Alternative payments like Instant eCheck™ increase conversions
Credit cards have traditionally been the "go-to" payment method for online purchases. Fears over identity theft and dissatisfaction with the "buy now, pay later" model have many turning away from online purchases that require credit cards.
Also, many people are not able to pay with a credit card because they cannot get credit. Even those who do prefer credit cards are having problems with them. Issuers are reducing credit limits, even for low-risk customers, in response to the tightening global credit environment. All of these factors are driving sites to offer alternative payment methods. As more and more consumers venture online, many are looking for new, more secure payment options.
Increased preference for multiple payment options
While credit cards continue to be the top choice overall, more and more consumers are demanding multiple payment options. A 2009 YouGov Independent Survey showed that 50% of customers will abandon a sale if their preferred payment type is not available. A 2006 Study by the University of Karlsruhe has also shown that when customers are given a choice of three or more payment types other than credit or debit cards, there is a 12% increase in sales conversion as compared to when they are offered one option only.
This means that if you are only accepting payments by credit cards or bank wires, your business is not making the money it could be. Many people move away from traditional credit card payments because of security concerns. Fraud-weary consumers are becoming increasingly reluctant to part with their financial information, particularly credit card information. They feel that other payment forms provide greater protection from fraud or misuse and better protect their identity.
New opportunity for online merchants
The increasing number of more secure payment options may be causing experienced online shoppers to jump the credit card ship, but new shoppers who previously refused to use credit cards online are now poised to enter the market, creating a new opportunity for online merchants.
An AC Nielsen report stated that credit cards were the method of payment used for 59% of international online purchases in 2005. In North America, while credit cards are still the more commonly used payment method, PayPal ranks second while debit cards, primarily driven by the U.S. market, rank third.
Yet, consumer protection organizations in the U.S. discourage consumers from using debit cards on the Internet. In general, the use of debit cards carries a much greater liability risk than the use of credit cards or check payments.
In fact, according to the newest research from Javelin Strategy & Research, the credit card share of online payments is expected to decline from 60% today to 44% by 2012. Already 41% of online consumers prefer payment options other than credit cards.