If you run an e-commerce business and you don’t think alternative payment methods (APMs) are something you need to integrate into your payment gateway, I suggest you consider the stat below.
Last year, it was estimated that 55% of all global e-commerce payments were made via APMs. This means that more than half of transactions are now made by payment methods such as Klarna, Revolut, PayPal, Neteller and Skrill instead of traditional methods like Visa and Mastercard.
E-commerce businesses must react to these trends now to ensure they continue to acquire and retain customers in what is only ever going to be an increasingly competitive market. But why are alternative payment methods rising in popularity and what benefits do they provide customers and businesses alike?
The surge in APM usage is aligned with the change in how people bank, send and spend money. We are fast becoming a cashless society and while debit and credit cards remain popular, consumers are moving away from traditional banking methods and embracing the likes of PayPal and Revolut.
This is being driven by a significant increase in mobile e-commerce, with consumers searching and purchasing from their smartphones and tablet devices. This in turn has led to mobile banking and mobile payments becoming the norm with consumers expecting to be able to pay via the likes of Apple Pay, Google Pay and Samsung Pay.
In the online gambling sector where we operate, there has also been a surge in demand for pay by mobile casinos with players wanting to top up their accounts via their phone bills. This method of payment is also becoming more common in sectors such as entertainment where you can charge a Spotify subscription to your phone bill. Such is the importance of payments in these sectors that consumers search based on payment methods – Boku casinos, charge to mobile subscriptions, etc.
While this is perhaps unique to the gaming and entertainment sectors, it does show how important payments are to consumers and this certainly carries over to other industries. Another consideration is privacy, with consumers able to make payments via APMs without having to provide reams of personal information and data.
PayPal, for example, requires just an email address and password, whereas traditional methods require billing addresses, names and more to make a payment. Consumers, especially those among younger demographics, simply don’t expect to have to provide such information in order to purchase products and services. As such, an e-commerce business that does not provide APMs – and especially mobile payment methods – will undoubtedly lose customers to those that do.
In fact, research from the PPRO Group found that 67% of UK consumers have abandoned a transaction because they are not satisfied with the payment process. This is ultimately because APMs provide a more smooth and seamless payment journey for the consumer, which is especially important want it comes to mobile e-commerce.
APMs allow consumers to checkout and complete payments in a handful of clicks or less – Klarna, for example, offers “one click” transactions.Traditional methods, on the other hand, require consumers to input details like lengthy card numbers, expiry date, security codes, etc, adding friction to the process. Simply put, this is not the type of user experience consumers now expect regardless of whether they are shopping online via a desktop or laptop, or via their smartphone or tablet.
What’s more, as younger generations becoming increasingly “mobile”, e-commerce businesses will have to offer the payment methods they prefer in order to engage this consumer demographic. But the advantages of APMs are not just for the consumer, they also provide upsides to the businesses adding them to their payment gateways. If you are an international e-commerce site with customers located around the world, you can tailor the APMs offered to suite individual market preferences.
For example, WebMoney is popular in Russia, AstroPay Card does well in Latin America while NeoSurf has high levels of engagement in the likes of Canada, Australia and Africa. In addition, APMs allow e-commerce businesses to offer a seamless customer experience and transaction journey across desktop and mobile, aiding acquisition and retention.
Ultimately, it comes back to the stat at the start of this article which highlights that more than half of all global e-commerce payments are now made via APMs. This means they are no longer alternative payment methods, but core payment methods and businesses that don’t offer them will absolutely lose ground to their rivals.