Having an online payments strategy has never been more important than it is today. Your global customers have never had so many ways to pay – credit card, debit card, E-Wallet, pre-paid cards, eInvoices, bank transfers – yet many businesses stick at just one or two options without taking into account the preferences of different customers. This is an opportunity for your business.
It’s up to your payments strategy to outline how you are going to help these customers use their favorite payment options to purchase the products they want at the right price. If you can achieve this, your business will be more competitive, score highly in metrics such as conversion rate and customer retention, and have more satisfied customers.
Consider the following six areas when building your payments strategy:
1: Geographies Of Your Target Markets
Payment preferences differ wildly by country. In Asia, for example, E-Wallets such as Alipay and WeChat account for 52.3% of eCommerce spending, while credit cards account for just 16.8%. Understanding who your customers are and how they like to pay is vital for building the correct payments strategy and maximizing your profit. It’s not just about today: payment preferences are changing rapidly so you must have one eye on future trends.
In 2018, for example, 33.9% of eCommerce payments in North America were made by credit card, and just 19.8% by E-Wallet. But, Worldpay predicts that by 2021 E-Wallets will have overtaken credit cards, and by 2022, E-Wallets will account for a third of eCommerce payments made in North America.
2: Payment Preferences Of Your Target Demographics
It’s not only geography that affects payment preferences; age does too. 74% of millennials in China and 75% in India (the two countries with the largest youth populations in the world) have used a mobile wallet; about double the adoption found in many Western countries.
Generally, if the demographic you are targeting is older, credit and debit cards and bank transfers will probably be the most popular payment options, but it does depend on who you are selling to. The lesson is simple: know your customer.
3: Price Localization
While many businesses simply convert their prices into another currency using the exchange rate, this isn’t always the best way. Customers in different countries may be more or less sensitive to price – you may get better results by raising or lowering the amount you charge.
The same logic applies to the features your product offers and its positioning in the market. Some features may be worth more in some markets and to some customers than to others. Doing your research and testing your markets is critical to getting this right: if you assume every customer worldwide is the same you are leaving value on the table.
The importance of testing is clear when you see price localization done badly. In 2013, Adobe’s reputation in Australia received a hammering when they priced their Creative Suite far too high – local news outlets quickly pounced on the fact that it was cheaper to purchase a return flight to the United States and buy a copy there than it was to purchase in Australia.
4: Know Your Market: Localizing Special Offers
What’s the biggest day for online shopping? Here’s a clue: it isn’t Black Friday or Cyber Monday.
It’s Singles’ Day, an anti-Valentine celebration adopted by Alibaba that has become a day on which millions of Chinese celebrate by buying themselves gifts. Held annually on 11/11, this year Singles’ Day saw Chinese shoppers spend more than $30 billion online in one day.
When setting your pricing strategy, it is important to research and include the holidays and celebrations that matter to your customers – and that’s going to change for every locality. Taking these into account helps you build your brand in different localities while increasing your profit.
5: Setting Up Fallback Payment Options
There’s no quicker way to frustrate a customer than to have a product they want, at a price they’re willing to pay, and then to not be able to take their payment. It doesn’t matter if the problem is with your payment processor and not your website, they’re going to assume it is your fault.
Worse, these kinds of problems are most likely to happen at the busiest times, when payment processors are managing higher volumes of purchases. Losing the ability to take orders for just an hour on Black Friday, Cyber Monday, or in the run-up to Christmas could cost your business thousands of dollars.
The easy way to avoid this problem is to set up fallback payment options. This means that if one payment processor takes too long, you automatically switch the transaction to another. No more lost payments, no more frustrated customers.
6: Using a Payments Management Platform
Although many of the above suggestions can be implemented manually, it is far more efficient to use a payments management platform. Using a payments management platform enables your business to connect to tens of different payment providers through just one application.
This enables you to set up localized payment options for every locality you sell too, set up automated fallback options for when something goes wrong, and collect all your payment data in one place – data which can then be used for further optimization.
You can put that data to good use by setting up customer routing that takes every customer through the right payment processor to optimize acceptance rates and minimize processing fees and FX.