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Picture the scene. It’s Friday night, you’ve made a big bowl of popcorn, and you’ve sat yourself down in front of the TV to watch a movie. You open Netflix, with thousands upon thousands of titles to choose from. Yet what happens?
You can’t decide. There’s too much choice; too many distractions, too little certainty. And, more often than not, you spend valuable time you could’ve spent enjoying the movie simply scrolling aimlessly through a catalog of content you have no interest in.
A similar phenomenon takes place when your customer, reaching the checkout stage of a purchase on your online store, comes to pay. In your desire to give them enough payment methods, you may inadvertently overwhelm them with choice instead. Despite your good intentions, this could lead to customers abandoning their purchases through confusion or using a payment method that is suboptimal for you as the merchant.
So how many payment methods should you offer? For this article, we'll assume you already accept credit card payments.
Below, we’ll discuss the pros and cons of offering multiple payment options. We’ll show you how to pick the right payment methods for your customer base and bust the myth that more payment methods are always better.
What are multiple payment options?
Having multiple payment options simply refers to offering your customers several different ways to pay for a purchase on your online store.
For instance, instead of only allowing them to pay with a credit or debit card, you might accept digital wallets (such as Apple Pay, Google Pay, and Samsung Pay), cryptocurrency, or offer a Buy now, pay later service like Afterpay or Klarna.
For more information about these alternative payment methods – including what they are, and how your business can take advantage of them – explore our dedicated guide to payment methods.
Benefits of multiple payment methods
Before we get into how many payment methods are too many, let’s take a look at the wealth of benefits providing more payment choices can offer your business.
Better customer experience
Customers love being able to pay the way they want – and via the method they’re most familiar and comfortable with.
Through this lens, offering multiple payment methods can reduce friction at checkout and increase the likelihood that customers will be able to pay through their preferred payment method – boosting not only their experience, but their faith in your brand at large.
This can lead to more engaged, loyal customers who are more willing to recommend your business.
Boosted conversion rates
Enabling your customers to pay via the method they’re most comfortable with increases the likelihood of them converting when at checkout.
In fact, offering multiple payment methods – and choosing ones targeted to the right audience – has been shown to increase conversion rates (and in some cases, as data has shown, by as much as 30%). On the flip side, our own research has demonstrated that 60% of ecommerce shoppers will abandon their carts if they don’t see their preferred payment method there – so it’s not something any online business can afford to ignore. On that note…
Lower cart abandonment
Multiple payment methods can prevent cart abandonment – decreasing the chance of your customer jumping ship before following through with a purchase.
Lower cart abandonment rates work wonders for your conversion rates (and your business’s overall sales and revenue). They also mean you can spend less on email marketing campaigns to retarget these customers.
Higher customer loyalty
Customer experience, as we saw earlier, is linked to customer loyalty. Simply stated, if a customer benefits from a satisfying, seamless payment process with your site, they’ll remember it – and, when faced with competing businesses, will be more likely to buy from you again.
New customers
Happy customers are loyal customers – and loyal customers refer you to their friends and social media followers.
In this sense, providing multiple payment methods is the start of a chain reaction that leads not only to repeat business, but to an altogether new stream of customers.
What’s more, different demographics prefer different payment methods, so if you want to expand your customer base among a particular demographic it’s a good idea to adopt their preferred payment method.
Want to grow your business’s audience? Our guide can help you reach new customers – in just five simple steps.
Flexibility in other markets
Particularly if you do business in multiple international markets, providing a variety of payment methods is vital.
That’s because different regions and countries around the world have their own preferred payment methods. Alipay and WeChat Pay are the dominant payment methods in China, for instance, while debit cards are still the most popular way to pay in the US.
When you accommodate these geographic distinctions and preferences, you can expand your reach globally, tap into new markets – and use them to grow your business, brand, and bottom line.
Reliance diversity
Sometimes, albeit rarely, payment method providers may have technical issues that can affect your checkout experience. As such, relying too heavily on one provider can be risky. Having a reliable suite of payment methods means there should always be a fully-functioning option for every customer.
Competitive edge
If your competitors are using certain payment methods, you risk losing out on business if you don’t offer the same ones. There are always going to be evolving trends when it comes to payment methods and it’s essential to stay on top of them to maintain relevance.
Why having too many payment methods isn't efficient
As we’ve seen from the above benefits, offering your customers multiple ways to pay is vital. But this correlation between more payment methods and happier customers isn’t exponential – it’s a bell curve.
That means you can have too much of a good thing – and the logic ‘the more payment methods, the better’ can be flawed.
Let’s take a look at why.
Creates confusion
The presence of too many payment methods can create an environment of chaos and confusion at checkout.
Like in the Netflix example above, too large a selection can lead to the customer becoming overwhelmed, distracted, and disengaged. When this happens, customers end up clicking away from your online store. And often, they don’t come back.
Increases expenses for merchants
As a merchant, managing multiple payment methods can be complex and costly. Typically, offering several different ways to pay requires multiple integrations and systems, so launching new methods can be operationally intense and require a lot of engineering bandwidth.
Juggling all these different payment methods (with their fair share of maintenance and transaction fees) is stressful – and can lead to an inflated expense sheet.
Lowers consumer trust
Some payment gateways and methods come with high levels of inherent customer trust. PayPal, for instance, is a name synonymous with payments – while Apple Pay and Google Pay have, by virtue of being owned by the world’s biggest brands, plenty of credit in the proverbial bank.
By contrast, many customers still have reservations about some emerging payment methods – cryptocurrency, for instance – and seeing these at the checkout may lead them to question the legitimacy of your business by association.
Plus, too many payment methods could give your checkout page a “spammy” or cluttered experience – another factor that could weaken a customer’s trust in your website and brand.
Learn more: How to accept payments online
How to pick the right payment methods for your customers
As we’ve seen, the right mix of payment methods is akin to Goldilocks’s preference for porridge: not too hot, not too cold, but just right.
It isn’t only the quantity of the payment methods you offer that’s important, but the quality too – which means it’s vital to choose the ways to pay that best suit your business and audience.
Here’s how.
Understand existing payment methods
Before you can switch on the right payment methods, you’ll first need to understand what’s out there.
Here at Checkout.com, we can help you do just that. Our payment directory provides a comprehensive list of all the different payment methods you can accept with us – you can even filter by region, payment type, and consumer country to zero in on the ways to pay most pertinent to your business and customer base’s unique preferences.
Know your audience
Developing a deeper understanding of your existing customer base and target audience can give you important insights into how they like to pay.
Always collect data on your customers’ age, location, income level, shopping habits, and payment preferences where possible (making sure to abide by local compliance regulations such as GDPR in Europe). Some payment methods are linked to a generational profile (Gen Z’s love of Buy Now, Pay Later services, for example; or millennials’ preference for digital wallets), while others, as we’ve seen, are subject to regional or geographic factors.
Monitor metrics
Your payments strategy shouldn’t be a static, ‘set and forget’ approach – but a living, breathing process you optimize, refine, and tweak on an ongoing basis.
So be sure to keep an eye on the performance of each payment method as you go. Which are the most popular? Which are leading to the highest conversion rates? To do this, you can analyze transaction data, and even solicit feedback directly from your customers to find out what is – and isn’t – working for them.
You should also stay on top of wider industry trends, technological advancements, and changing customer preferences to ensure your payments strategy is evolving with the times.
Ensure security
The checkout process requires the exchange of sensitive data – so security is a must.
That means you, as a merchant, need to demonstrate your commitment to safeguarding your customers’ data – so it’s vital to choose payment methods that offer the highest levels of security and brand trust.
Assess the security features of each different payment method to ensure it complies with regulations like Payment Card Industry Data Security Standard (PCI DSS).
Consider industry and market-specific payment trends
Each industry has its own payment trends, as does each market or region. Make sure you do your research so you only offer what’s relevant. This involves understanding the wider industry or market context, such as regulatory environments and customer payment preferences.
Conduct a cost-benefit analysis
Payment methods can be expensive and time-consuming to implement, so it’s essential to analyze whether the benefit outweighs the cost. Beyond factors like transaction and chargeback fees, consider how much it costs to implement and maintain the payment method – do you have the bandwidth, especially within your engineering department?
If your bottom line will still be better off despite any associated costs (and all the above criteria are met too), then it’s likely a payment method worth adding to your roster.
Types of payment methods
Here’s a list of some of the world’s most popular payment methods, from the more traditional like credit cards to newer innovations like QR code payments.
Credit cards
One of the most popular payment methods globally, credit cards are a convenient way for customers to make purchases and pay them off at a later date. Many credit cards, such as American Express, offer rewards for spending on their cards.
Debit cards
Debit cards are used in the same way as credit cards at checkout, but instead of the money being credit, the funds are deducted directly from a customer’s bank account. Debit cards are also incredibly popular and considered a traditional payment method.
Digital wallets
Digital wallets have been on the rise in recent years. Apple Pay, Google Pay, and Alipay are all examples of digital wallets. They store your payment information digitally to make checkout quicker and accessible from all your devices.
Buy now, pay later (BNPL)
BNPL services such as Klarna, Afterpay, and Affirm let customers pay in installments or at a later date. The ecommerce industry is the primary user of BNPL services. Around 16% of 18-34 year olds use BNPL.
Cryptocurrency
Some businesses let customers pay using cryptocurrency like Bitcoin or Ethereum, however, crypto does come with associated risks and variations in price. Learn more about how companies are utilizing crypto.
Open banking
This is an emerging payment method that lets customers share their financial data with third-parties via APIs (application programming interfaces). If a business is approved on the Open Banking Directory, customers can authorize it to request payments on their behalf.
It’s growing in popularity due to the way it simplifies the payments process for businesses, gives customers more control over their data, and promotes innovation in the industry. However, this is still a work in progress.
QR code payments
QR code payments let customers pay for goods or services by scanning a QR code with their smart device. When scanned, the QR code takes customers to a payment app where they can complete their payment quickly. QR code payments are particularly popular in the Asia-Pacific (APAC) region.
Choose the best payment methods for your business with Checkout.com
A successful checkout process is one that offers customers the right payment methods, at the right time, to the right customers.
Of course, what this looks like depends on your business’s unique needs and circumstances – and there’s no catch-all solution that works for everyone. A tailored, targeted approach is a must – so get in touch with the team here at Checkout.com, and let us work with you to find it.
We’ll help you identify and switch on the payment methods best suited to your brand and customer base: reducing cart abandonment, boosting conversion rates, and shoring up your business’s long-term health with a more loyal, engaged, and satisfied customer base.
Contact us today to start the conversation.
