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How payments affect conversions

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The payment process is one of most overlooked steps when it comes to converting visiting shoppers to paying customers, and your choice of payment provider plays a bigger role than you might think. Here are three ways in which your payment solution affects your conversion rate, and what you can do to improve it.

The challenge of getting an online shopper all the way from “awareness” to “purchase” is perhaps best illustrated by the fact that the average cart abandonment rate for e-commerce is almost 70 percent, with some industries, like travel, showing numbers above 80 percent.

Some of these abandoned carts are, of course, unavoidable. Customers often fill their carts just to compare with other shops and might return later to actually finish the purchase. A bigger problem for online merchants are the customers they lose during the payment process. These are customers who appear ready to buy and who have already invested a lot of time on your site, but for some reason can’t finish the purchase or simply choose to move on. Losing customers at this late stage is obviously extremely expensive as you will have invested a lot to get them there and will struggle to recover them once they have abandoned their carts.

So, how do you stop it? While being upfront with shipping charges and having a generous return policy might increase conversions a bit, your choice of payment solution plays a bigger role than you might think.

Make it frictionless

Online shoppers expect convenience, so a long and complicated payment process is sure to discourage a lot of potential customers. According to statistics from Baymard, 27 percent of shoppers abandon their orders because "checking out" takes too long or is too complicated. Baymard’s research also shows that the average payment window actually displays twice as many form fields as are actually needed. And with the rise of mobile shopping, the need for simple and user-friendly payments has only grown. Today, most e-commerce traffic comes from phones but because of poor mobile UX the cart abandonment rates are significantly higher for mobile than it is for desktop.

What to do: Find a payment provider that can offer you a frictionless and mobile-friendly payment solution. Try out the payment process yourself to see that the customers aren’t redirected or asked to fill out “unnecessary” fields. Another way to boost your conversion is to check if your solution has functionality that remembers the customer’s card details, that is a great way to increase conversions on returning customers.

Offer the right payment methods

We have previously written about the importance of having the right mix of payment alternatives in order to increase conversions. In a study that the Danish e-commerce organization FDIH did together with Bambora on Danish shoppers, we found that 25 percent of shoppers have decided not to make a purchase because the online store didn’t offer their preferred payment alternative. When Postnord asked Nordic consumers how important it was for them to be offered a variety of payment alternatives, 72 percent answered that it was either “important” or “very important”.

What to do: Analyse your customers to see what kind of payment options they prefer. If you're targeting Swedish customers, for example, a combination of invoice, card payments and Swish will satisfy most customers. And in Denmark the combination of cards and Mobile Pay covers pretty much everyone. If you are looking at an even wider geographical market you should also make sure that your payment provider can handle cross-border payments and a wide variety of currencies. According to Shopify, 92 percent of shoppers prefer to but from sites that allows them to pay in their local currency.

Increase your card acceptance rates

Cards are the single most popular payment method, but your card acceptance rate is fully dependent on who your supplier of card acquiring is. This means that choosing the right partner for card acquiring can make a big difference for your bottom line. The issue with card acceptance rates revolves around security. In order for the card issuing bank to accept a card transaction they have to trust that it isn’t fraudulent. The way banks do this is by analysing all the data that is sent along with the transaction to see if it fulfills their security criteria. But depending on what data the acquirer chooses to send, even legitimate transactions might not meet the criteria set up by the bank, resulting in a false decline. And since different banks have different rules, there isn’t one correct solution. This means that the acquirer has to work continuously on adjusting their solution to meet the different banks' criteria in order to make sure that legitimate transactions aren’t declined.

What to do: When it comes to increasing acceptance rates and reducing false declines all acquirers aren’t equal. By choosing an acquirer that proactively finds the reasons for false declines and fixes them, your acceptance rate can be significantly improved. In 2017, Bambora conducted a study of more than 300 merchants that switched from another acquirer to Bambora in the previous year. On average, we saw that our way of working led to an average uplift in acceptance rate of 3.7 percent, compared to one acquirer the increase was 8.6 percent.