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Continuing with our series on how to launch your e-commerce website from scratch, we shall look at the critical step of deciding upon the best payment partner for your e-commerce business. A suitable payment partner can significantly improve cash flows while simultaneously helping the e-commerce player win customer loyalty.
Impact of online payment methods on transaction completion
The high point of an online transaction is the completion of the successful payments at the time of checkout. This is where choosing a payment gateway partner like Simpl can make a world of difference. Simpl offers credit-enabled purchases at the time of checkout.
With Simpl’s integration as a payment network in the e-commerce website, customers can enjoy an interest-free 15-day credit period. At the same time, in return for a fee, the merchant is assured of instant payments towards the purchases from Simpl. Effectively, Simpl assumes the credit risk of each purchase.
The below chart by Statista highlights the popular payment methods in vogue globally, with BNPL being a rapidly emerging segment:
What exactly does a Payments Network do?
Simpl works through a unique B2B cum B2C model. As a payment network, Simpl processes each purchase transaction for online stores and authorizes PoS credit to eligible consumers. All of this is undertaken in a secure and prompt manner – from credit underwriting to approval.
The transactions are completely encrypted on the server, ensuring that the customer-sensitive information is confidential at all times. Some of the steps include:
- Verification of customer information and credit assessment based on ML-based decisioning and advanced analytics
- Authenticate the specific credit limit for customers based on the credit score
- Approval of payment requests applied via the Simpl App on merchant platforms
- Transaction approval and fund transfer to the merchant account
- Prepare a consolidated bill for all customer purchases across merchants via Simpl
How to Choose a Payment Method?
The following are some of the factors that e-commerce business entities need to keep in mind to effectively manage their online payments:
1. Sales conversion: The payment processing stage is the final closure stage of each transaction. After browsing through and adding the products to the cart, it would be a huge setback if the cart is abandoned by the customer after being redirected to an outside payment page with poor UX. The absence of seamless payment options often causes revenue uncertainty for the merchant. It is imperative for the merchant to evaluate all existing payment modes and select the most suitable one that enhances customer loyalty. Customers often prefer to transact on an e-commerce portal that offers their preferred choice of digital payments. Studies indicate that credit-backed options like Buy Now Pay Later at the time of checkout can tangibly improve sales conversions. It would be prudent to select payment modes that are a popular choice amongst customers.
2. Lower costs: Another criterion is the selection of a payment provider that is optimally priced. Simpl’s Buy Now Pay Later instantly pays the merchant partners for the purchases in return for a fee. Declaration of charges upfront and transparent pricing with the option to negotiate pricing is of utmost importance while deciding upon an e-commerce payment method.
Certain e-commerce players are required to pay hidden costs, additional fees, renewal costs, chargebacks, registration fees etc at a later stage. The common pricing models are fees charged per transaction, monthly, quarterly, or annual usage charges, fees as a percent of the transaction value, flat fees, subscription model or bulk pricing.
The capability of the payment player in terms of low instances of failed transactions and flexible repayment options also should be evaluated. For example, Simpl has a 99% success rate of transactions and offers Pay in 3 where the customer can repay in 3 hassle-free installments.
3. Secure payments: This is the sine qua non condition. Payment providers handle sensitive customer information. Security compliance with security standards like PCI DSS and the likes go a long way in assuring the customer that the privacy aspect of the personal data and credentials shared are safeguarded. Simpl processes every transaction via a secure server that offers complete fraud protection.
4. Ease of integration: The payment option should be capable of smooth integration into the e-commerce portal to enable the customer to complete the transaction with a few clicks in a convenient manner. A user-friendly, plug and play model through API sharing can be easily set up without the need for technical staff. A payment solution with multiple features would also help win customer trust and boost sales.
5. Support: Operating and maintaining an e-commerce site needs to continue 24*7. This is because a customer can log into the portal from anywhere and at any time to buy products. Further, the payment product should be capable of handling the peak volume of transactions and function, at scale.
Similarly, the support services of the payment provider also need to be available at all times to resolve any customer issues on an urgent basis. The technology infrastructure of the payment player needs to be robust to handle customer services via email, call, video call, chatbots, or live chat session.
6. Omnichannel payments experience: Most importantly, the payment method should be able to successfully support and complete transactions across devices – desktop, laptop, smartphone, mobile, etc.
7. Best in class features: When it comes to e-commerce, often customers naturally opt for variety. In fact, offering a wide range of options can be an effective differentiation strategy for the e-commerce portal.
A payment provider that offers new functionalities should be the preferred choice. Examples include special festive offers, redemption coupons, discounts, and flexible repayment options offered by the payment player with detailed reporting and billing that provides insights on customer purchase trends. This would enhance the scope for the eCommerce player to upsell and cross-sell to customers.
Simpl, a cashless payment network, is at the forefront of driving value for merchants through simple, prompt, and secure payments aimed at strengthening the bonds of trust with the customer.
In the next article, we shall look at the last stage of an online transaction i.e. the last-mile delivery, logistics, and post-sales customer services.