One of the most important steps when planning our online store is choosing the payment methods. A good choice can boost our sales conversions, while a lack of options could lead users to abandon their purchase. So what criteria should we follow?
Common sense tells us that the more payment options we offer our customers, the more likely they are to complete their purchases successfully. But this rule doesn’t always apply, since other factors can influence our final decision, such as the type of product we sell, the value of the transactions, our customer profile, the fees involved, the security of each system, etc.
It’s essential to know our options and, at the same time, the pros and cons of each payment method we can implement in our online store. Put very simply, we can divide them into two groups: offline payment and online payment.
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Offline payment methods
Offline payment methods are the “traditional” systems that let customers pay for their purchases afterward without entering their bank details online. Their advantage is that they offer an alternative to customers who are reluctant to use their card details online, but on the downside they require more management and follow-up from the store administrator to verify payments. The most common offline payment methods are:
- Bank transfer: bank transfer is a secure payment method for both customer and seller. The customer receives payment instructions, and the payment is verified once received. Its main drawback is the time that passes between the customer making the transfer and the store receiving confirmation, which also delays shipping.
- Cash on delivery: with cash on delivery, the customer pays for the product upon receipt, and the carrier handles collecting the payment. It usually involves a surcharge for the customer for this extra service. It can sometimes cause problems for the seller, since the customer may refuse the package on delivery, resulting in a loss for the store.
Online payment methods
Online payment methods are undoubtedly the easiest and most convenient options for both customers and sellers. One advantage is that payment is instant, so no extra follow-up is needed: when the order comes in, the payment is already confirmed and we can start processing it. It’s also worth noting that the payment gateways themselves handle transaction security, which builds user trust since it’s provided by the bank. As for drawbacks, they can make some more cautious users hesitant, since they involve entering their details online. At times, high security levels cause users to give up on their purchase or run into problems completing it. Finally, these payment methods involve fees charged by the service provider. The most common online payment methods are:
- Virtual POS (bank payment gateway): with a virtual POS, the customer goes straight to the payment gateway’s page when paying. Data is exchanged directly between the customer and the bank and never passes through the online store. Examples of these gateways include 4B, Sermepa, RedSys, CECA…
- PayPal: the secure payment gateway of the eBay group. It inspires a lot of trust among users, since no banking information is ever transmitted during the transaction. Its big advantage is that it’s a very widely used payment method worldwide. On the other hand, its fees tend to be higher than those of a virtual POS.
Whatever we choose, the most important thing is to maximize convenience for the user while guaranteeing security in every transaction. A good shopping experience is essential to grow our conversions and, above all, to earn customers’ trust and recommendations.
