Digital transactions topped $1.9 trillion in 2016 according to eMarketer, and this is expected to grow to over $4 trillion by 2020. With the amount that’s bought and sold online continuing to grow fast, the challenge for ecommerce businesses is often just keeping up. By that, I mean keeping up with both the scaling up of your own business and keeping up with the rapid changes of the ecommerce landscape.
Technology is making ecommerce experiences increasingly convenient and personalized for customers. Consequently, the only way to capture a piece of the opportunity presented by online sales and maintaining your growth is to become adept at managing both.
But for this post, I’m going to focus on the pace of change in payments specifically. It’s one of the most important components of an online business and there are a number of trends that are already affecting how we pay for things. As these trends evolve, merchants need to stay on top of how they will affect their customer’s habits and preferences. And ecommerce businesses must be prepared for the changes it will necessitate for their checkout.
1. Blurring lines between physical and digital
To reach customers, you have to be where they are — and they are increasingly on their phones. In 2016, Americans spent an average of five hours a day on their mobile devices. This presents a lucrative opportunity as people spend more time on their phones and begin to shift more of their purchases online. Beacon technology, apps and social media are making it possible to reach potential customers digitally while they’re close physically.
In addition, payment options are becoming more digital. eWallets and NFC (Near Field Communication) are making it possible to make payments directly with a phone while in store. eWallets also make online purchases through a phone much easier. This melding and streamlining of payment options between physical and digital is one trend businesses will need to continue to adapt to.
2. Greater reliability
With technology making more streamlined ecommerce experiences possible, customers are going to expect a great experience with your online check out process. This means fast loading times, as few fields as possible and payments must work the first time. Up to 5% of purchases are unnecessarily abandoned because of a failed transaction.
One way to ensure your customer’s transactions are successful is to integrate with multiple payment gateways and to have intelligent payment routing. That way, if one gateway is down or results in a decline, another gateway can be attempted.
3. Increasing personalization
People have always loved to express their unique personality. Now, for everything from smartphones to cars to apps, people have a vast array of choices. This translates to payment methods as well. While credit cards are still popular, many, especially younger people, are opting for alternative payment methods when they can. Compound this with customers overseas and the number of preferred payment methods can seem overwhelming. But if you want to convert as many online customers as possible, you have to be able to accept their most preferred payment methods or you risk losing a sale to a competitor that does.
4. More convenience
The more barriers you can remove for a purchase, the more success you’ll have. When it comes to payments, you need to make sure your options match what your customers want and makes it as easy as possible. Whereas there have traditionally been additional steps for security and fraud prevention, many of these are being streamlined and made easier and more secure.
For example, instead of inputting a password, biometric authentication (like a fingerprint) is now becoming standard on many smartphones. Juniper Research recently predicted that over 600 million mobile devices will have some form of biometric authentication, more than triple the 190 million that was recorded in 2016.
If you’re still using old methods for security and fraud prevention that add steps to your checkout process that your competitors don’t require, you could be causing customers to bounce before they complete their purchase.
Positioned for success
Customers have growing expectations for ecommerce businesses and payments are a critical part of this. The more personalized the experience, the more complex it gets. But it’s also necessary to keep your conversion rate and online revenues growing.