How to Boost E-commerce with Digital Payments

Since the humble beginnings of the Internet, e-commerce has come a long way. We are already witnessing a new industry that does not only exist alongside traditional brick-and-mortar stores, but which has the potential to virtually replace them in the near future.

For more than a decade the US e-commerce market size has been growing rapidly – with no signs of slowing down. One big contributing factor to this trend is that virtually all industries profit from online sales. From the retail sector to entertainment, education and even the food industry, there is no industry that does not profit from a thorough e-commerce and online sales strategy. 

Revenues from e-commerce have grown from $285 billion in 2017 to $469 billion in 2021 and expect to grow up to $563 billion in 2025 according to Statista. 

The pandemic has further sped up this trend. According to McKinsey’s survey of US consumers, consumer behavior has shifted even more towards online purchases, which most likely will remain even after the pandemic is over.

Over half of US consumers reported shifting their usual purchases online, and more than one-third of them expect to further increase their share of online shopping in the next six months, and only 11 percent plan to revert back to brick-and-mortar channels. This is a strong indicator that many new shopping and payments behaviors prompted by the pandemic are likely to stay in trend for the long term.

The question remains how merchants can find the right ingredients to bring their e-commerce activities to a new level, boost sales and stand out of the crowd. Merchants face 5 digital payment trends that can help them boost e-commerce:

1. Streamlined customer journeys

2. A smooth purchasing process

3. An optimal payment mix

4. Custom payment solutions (internal and external)

5. Increased safety features

Streamlined customer journeys

Nowadays customers go a long way before buying a specific product. The general customer journey consists of 5 broad phases:

·       Awareness

·       Consideration

·       Purchase

·       Retention

·       Advocacy

The most crucial phase – purchase – is highly dependent on the payment infrastructure of the website. Customers require easy-to-use, accessible, safe and trustworthy payment options to make the purchase. 

Therefore, setting up a reliable payment system is the first step in becoming a viable e-commerce business. In the long-run, e-commerce merchants should strive at streamlining the entire customer journey and improve every step on the way. 

Create a smooth purchasing process 

No matter how good the marketing approach is, a company needs to emphasize the payment process in order to convert page visitors to customers. This is where banking as a service (BaaS) comes into play. Nowadays, not only banks, but also more and more financial service providers offer customizable banking solutions, which can easily be integrated to the backend of the e-commerce page. 

Having set up a proper banking system ensures that customers get an optimal purchasing experience with less technical problems, which converts to higher sales figures. While most e-commerce sites have financial services such as PayPal in place, nowadays customers are asking for even more choices. An optimal payment mix can solve this problem.

Create an optimal payment mix

In 2021, there are a lot of different wallet types and other digital payment options customers can choose from. The right mix of payment options is crucial in order to satisfy most customer needs. 

Besides the big 3 – Apple Pay, Google Pay and PayPal – there is a lot more to consider. While it is recommended to offer as many payment options as possible for the customer base, a more customized approach to online payment is recommended in order to serve the needs of even highly demanding customers. To streamline internal payment processes of e-commerce businesses turn to embedded financial solutions.

Custom payment solutions to stand out of the crowd 

Service providers such as Hyperwallet (member of the PayPal group), Adyen and Whillet do not only offer an easy way for customers to pay for products or services online, these providers allow merchants to add a lot of customized payment options. 

This is why specialized banking as a service (BaaS) solutions are so important. Instead of just offering multiple payment options, merchants get the opportunity to offer customized loyalty programs and bonuses to improve the retention phase of the customer journey.

Embedded financial solutions do not only help customers but are also a great way to streamline internal processes. They can take different forms. For example, Chinese companies like Yizhibo and Kuaishou allow their customers to purchase merchandise while they watch live streams with a click of a button, payments are powered by fintechs like Ant Financial. Another example from the US, Google Maps announced that users will be able to find and pay for parking directly through the interface of the Map. 

Largest marketplaces eBay and Etsy benefit from the holistic view of payments, which their partner Ayden is providing by creating a unified, single platform able to process all payments, irrespective of channel. In its turn, Hyperwallet does not offer traditional merchant services but rather targets enterprise-level clients or marketplaces by driving seller loyalty with controlled payouts. Whillet is going further in its solution by allowing customers to create their own wallet on the platform. Having more than 14 million opened wallets team experience globally, the company empowers their users to rapidly update balance, easily refill or withdraw money. All operations are in “one-click" and without redirecting to third-party platforms: no questionnaires, in-person visits to banks and other administrative hurdles.

Provide higher safety standards

A lot of new merchants are still reluctant to engage third-party suppliers because of security risks. Even though these concerns are understandable, they do not reflect the actual market situation. Merchants trying to establish their own in-house payment system will most likely fail due to a lack of experienced staff or the lack of financial resources needed to set up a well-functioning and secure payment system. 

This is the reason why most merchants look for established payment solutions on the market. Embedded finance services have the advantage to offer high-level security features without the need of complex integrations into the own framework. 

Therefore, especially new merchants or merchants that lack an internal software team should definitely consider embedded finance services in order to implement the best e-commerce solutions with the highest safety standards while spending the least amount of time, costs and effort.