The COVID-19 pandemic saw the majority of online businesses (61%) accelerate their plans to upgrade the checkout as a direct result of them seeing consumer payments preferences changing (65%) and customers asking for more payment options (52%).
That’s according to new research from Paysafe as part of its ‘Lost in Transaction’ report series, in which 1,100 small-to-medium-sized businesses (SMBs) globally, which operate online and instore, were asked about how their payment offerings had changed over the last 12 months.
However, with 40% of respondents seeing cart abandonment levels as more than a minor issue, and 41% recording an increase in fraudulent transactions since the start of the pandemic, the checkout remains a hindrance for many, forcing them to re-evaluate what they require from their payments partner.
In fact, reliability (as identified by 42% of respondents) has now overtaken cost (32%) and security (26%) as the most common priority for online businesses when searching for a payments partner.
In a bid to upgrade the checkout and attract more customers, offering alternative payment methods is becoming increasingly important to online businesses – with digital wallets and eCash gaining particular traction.
61% of online businesses are now offering digital wallets and 67% have seen an increase in the percentage of sales completed via this method in the last 12 months.
Elsewhere, 29% are already offering eCash and over a third (35%) plan to in the next 12 months.
According to the findings, online businesses are also adopting cryptocurrencies en masse. Almost half (48%) of all businesses are looking to offer cryptocurrencies in their checkout as soon as possible, with almost three in five (59%) believing this will help them expand their business into new countries.
As online businesses continue to diversify their payment offerings, providing a streamlined, secure and reliable checkout is becoming paramount.
A third of online businesses say they are currently an easy target for fraudsters (33%) and uncompetitive on fraud prevention (34%).
Although 59% believe having more payment methods available in the checkout is an effective strategy to reduce fraudulent transactions, 31% don’t feel that they have all the tools needed to minimise such activity in their checkout.
Alongside fraud prevention, online businesses are also looking to their payments partners to improve cart abandonment rates, with respondents seeing an increase in this over the past 12 months – primarily due to cards being declined (24%) or consumers not being able to pay with their preferred payment method (16%).
The online checkout is rapidly evolving
- Credit (77%) and debit (73%) cards are the most popular payment methods businesses accept, but alternative payment methods are becoming increasingly important to online businesses. For example digital wallets (61%) and direct bank transfer (52%) are now offered by the majority of online businesses.
- Despite the growth in alternative payments globally, regional payment preferences are still identifiable. For example, digital wallets (68%) and mobile wallets (51%) are more popular in the US, eCash (38%; 34%; 36%) and direct bank transfer (68%; 61%; 65%) are more popular in Italy, Germany, and Austria, and payment on delivery is popular in Bulgaria (68%) and Brazil (55%).
- The payment methods where businesses have seen the biggest percentage growth of consumer spending in the past 12 months are credit cards (67%), digital wallets (67%), and cryptocurrencies (63%).
- And in every country the percentages of businesses that are not considering alternative payment methods is falling. This is true for businesses in almost every country, for almost every payment method.
- Two thirds (65%) of businesses say that consumer payment preferences have changed due to COVID-19, and more than half (52%) say their customers are asking them for more payment options. 63% say COVID-19 has changed the way they think about payment acceptance and a similar percentage (61%) have accelerated their plans to upgrade their checkout.
“Since the start of the pandemic, more and more online businesses have learnt the hard way that not having a frictionless or secure check-out experience will kill their sales,” comments Paulette Rowe, CEO of Integrated & E-commerce Solutions at Paysafe.
“On top of that, shoppers are now demanding a wider choice of alternative payments methods than ever before – such as digital wallets and eCash – and our research indicates this is not likely to diminish.
With the holiday season now upon us, reflecting the busiest online shopping time of the year, those who get it right will come out strong and avoid high rates of cart abandonment. For those who are still catching up, it’s actually easier to resolve than they might realise.”