Digital payments have become so popular that soon people might stop carrying a physical wallet when they leave their houses. Be it buying a cup of coffee at the local shop or paying utility bills, most of them are now done over the internet through mobile channels without any physical transfer of funds. That is why every online retailer has come to think of them as an essential service he/she must offer.
A recent report has revealed that online sales have increased to $794.50 billion, a remarkable 14.4% of total US retail in 2020. Additionally, payments through credit cards are expected to grow from $1.75 trillion in 2019 to $1.82 trillion in 2024. In fact, this digitization of payments may not remain confined to retail for long. Their use will significantly increase for P2P payments, digital remittances, and digital business payments.
This change in consumer habits and behaviors related to money and paying methods has further accelerated in recent years owing to coronavirus pandemic, social distancing policies, and brick-and-mortar stores closing shop. It is all going to eventually lead to the growth of e-commerce sales.
Here are 3 big reasons why digital payments have become the preferred solution for most retailers:
1. Convenience
If your customers get more payment options, it increases your chances of successfully making the sale. It is all about convenience. So, you should incorporate a payment solution that allows you to accept multiple payment methods from your customers in real-time. However, remember to have data encryption, so that your customers can trust the process.
Using digital payments also offers several other advantages such as cash-back policies, instant payment, digital receipts, and lower interest rates. You can always try out different payment options to find out the ones most convenient for your customers. After all, it’s an important part of the online buying process, and perfecting this flow will guarantee a lower cart abandonment rate on your website.
2. Safety and Reliability
Digital payment methods have made it easy for customers to purchase goods online. Additionally, these transactions are quite secure. In fact, several payment providers allow your customers to put in their information once and in one place, without having to worry about data security when shifting from one e-commerce website to the other. What makes these payments safe and reliable is that they usually function on tokenization. It refers to a system that generates virtual information for each transaction. So, they don’t have to store any financial details and personal information on the device.
However, digital payments are still vulnerable to some threats. A 2020 survey revealed that the most common type of cybercrime – asset misappropriation – can cost a whopping $42 billion for businesses and multiple companies might fail to respond to it effectively. That is why it is vital to handle customer data with the highest care.
You should comply with online safety tools and showcase them on the website. It will encourage your customers to trust you. They will know that your services are reliable, and they can put sensitive information (such as their payment method data) in your portal.
3. Access to Big Data
Another big advantage of accepting digital payments is that you get access to huge volumes of crucial data. You can analyze this data, run tests, and check results to make the most out of digital payments and use them to boost your conversion rate.
For instance, a study published in November 2020 revealed that some common reasons for abandoning a purchase were a too long/complicated checkout process, lack of trust with credit card information, and limited availability of options when it comes to payment methods. As a retailer, you can use this information to your advantage. You can offer payment solutions that are ideally suited to your customers’ needs. This way, you get to know your customer and fix the issues where your business is lacking when it comes to payment.
Customers prefer using online payment methods simply because they are easy, secure, and practical. Simple, easy, and safe new things often spread like wildfire. That is the reason digital payments have become so popular over the years. If you understand your customers’ behavior, you can increase revenue and use convenience as a weapon to preserve and build customer loyalty.