Conversion rates in e-commerce continue to be a challenge for retailers, and as this article from Chain Store Age points out, keeping the checkout process simple and straightforward is one important way to keep cart abandonment to a minimum. Just a few years ago, “more is better” was the driving force in payments; retailers should provide choices, and accept any form of payment that the customer wants to use. However, the growth in alternative payments types like digital wallets, buy now pay later services, crypto, etc., has brought us to the tipping point of that logic. Presenting too may payments choices during the checkout process can actually confuse shoppers and have a negative impact on conversion rates.
The easy solution is to simply eliminate any payment type that’s not at least 5% of sales. At low volume levels, customers aren’t likely to miss not having it available, and the retailer will eliminate another revenue stream to manage. Like many other things, the easiest solution is often not the best, and when looking at ecommerce conversion some strategy is warranted. For example, a payment type may have low customer utilization today, but may offer advantages to the retailer in terms of lower costs or better fraud prevention. In this case, offering a discount or incentive for the consumer to use that payment type may be a net benefit to the retailer, and at the same time improve conversion as consumers are offered an additional incentive at the critical payment juncture.
Omni-channel retailers should also consider the total customer experience across all channels. A payment type with a low e-commerce utilization rate may be worth keeping around if it has higher utilization rates in offline and mobile channels. Likewise, offering an incentive to grow a payment type should be done as consistently as possible across all sales channels.
The takeaway is that while simplicity may drive conversion, consistency is the payments experience will optimize customer engagement across all of your sales channels.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group