You see, the payment processing decisions you make will have a direct effect on the conversion rates you experience for the next few years. And that, in turn, will affect the success of your eCommerce business.
For this blog, I’m going to look at three areas of payment processing, explaining how they influence your conversion rate.
First up, let’s talk about payment gateways. If you’re not that digitally savvy, a payment gateway is the bit of tech that allows your eCommerce website to actually process credit and debit card payments.
Technically, there are two flavours of payment gateway.
Hosted: Hosted gateways are hosted by the company that provides the payment gateway and not by you. In order to process a payment, your website has to redirect a user away from your website to the provider’s site, have them enter their payment information and then redirect them back to your site for confirmation of their order.
Shared/Direct: A shared or direct gateway is one which you can integrate into the checkout process on your site. So instead of redirecting a user to a different website to enter their payment details, your customers can enter their details directly into your site.
While hosted gateways do have a bunch of benefits, the key advantage is security. Because the provider hosts the page where your customer actually enters their payment details, they shoulder a bunch of the security responsibilities.
However, hosted gateways also have one big disadvantage. They kill your conversions.
Imagine you’re trying to buy something from a website called www.worldofhats.com and it suddenly redirects to a third-party website called www.paymentworld.com. Are you going to think twice about entering your payment details? I certainly would!
And that slight hesitation is all it takes to take a chunk out of your conversion rate.
While shared gateways mean you shoulder a bunch of security concerns, they are great for conversions as your customer completes the whole transaction in one place.
Now more than ever, people are concerned with the security of their personal and financial data. Customers want to feel safe and secure, especially if it’s the first time they’re using your site.
Now, there’s really two parts to this point. The first is to actually make sure your site is as secure as it can be. Check out the PCI Security Standards Council for information on where to start.
The second part is to communicate that security to your customers. An easy way to do that is through trust badges. If you’re not familiar with trust badges, they are basically little virtual badges security companies assign to indicate that you meet a minimum level of security. A bunch of payment companies have similar badges, too. You’ve probably seen the PayPal Verified on loads of sites already.
Having these badges on your site and highlighting them during your checkout process communicates to your site visitors that you take security seriously and that their payment details are safe. And a site visitor that believes their payment details are safe is much more likely to convert into a customer.
Offer multiple payment options
Way back when, the retail sector was ruled by cash. Yes, companies did accept debit cards, credit cards, cheques and other payment options but cash was the most popular by far.
Well, times have changed.
The modern retail world has a much more fragmented payment makeup. Cash is still a key player, but credit and debit cards have taken over as top dog.
Alongside card payments, there’s a group of payment methods called ‘alternative payment methods’. This includes anything that doesn’t involve a card, and there are over 200 alternative payment methods already available, ranging from direct debits and digital wallets to digital currencies and e-invoices.
With so many payment options being used, it’s important you offer the ones that your target audience wants to use.
Before deciding on a range of payment options, I recommend you talk to your customers and ask them how they wish to pay. Then make sure you support those payment options in your checkout process.
About the Author
Stephen Hart is the former CFO of payment processing company Worldpay. He is now the CEO of the UK’s first card processing comparison site, Cardswitcher.