaid cards to cater to users who prefer not to disclose their banking information.
Videogame items & services
For this industry, payment methods that support microtransactions without hefty fees are essential. Digital wallets are ideal as they efficiently support small, frequent transactions. Many gamers are young and tech-savvy, which makes cryptocurrencies and in-app purchase systems two other attractive options.
Marketing services
Businesses in the marketing services sector often deal with other businesses and require payment methods that can handle larger transactions securely. Bank transfers and Pay-by-Bank payments are preferred for their security and suitability for high-value transactions.
However, digital wallets and credit cards should also be available to accommodate a variety of client preferences and to facilitate quicker payments.
Forex
Given the fast-paced nature of currency exchanges, the ability to move money quickly and securely is paramount in the Forex trading industry. Digital payment options are particularly popular because they allow for instant deposits and withdrawals, enabling traders to react quickly to market changes.
Bank transfers are also commonly used for larger transactions due to their high security. Additionally, offering multiple currency options and low transaction fees can enhance the trading experience, making it essential for platforms to support these features.
Boosting services
Boosting services in industries like gaming or social media require payment methods that support anonymity and small, frequent transactions. Digital wallets are ideal here, as they can handle numerous small payments efficiently and often offer some level of anonymity. Cryptocurrencies are another popular choice due to their ability to provide secure, private transactions and bypass traditional banking systems, which can be restrictive for such niche services.
Thanks to our extensive practical experience, the Payop team has an excellent knowledge of customer preferences in different industries and regions. They will always be happy to assist and advise you in compiling the list of methods to include all categories of your clients. To get a consultation, contact us at [email protected].