31 Oct 5 Reasons Why Businesses Need to Diversify Their Payment Options
Every customer wants a seamless shopping experience, and flexible payment options can help a business provider just that. Now, among Canadian shoppers, credit and debit cards still dominate the payment scene. However, online banking and digital payment options have also gained significant traction in recent years. And because most Canadians now have quality on-the-go internet access, many shoppers are also growing accustomed to using their smartphones to run transactions.
The demand for alternate payment methods will only continue to grow, especially given that the global health crisis has hastened preferences for contactless payment options as well. These broad trends speak to why any business should be looking to diversify payment options. If you run a company and are considering this kind of change however, there are some more specific reasons to consider as well.
1. To accommodate different generations
Different generations tend to prefer different payment methods. Tech-oriented methods like mobile payments tend to be popular among customers from younger generations, for example; older customers, meanwhile, will often be more comfortable with traditional methods like cash, debit, and credit. Diversifying your business’s payment options will accommodate people on either end of this spectrum.
2. To accommodate different payment preferences
Generations aside, there are additional reasons why some shoppers might strongly prefer one payment method over another. For instance, fund availability is a factor that often comes into play. A comparison between credit vs. debit by Petal Card, explains that shoppers who don’t have immediate access to the funds may prefer to pay with credit cards, while shoppers who would rather not risk debt – and do have immediate access to funds – might prefer debit cards. Other customers might also choose to pay through a line of credit if, say, they’re concerned about protecting their money from fraud. The list could go on, but the point is that customers will have different payment habits. If your business limits itself to a small set of payment methods, you may inadvertently exclude some would-be customers on the basis of those habits.
3. To promote financial inclusion
Building off of the previous point, many customers also don’t have access to traditional payment methods. Our article on ‘5 Payment Trends That Are Transforming Commerce in the World’ points out that many people remain unbanked, which in turn means that they are effectively shut off from the world of credit cards, debit cards, and savings accounts. Businesses can accommodate customers in these situations by offering digital payment methods, such as mobile app payments and digital money transfers. Welcoming the unbanked is also one reason to consider keeping cash payment options in play.
4. To account for cryptocurrency adoption
Over the past few years, cryptocurrencies have slowly gained popularity as valid payment methods. There are numerous reasons for this, though safety and security are at the core of the movement. Finextra’s overview of cryptocurrency benefits explains that many people who are beginning to choose cryptocurrencies over fiat options are doing so because of the blockchain’s capacity for preventing fraud and corruption. That said, there’s also something to be said for the fact that cryptocurrencies are simply trendy, particularly among younger generations.
5. To simplify checkout processes
Recently, the Baynard Institute’s study of leading e-commerce companies revealed that 21% of customers have abandoned shopping carts when faced with over-complicated checkout processes. Similarly, there is also data to suggest that providing payment options that align with customer needs can increase a business’s conversion rate by 30%. Though these numbers relate primarily to online selling, all businesses can benefit from identifying their customers’ preferred payment methods. Simply put, you want to make it easy for customers to pay the way they want to!
Though it’s clear that credit and debit cards won’t be going away anytime soon, businesses still need to account for the growing popularity of digital payment methods such as online bank transfers and mobile payment apps. If you want to embrace as many demographics and preferences as possible – and in doing so maximize your sales – you should move to diversify payment options