New FinTech companies have revolutionized payment methods in eCommerce, competing against large companies such as Visa and PayPal and gaining ground for the facilities they offer to customers. New technology is rapidly being embraced, where cryptocurrencies are making strong inroads, as well as eWallets, the main global payment method in these transactions. The new BNPLs are growing over traditional methods offering customers new ways to distribute their payments. Jason Simon, an eCommerce specialist, discusses some of the newest trends in B2C payment methods in this space.
The ecosystem of payment methods has never been as varied as it is today. The abundance of options and the continuous advancement of technology present a scenario in which traditional payment methods are facing fierce competition from new companies. The exponential growth of eCommerce in all sectors has brought with it a revolution in payment methods for consumers. The transformation comes from the hand of FinTechs that offer new, faster, easier, and cheaper payment methods around the world.
“As entrepreneurs, we need to stop and think about which payment methods are best to offer our customers,” says Simon. “We must provide variety so that the customer feels comfortable with the different payment methods available, but also secure options that generate confidence in the customer, since a large part of the abandonment rate in the purchase process comes on the payment page. Likewise, for our internationalization strategy, we must study the dominant payment methods in the markets we want to access, as well as the digital consumption trends of the specific country.”
In order to make a strategic decision about online payment methods for your B2C web business, you must first know where this industry stands and what are the major trends that will arrive with force this 2022. According to Simon, electronic payments are expected to almost triple in the world by 2030 to more than three trillion transactions.
Mobile payment has been used frequently over the last few years (online and offline) thanks to offering contactless payment. The customer uses NFC technology to pay in store, and stores their credit and debit cards in their bank’s or cell phone’s encrypted applications to enable fast and secure e-Commerce transactions. More and more shoppers are ditching the old cards and going straight to shopping with their eWallet from their cell phones or smartwatches.
“By 2020, digital and mobile wallets accounted for approximately 45% of global eCommerce payment transactions, making this the most popular online payment method worldwide,” explains Simon. “Forecasts expect this share to increase to more than 50% by 2024.”
Buy-now-pay-later (BNPL) is another big bet to make payments easier for your customers. This payment option allows you to spread the cost of their purchases in a similar way to a loan.
Depending on the application, there are some conditions. Some include interest, and others split the purchase into multiple interest-free automatic withdrawals. Some of these BNPL companies such as Affirm, Klarna, Afterpay and Sezzle, already compete with digital payment giant PayPal.
This may be in the long run, but the use of cryptocurrencies has increased in recent years, and large companies such as Microsoft or Tesla already accept cryptocurrency payments. Other large companies, such as Starbucks, have coupled cryptocurrencies among their payment methods since the Bakkt application allows its customers to buy with converted Bitcoin.
The latest example is Visa, which has announced plans for a hub to couple multiple blockchain networks to improve cryptographic interoperability. In other words, the future of cryptocurrencies is just around the corner.
Payment methods are an essential tool we need to manage online transactions. This is why choosing the most suitable payment methods for customers can seem like a difficult decision. It is important to highlight that having several varied payment options will favor the conversion rate, since you make sure that the potential customer does not abandon the purchase page because he or she feels unsure about the payment page of our eCommerce.