The COVID-19 pandemic drastically increased the popularity of digital payments. The value of the digital payment market is forecasted to grow 20.5% by 2030, according to data from Grand View ResearchTM. As shoppers have become used to the ease and convenience of online shopping, this trend appears unlikely to reverse even after the public health crisis subsides. The increasing sophistication of digital technologies will likely only facilitate its growing popularity.
For those reasons, businesses should consider accepting digital payments for their products and services on their websites. Not only does this create a more convenient shopping experience for customers, but it also helps the business itself reduce costs and reach a larger customer base.
While many businesses have recognized the value of accepting digital payments, some of them do not know how to implement them. Continue reading to learn more about how to accept digital payments from your customers.
The benefits of accepting digital payments
A digital payment is a type of financial transaction that takes place using digital means, whether through a website, digital payment apps, mobile wallet or other device. As customers around the world increasingly rely on digital means to make purchases, both the large and the small business stand to gain considerably from accepting digital payments. Here are some of the benefits businesses can experience from accepting digital payments:
- Access a larger customer base: Creating an online shopping experience opens your business to online shoppers across the world. You are no longer limited by your storefront’s geographic location, foot traffic volume, parking situation or any other physical considerations. It also evens the playing field and enables smaller players to compete with big companies for the same market share.
- Reduce operating and labor costs: Implementing digital payment technology helps to automate the transaction process between you and your customers, eliminating the need for in-person cashiers and other support staff. Additionally, much of the technology needed to implement online shopping can be highly affordable for smaller businesses, meaning the financial benefits could easily outweigh the upfront costs.
- Create better customer experiences: If you invest the right amount of time and resources into creating quality digital payment processes, you could create an online shopping experience that is fast, convenient and user friendly. User experience is among the top priorities for online shoppers today, so this could be important for boosting your customer retention and loyalty figures.
- Facilitate more transactions: Online shopping allows customers to browse products and services and make a purchase with just a few clicks — at any time of day, no matter where they are. This eliminates the need for them to venture to your physical storefront, which encourages more buying (especially from those making impulsive purchases) and attracts a greater number of customers.
6 steps to setting up your online payment systems
The following serves as a basic step-by-step guide to help you identify and implement the technology needed to start accepting online payments from your customers.
1. Determine the type of digital payments you will accept
Before building digital payment processing into your website, you should start by determining what types of payments you intend to accept. Your online shopping experience should match the existing preferences and behaviors of your customers as closely as possible, so you should start with the payment methods they already use most.
However, it might also be important to understand that limiting your accepted payment options to a select few could be one reason online customers abandon their shopping carts. Research from SaleCycleTM found that 6% of customers abandon their carts due to a lack of payment options.
Businesses that do not accept their customers’ preferred digital payment method stand to lose significant business opportunities, so you should consider accepting as many digital payment methods as possible.
2. Integrate a shopping cart
The shopping cart is a critical part of the digital payment process and the online shopping experience at large. Not only is it the visible hallmark of the digitally savvy online brand, but it also gives customers a central location for all their selected items, pricing totals, tax/fee information and even estimated shipping times.
While online businesses can build their own shopping carts, there are numerous third-party software options available for which merchants can pay on a subscription basis. The right software solution should easily integrate into the merchant’s website and other applications, while the vendor should handle all upgrades, maintenance and some security responsibilities.
Shopping cart software solutions should automate the shopping experience from both the customer and merchant standpoint, eliminating many of the manual tasks associated with shopping (like calculating taxes and shipping costs) and creating a smoother experience for the customer.
3. Create a payment gateway
The payment gateway is a key facilitator of online transactions and essential to businesses that want to accept digital payments. Once the customer has completed their purchase at the checkout stage, their personal, banking and debit/credit card information is transferred to the payment gateway.
Payment gateways gather and encrypt this data, then access the buyer’s bank account to ensure the appropriate funds are available. If the customer has sufficient funds, the transaction will be allowed to continue; if not, the gateway will communicate this information to both the customer and the merchant.
Similar to the shopping cart, businesses can choose to develop their own gateway or integrate one from a third-party vendor. If you choose a third party, it might be important to select a gateway that accepts your customers’ digital preferred payment method and seamlessly integrates into your website.
4. Identify a payment processor
The payment processor is the final step in the transaction process. It is responsible for authenticating the payment details provided by the customer in the previous steps with the customer’s bank and facilitating the transfer of funds from the customer bank account to the merchant account.
There are several factors to consider when selecting a third-party payment processor. Firstly, payment processors will typically charge processing fees during each transaction. While it is important to know how much those fees will cost, you should also decide whether your business will cover those costs or if you will push them down to the customer.
You should also choose a payment processor that is compatible with your existing internal applications so you can automatically share receipts and transaction information with accounting and other financial teams.
5. Establish recurring payments
There could be a highly profitable opportunity for businesses that can sell their product or service on a recurring basis (like a morning energy mix, a cleaning product or a software subscription). While these types of purchases give you the opportunity to quickly convert one-time buyers into returning customers, requiring them to fill out payment forms every time they try to make an additional purchase could frustrate the customer and cause you to lose this opportunity.
A recurring payments feature allows merchants to automatically charge customers for ongoing service or product deliveries at a regular time interval. While customers are usually free to cancel their subscription at any time, the benefit to the business could be that it reduces payment friction and decreases the likelihood of customer churn.
6. Use mobile wallet integrations
The increasing sophistication of mobile technology has led customers to lean more heavily on their mobile devices to undertake both basic and complicated tasks. The rise of the mobile wallet in recent years has taken place on the back of this trend. It has made it much easier and more convenient for customers to use these devices to complete both online and in-store purchases without needing physical cash or credit/debit cards.
From a consumer standpoint, one of the benefits of accepting mobile payments might be that customers usually will not have to manually fill in personal information like their name, credit card information, billing and shipping addresses. That removes several processing steps from the customer journey and creates a more seamless and convenient shopping experience, which will likely further increase satisfaction and loyalty.
Enhancing your digital payment experience
Your online shopping experience should be an ongoing project. As customer preferences change alongside the evolution of digital technologies, they might expect your business to keep pace and evolve to meet their expectations.
Here are some of the most effective ways to enhance your online payment experience:
- Accept more payment methods: The increasing diversification of the digital payment market has led different customers to show preferences for different methods. To capture the widest possible customer base, you should aim to identify and accept emerging popular payment methods to ensure customers can complete transactions whatever their preferred method.
- Secure all customer transactions: One of the disadvantages of digital payments is that they could offer a highly lucrative attack vector to cybercriminals. Creating an additional layer of security to all digital transactions (like requiring two-factor authentication before checkout) can help secure all payments and allay any customer concerns around data privacy and security.
- Ensure compatibility across all devices: Similar to their preference for different payment methods, customers also have different devices that they prefer to use when shopping, including mobile devices, desktops, tablets and more. It is important to create a digital shopping experience that is compatible across all devices, platforms and browsers to better meet (and exceed) customer expectations.
- Allow customers to save payment details: Many digital payment software solutions might allow you to configure “save payment details” features into your payment process. That means when customers return to your site to make a future purchase, they should not have to reenter their personal information, banking details and billing/shipping addresses, eliminating a manual task that can seem tedious and time consuming.
The bottom line is that whenever you choose to enhance your digital payment experience, you should put yourself in the shoes of your customers; every change you make should aim to eliminate friction, remove barriers and make it easier and more convenient for customers to complete their purchase with as few clicks as possible.
Accelerate your digital transformation with Comerica Bank
Speed and ease of use are the hallmarks of today’s consumer shopping experience. Customers are less willing to buy from businesses that are unable to meet them on the devices and technologies they use every day. A robust, convenient digital shopping experience could be essential to attracting (and retaining) customers and ensuring the long-term growth and stability of your business.
Comerica Bank provides businesses with the solutions they need to accelerate their digital transformation and build stronger customer relationships.
Reach out to our team to learn more about our products and services.