With the world of ecommerce rapidly evolving, payment options need to keep up. But are conventional methods cutting it? To address the constantly changing needs and preferences of the modern shopper, it might be time to explore innovative solutions, like open banking. Don’t lag behind—merchants should embrace adaptability to flourish in today’s dynamic consumer shopping environment.
How do they typically shop?
As online shopping grows in popularity, it's important to consider different payment methods. With the average consumer shopping online two to three times per week, ecommerce makes buying clothing and groceries easy. However, data privacy and security concerns can deter some shoppers from using online payment methods. Nevertheless, ecommerce is a crucial aspect of modern shopping, and reliable payment methods are essential for secure and hassle-free transactions.
How much do they spend on subscriptions?
According to our recent survey, 53.7% of Americans spend over $100 per month on online shopping and subscriptions. As consumers increasingly turn to online subscriptions, it can be helpful to consider their shopping habits. With so many digital services available, such as streaming platforms and news outlets, consumers may find it challenging to prioritize their subscription needs and may choose payment methods that prevent unnecessary expenses and ensure easy transactions.
How do they pay for subscriptions and online shopping?
At present, debit cards are a popular payment option for online transactions with the majority (72%) of respondents relying on them, mostly due to the ability to keep track of expenses and prevent credit card debt (30.09%). Despite consumers showing a preference for debit, most merchants still only see it as 30% of their cart.
However, using debit cards and other traditional payment methods pose concerns about fraudulent transactions (36.81%), loss or theft (32.04%), and payment security (30.09%), which may dissuade some online shoppers. Some customers already depend on alternative payment options, including credit cards (47.96%), Paypal (55.40%), and mobile applications, all of which are vulnerable to various kinds of fraudulent activities, ranging from theft and misplacement to security breaches.
What do consumers need in a payment option?
As technology has advanced, consumers have become increasingly aware of the potential risks associated with payment transactions. According to our research, security has become a top priority for consumers when selecting payment methods. At the same time, consumers also demand convenience and simplicity when making payments.
This is especially true in the world of ecommerce, where consumers expect fast and efficient transactions; these results raise questions about the role of traditional payments in the future of ecommerce. It’s increasingly important for consumers to have access to alternative payment methods that are reliable, secure, and just as or more convenient than debit cards.
Would they consider alternate payment options?
Many Americans are still unaware of open banking, and understandably so as it’s still gaining momentum in the United States. Yet, if given the choice, more than half (53%) of respondents would switch to a secure, password or biometric-protected payment method powered by open banking.
Notably, consumers place importance on the level of security and trustworthiness of the brand to be willing to share financial data with a third-party provider. More than half of them (56.17%) consider rewards to be a top incentive to switch to an open banking payment option.
Tips for ecommerce merchants
Customers demand security and convenience in online payment options. However, traditional payment options, such as credit and debit cards, still pose a risk of fraud. Here are some strategies to help you overcome these challenges:
With the growing popularity of online shopping, ecommerce businesses must consider different payment methods, and luckily, pay by bank is a new option for merchants.
Pay by bank is that allows customers to make online purchases directly from their bank accounts without the need for a debit or credit card. Their login information is not seen or shared, reducing risks around data breaches. By leveraging the power of open banking, pay by bank offers a fast, secure, and convenient payment experience that benefits both customers and ecommerce merchants.
With reduced transaction costs, increased security, and a better customer experience, merchants can expand their customer base and increase their sales by providing a frictionless payment experience that meets the evolving needs and preferences of modern shoppers.
Here are some tips for ecommerce merchants to offer pay by bank as an alternate payment method:
Explain the process: When introducing pay by bank as an alternate payment method, it's essential to educate customers about how it works, and its security features. This will increase their trust in the payment method and make them more likely to use it.
Choose the right partner: Security is a top priority for consumers when it comes to payment methods. Ecommerce merchants should partner with secure payment providers that prioritize data privacy and security. Merchants should also be transparent about their security measures, which will give customers the confidence to use this payment method. Businesses can easily allow consumers to make transactions directly through their bank account with Link Money.
Emphasize convenience: One of the reasons why consumers shop online is because of the convenience it offers. Pay by bank should be easy to use and navigate, providing a seamless and efficient payment experience for customers. Merchants should ensure the payment process is quick and easy to understand for customers.
Offer incentives: Offering incentives, such as rewards or discounts, is a great way to encourage customers to use pay by bank. Merchants should communicate these incentives to their customers to show them the value of using this payment method.
Be transparent: It's important to be transparent about the fees and charges associated with pay by bank. Customers appreciate merchants who are upfront and clear about the costs associated with their payment methods, which can encourage trust and loyalty.
If you’re considering offering pay by bank to your customers, contact Link Money to learn how we can help. This survey was conducted in April 2023 with 600 people.