How Payment Methods Can Boost Conversion Rate in E-commerce
Gone are the days where Click-through Rate (CTR) is the top metric used to measure the success of an e-commerce campaign. With different tools that can now be used, conversion rate has certainly become the key metric advertisers look at to measure the success of their campaigns. As e-commerce business grows further, it is essential to identify the factors responsible for increasing the conversion rate.
According to Baymard Institute, the average cart abandonment rate is 70 percent and the higher the cart abandonment of an e-commerce business, the lower the conversion rate it will achieve. In order to be at the top of the game, businesses need to look at different factors that they can work on to decrease cart abandonment. More than the strength of the CTA or the UI/UX of the store, businesses should focus on the payment phase, which is where the biggest drop in the purchase journey normally happens.
There are different factors that explain why shoppers abandon their carts, but as the final step in the check-out process, the available payment method is an area that deserves particular attention. Based on the Global Web Index survey, 37 percent of those surveyed said that the ability to pay cash on delivery is one of the factors they consider most strongly when buying a product online. Furthermore, an easy checkout process and the ability to spread payment without added interest are also things people look at with 23 percent and 20 percent responses respectively. Luckily, nowadays e-commerce businesses have a wide array of payment options that address these considerations to optimise their conversion rates.
The first option is Cash on Delivery. Since it is so commonly used, it remains one of the top preferred payment methods in the region. Based on ESW 2021 data, 64 percent of online shoppers in KSA use Cash on Delivery, making it the most preferred payment method when purchasing online. With the fear that comes from buying from fraudulent online stores, Cash on Delivery gives online shoppers a sense of security by not requiring them to disclose financial information such as bank or card details. The convenience and security of paying only when the product has been received ensures a more hassle-free purchase journey for the user.
Another option that should be considered is credit and debit card payment. As the popularity of contactless delivery started to rise with the onset of the pandemic, card payment options became more essential to e-commerce businesses than ever. Based on McKinsey & Company insights, annual digital payment rates in the UAE grew by 9 percent from 2014 to 2019, while KSA observed an astronomical growth of 70 per cent in card payments between 2019 and 2020. Moreover, according to Visa, UAE consumers have continued to prefer digital payments. In the study they conducted in August 2021, 57 percent of consumers in the UAE said that they have increased their credit card usage, while 53 percent and 47 percent reported higher debit card and prepaid card transactions respectively. As contactless payment continues to grow in the region, keeping card payment options at the check-out could be instrumental to a successful conversion.
Aside from more typical methods like Cash on Delivery and card payments, merchants can also activate Buy Now Pay Later (BNPL), which has grown rapidly in the market in the past couple of years. With this payment tool, customers make an initial payment to receive the product and the remaining amount is then distributed across two or more instalments without additional interest, unlike credit cards. However, this could only be an option for minor purchases. Additionally, while consumers of all ages are utilising BNPL tools, millennial, and Gen Z shoppers, being averse to the use of credit cards, are doing so at markedly higher rates. By understanding the demographics and behaviours of the target audience, e-commerce businesses can highlight this option in a campaign tailored specifically to this younger subset of the population.
Moreover, Mobile Wallet is another method that can be added to further the payment options. It is a tool that replaces the use of a physical card and allows you to make transactions on your smartphone instead. Common examples of this are Samsung Pay and Apple Pay, and while they are not new to the market, their convenience has resulted in a decrease in cart abandonment rate. E-Wallets can be used to target the right audience in terms of the device they use. With the information that can be gathered from digital platform reporting tools, e-commerce businesses can focus on communications that will accentuate the availability of Mobile Wallet payment in their shop. This will enable businesses to implement more convenient online shopping experiences while reaching the right audience based on their devices.
As e-commerce business grows, new payment methods will continue to evolve to meet the demands of the customers. Being innovative while keeping in mind what would fit customers’ ability to pay can make them feel valued, which is one of the key elements that contribute to both conversions and customer loyalty.
