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What Is the Link Between Payment Methods and Conversion Rates?

conversion rates in cross-border ecommerce

Checkout conversion rates are an incredibly important indicator for merchants’ bottom lines. Even minor change in website design, checkout flow, or the overall payment methods setup can noticeably impact a merchant’s conversion rate – positively or negatively.


Luckily merchants, provided they are working with the right payment gateway providers or technology partner, have a wide range of tools at their disposal to optimize their eCommerce and mCommerce conversation rates. Payment setup, as the final step in the checkout process, is an area deserving of particular attention. Specifically, it is worth exploring the link between payment options and conversion rates.


The role of alternative payment methods and conversion rates

Success in cross-border eCommerce (including via mobile devices) relies on an understanding of local markets; how they find products, how they shop, and most crucially, how they pay. “Think globally, act locally” has become a cross-border truism, but being highly-attuned to locally-preferred online payment system has become essential to growing a global eCommerce business.

Alternative payment methods (APMs), defined as any non-card payment method, are expected to comprise nearly 55% of global eCommerce payments by 2019. Globally, there are more than 200 alternative payment methods, including bank transfers, direct debit, digital wallets, cash on delivery, e-invoices, digital currencies, plus a variety of highly specific, locally-preferred payment options. One of the key drivers is mobile, where entering card details is simply not practicable. Convenience is king, and even where card payments are still used, they are increasingly “dematerialized” and hidden behind a digital wallet, app, or another APM.


Finding the payment method mix that maximizes conversion rates: Steps that merchants can take

Understanding end-user device, as well as local payment preferences, is therefore crucial to getting the payment mix right. Shopper recognition also plays a role, as consumers typically have 1-2 payment methods that they prefer, while others are useless to them.

  1. A merchant needs to look closely at the country, industry, and type of device that is used, and cater their payment offering accordingly. A merchant’s payment provider – if they are suitably experienced – should be able to provide valuable guidance. In many markets, offering the right APMs also conveys a sense of legitimacy, important to building trust with shoppers.
  2. Merchants should ensure that they always offer at least the top three payment methods in a given market or country. Most shoppers will use at least one of them, and it has been shown that providing the top three methods, rather than only the most popular, can increase conversions by up to 30%.
  3. Merchants must continually analyze the conversion rate and usage of each payment method, and be ready to adjust when needed. This is easier to do when working with a payment provider that offers an extensive global payment network, enables rapid payment method switches, and provides access to comprehensive payment data for advanced analytics.

There are also solutions available that provide dynamic tools that determine which payment methods should be offered to shoppers, determined by their pre-assessed risk level. A shopper’s shipping address, device information, and other data can be used to automatically determine whether higher risk payments (i.e. payment by invoice, popular in Germany) should be offered alongside major card brands. The background check is done before the shopper reaches the payment page, and results in higher conversion rates, because the appropriate payment methods are offered at the same time as reducing fraud risk.

Our insight paper, Driving Up Conversion Rates in eCommerce, illustrates how merchants and payment providers can increase their eCommerce conversion rates.