Until recently, offering multiple payment options online for many small businesses meant allowing customers to checkout with their credit card of choice. This has quickly evolved, with alternative payment methods such as digital payments increasing in popularity. And while “more money” in some realms is said to mean “more problems,” the buying power these alternative methods give to consumers is all good news for e-commerce retailers.
Instant financing, one of the latest payment methods in e-commerce, is widely considered a win-win for those selling and purchasing products online. A growing class of point-of-sale (POS) lenders offering instant financing solutions are embedded in the checkout processes at major retailers from Walmart and H&M, to Sephora, Dyson and Adidas, according to a recent article in The Atlantic, and for good reason.
The article states that while these lenders encourage consumers to spend more money more often, they also “give retailers greater access to a demographic whose purchasing power is relatively untapped: the nearly half of Americans in their 20s who don’t have a credit card.”
Add to that mix the pandemic’s acceleration of the online shopping shift and, as a result, eMarketer projects that “U.S. retail e-commerce sales will grow to $843.15 billion in 2021 (up from $794.5B in 2020). While this isn’t as pronounced of an increase as we saw in 2020 from 2019 ($600.1B), these are levels of e-commerce that experts didn’t expect we would reach until 2024.”
With the convergence of this data, it’s no wonder the digital version of “buy now, pay later” has grown exponentially. TotalRetail reports that “more online retailers recognize POS credit is an important tool in reducing friction at checkout and increasing consumer buying power.”
So the question becomes: How is your business keeping up with technology when it comes to your online checkout process?
At Retailer Web Services, we are helping dealers meet this challenge with WebFronts Go, a set of technologies deployed to evolve websites into a delightful online shopping experience that successfully converts prospects into customers. The latest powerful features of WebFronts Go: PayPal and Wells Fargo Integration for instant financing.
With the Wells Fargo “apply and buy” integration, shoppers can apply and get approved for financing with a Wells Fargo credit card within minutes—all from a dealer’s website. “Apply and buy” financing options at checkout can reduce cart abandonment and increase overall sales, two key metrics driving the rise of e-commerce instant financing. According to a survey by Klarna, an e-commerce payment solutions provider:
Nearly half of online retailers (46%) confirmed instant financing reduced cart abandonment; two-thirds (64%) believed that providing financing options at checkout increased overall sales.
As for consumer sentiment and understanding of financing options, the Klarna survey reported that instant financing empowers consumers by providing them with additional freedom, flexibility and buying power, all of which bode well for the retailers offering payment type flexibility.
Along with “apply and buy,” PayPal integration is another important feature to facilitate easy and secure transactions via the world’s leading online payment system. PayPal was reportedly used by 64% of online shoppers in the last year. Their brand name provides a level of trust and security to shoppers increasing not only the likelihood certain customers will complete an online order, but also the size of the order. When PayPal is available in the checkout process, as it is on all levels of WebFronts websites, 36% of current customers spend more money.
Making different payment methods available on your website can make a powerful difference in your online sales, and it’s important that you act now so you don’t forfeit potential business. With as fast as consumer trends have accelerated over the past year, proceeding with the same digital approach that was stood up even a year ago is risky. Shoppers value different criteria today than they did 12 months ago, and your digital strategy should consider these changes. From your website and its checkout process to your online reputation, to your paid digital advertising, review every element considering the shifts that came in 2020 so you can position your business to properly meet consumer expectations and give them the tools to make shopping with you simple and pleasant.
This article was first published in the April 2021 issue of Retail Observer.
Genna Majuta is CEO of Retailer Web Services.