The different payment options in your web store determine the success of your shop. It is very important to offer all payment options that meet the payment needs of your (potential) customers. A consumer is more likely to make a purchase when the desired online payment method is offered. As an owner of a webshop, you can choose from many different payment methods. Which solutions are popular / important? What are the advantages and disadvantages of the different forms?
The most popular payment methods
Choosing the right online payment methods depends on the product or service being offered and the potential customer. In general, it is wise to start with a selection of payment methods that you know are popular within the market the online business is targeting. For many Dutch webshops, it is advisable to start with iDeal. In addition, you are required to offer a post-payment method, such as giro or credit card.
iDeal
When a consumer chooses to pay with iDeal, they are directed directly from the online store to their own familiar banking environment. iDeal is also a safe way for you to handle payments because the amount is immediately debited from the consumer's account as soon as he pays.
Credit Card
Worldwide, online payment by credit card is a widely used method, which can make it very interesting to offer this way of payment. However, the connection is only profitable when there are a significant number of transactions or when you sell products in the higher price segment. This is because the cost of accepting and connecting credit cards is very high compared to other payment methods. In addition, the application process for credit cards can take several weeks. Furthermore, paying online with a credit card is susceptible to fraud because a transaction can be reversed for up to six months.
PayPal
PayPal is gaining more and more ground in our country. Worldwide, this payment method is actively used by more than a hundred million people. If you are considering doing business outside the country, PayPal is definitely worth considering. You can compare PayPal to an online wallet. Consumers deposit money from their bank account or credit card into this wallet. With this money, they can pay online. To take full advantage of PayPal, merchants need to create a business account. When you don't want to or can't accept credit cards directly, PayPal is a great alternative. Without going through the credit card application process, you can still receive credit card payments this way.
Pay afterwards
Paying in arrears is becoming increasingly common. When a merchant offers back-payment, the consumer receives an invoice with the ordered product. The main difference with a giro collection form is that the provider of this payment method takes over the payment process from the merchant, including the payment risk. Providers include Klarna and AfterPay.
Bank Transfer
Like iDeal, payment is made by bank transfer within the consumer's online banking environment. Many customers like the fact that they can choose their own time of payment. This can persuade potential customers to actually make a purchase from the online store. A disadvantage can be that you receive the amount due late or not at all. You can mitigate this risk by not shipping the order until payment is made. But this in turn can scare customers away. Also, consumers may incorrectly enter the payment reference or amount due resulting in annoying delays.
Gift Certificate
A gift card is of course also a payment method, although that may not be something you immediately think of as a merchant. Logical, because the gift card can actually be seen - much more than the online payment methods mentioned above - as a marketing tool. Of course, consumers can pay with a gift card, but the (digital) paper is mainly used to lead consumers to your webshop.
Payment Service Providers
If you could use some help choosing the right payment methods, it might make sense to turn to a Payment Service Provider (PSP). Of course, you can also use your own bank or an acquirer, but PSPs specialize in online payments. You can also save money by outsourcing the payment process.
The biggest advantage of PSPs is that they can combine several online payment methods within a single Internet cash register so that transaction processing can be provided more cheaply. In most cases, you pay a percentage of the transaction amount or a fixed amount per transaction to the PSP for each payment method. Some PSPs charge both a percentage and a fixed amount per transaction. Want to know more about what is the best Payment Provider for you? Then contact us and we will be happy to provide you with advice!
Conclusion
You have three options for managing your payments: you can do everything yourself, you can delegate part of it to a distributing PSP, or you can leave the management of your online payments to a collecting PSP. When making a choice, it is good to consider the size of the company, the payment methods you want to offer and the way of working you yourself are comfortable with.
Want advice on the best option for your business? Then get in touch with us!
