Offers and services on Internet are always evolving. This also applies to online payment systems. New and practical payment methods are constantly appearing on the market, but can they exceed classical methods? To offer clients the best possible service, as a merchant you must always have an overall view and provide clients with a selection of secure online payment methods.
Payment methods available when clients are purchasing online play a crucial role in the online shop's success. In addition to credit card or PayPal, there are many other options to choose from.
We show you the most important payment methods and the situation in Italy.
1. Payment methods are decisive for the e-commerce's success
Wether you want to dedicate yourself 100% to e-commerce, or you want to open an online shop in addition to your commercial activity as part of a multichannel strategy, you have to make your online activity as much profitable as possible. Several studies have shown that one of the most important success factors is the appropriate choice of online payment systems. According to these studies, for example, over 70% of purchasers would abandon purchase if the preferred online payment method is not offered.
Questo comporta il cosiddetto "abbandono del carrello": il cliente ha già deciso un prodotto ed è pronto ad acquistare, ma prima dell'ultima fase della transazione il processo di acquisto salta. Naturalmente, questo deve essere evitato a tutti i costi. Allo stesso tempo, però, non è nemmeno opportuno offrire indiscriminatamente il maggior numero possibile di metodi di pagamento. La facilità di gestione per il cliente deve diventare la priorità assoluta.
This leads to the so-called "shopping cart abandonment": the client has already chosen a product and is ready to make the purchase but before the last phase of the transaction the purchase is skipped. Of course, this must be avoided at all costs. However, at the same time it is not even possible offering indiscriminately as many payment methods as possible. The client's easiness in handling the payment process must become top priority.
2. Payment methods
Let's explore the following payment methods:
- Payment card (credit, debit or prepaid card)
- Digital wallet
- Credit transfers
- Installment Payments
1) Payment cards
At an international level this is probably the most convenient and used payment method online. Credit, debit and prepaid card fall within this macrocategory.
During the payment process with credit cards the customer only has to enter the credit card company, his personal card number and a security number in the ready-made order form of the online shop. The merchant collects the invoice amount from the corresponding credit institution or bank and dispatches the goods. Due to simple and fast payment processing, this payment method is available in almost all online shops. By offering credit card payment, e-commerce operators can also attract more foreign customers to their business.
PayPal is one of the most important online payment systems and should therefore be part of every online shop.
The payment with PayPal is simple, secure and completed withiin seconds, so that the goods can be immediately shipped to the customer. For the merchant, PayPal offers security: the customer can't easily cancel the payment. Commission are relatively low: 1,9% plus 0,35 euro per transaction (for small merchants) although the online merchant still has to bear them to use the service. PayPal accounts can be subject to hacker attacks. Furthermore, data is archieved on servers all around the world.
3) SEPA Direct Debit
Direct debit is also one of the classic payment methods. In online shops, it is particularly suitable due to its reliable scheduling and relatively low transaction costs. Payment by direct debit is very convenient for the online shop buyer: after giving the shop operator a direct debit authorisation in the form of a written SEPA mandate, invoice amounts are debited directly from the customer's bank account, usually as soon as the goods are shipped. Buyers can object to unauthorised debits at their bank and have the amount redebited. This option offers protection against dishonest traders and Internet fraudsters.
The term stands for 'electronic wallet' and is a digital system that stores payment information. It exists only electronically and is a secure and widely used payment method. E-wallets are used to make online purchases and to pay for services, employees or freelancers. To pay, the appropriate payment method must be selected in the web shop, in particular Paypal. Well-known e-wallets are e.g. Apple Pay, Google Pay, Amazon Pay. Less well-known e-wallet providers can provide a credit card with which you can shop in many web shops.
5) Credit transfers
Although this is a more time-consuming operation, offering this type of payment can be extremely useful, especially if the end customer has to transfer large sums of money or does not have a payment card. The dispatch of the goods takes place when the buyer receives the crediting of the transfer to his bank account. This is a secure payment method because it offers a trace and a guarantee of the payment made in case of fraud or problems.
6) Installment Payments
Payment in instalments, long a common practice for the purchase of cars and houses, is still considered relatively new in e-commerce. However, this payment method, also known as financing, is becoming increasingly attractive to online buyers. The purchaser pays the purchase price in instalments, which is convenient in many respects: it is low in formality and time-consuming in comparison and the goods are already usable. Among the most popular solutions are Klarna, Scalapay, Cofidis and Soisy.
Which are the favourite payment methods in Italy?
According to the Casaleggio e Associati report for 2021, Italians still prefer to pay with credit cards (50%) to make online purchases. In second place are e-wallets (28%) followed by bank transfers (8%). Incredible but true, cash on delivery payments are still in demand.
This shows several aspects: even though Italy has an image that is strongly tied to the use of cash, this habit is changing. It is already evident that digital payment solutions allow quick and easy purchases, a habit that is well anchored in the generation between 15 and 24 years. This is in fact the age range that makes the most use of digital payment solutions.
A big change in Italy is the rise of instalment payment services like the above-mentioned Klarna, Scalapay, Cofidis and Soisy. Besides allowing an increase of online purchases this permits access also to a younger age range, previously excluded and also for very small amounts.
Now that we presented the most common payment methods for e-commerces and a panoramic of the Italian preferences we would like to remind you that beyond payment methods, choosing the right integration is equally important.
If you want to update your e-commerce with more payment options we can help you integrate with any payment system. Give a look to our service and don't forget to check out our portfolio to have a complete panoramic of our works.
Contact us, we are always at your disposal.