Can Payment Gateways Online Increase Conversion Rates?

Your cart is full and you’re in checkout inputting all of your information. Finally, it’s time to make your transaction and you’ve put your credit card information only to have it declined. That couldn’t be right, though because you recently checked your statement and you had plenty to cover the purchase.

Rather than try again, you move on with frustration to another website that had the same product, but for a few dollars more. You would rather pay the extra money than have the inconvenience of a difficult checkout. 

Just like you, many of us “abandon cart” as soon as there’s a glitch in the checkout process. Unless that eCommerce business is the only one selling the product we’re after, most of us would bail and find it elsewhere. It’s the equivalent of the line being too long in a traditional store. Sure, you tried it on and loved it, but one look at that line and you’re out the door. 

As an eCommerce business, it’s important to take into account the impatience of human nature and work ahead of it. Your eCommerce marketing strategy will only go so far if the rest of your platform isn’t user friendly, including your payment system. How can payment gateways increase conversion rates and can your business work ahead of the potential issues?

If you’re in the process of learning how to start an eCommerce business, start by making sure your payment gateway system is efficient and is built to increase conversion rates. 

What Is a Payment Gateway?

A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The technology acts as a third party between the business and the customer. The payment processor takes the customer’s card information from the business and then delivers it directly to the customer’s bank or creditor. Payment gateways can be the card machine at your grocery store checkout, the online checkout of your favorite online store, or even a card reading device that you pop onto the end of your phone—like Square. 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.

Payment Gateways and Fraud

With an ever-increasing rise in financial crimes and fraud, it’s difficult to know which payment options to offer customers. Fraudulent card payments aren’t as easily identified today. With the improvement in technology, there’s more access to credit card information and advanced devices to make carbon copies of cards. 

There may be a few reasons that shopping cart abandonment may be prevalent on your site:

• Customers may feel a level of distrust with your brand. Positive disclaimers and recognizable financial logos (Better Business Bureau certification, etc.) will help reassure customers that they are not at risk of fraud.
• A credit card payment being redirected to a third party may be a problem for customers. This not only increases your risk of logistical hiccups but increases exposure for you and the customer.

To combat the negative implications of new technology, there are also advancements that are extremely beneficial to eCommerce businesses. 

“…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.” ACI Worldwide

Tools like these help to provide your business with security against any looming fraudulent card payments. Results from a technology like this would allow your business to make highly informed decisions on payment types and protocol—saving you time and money in the long run.

Payment Gateways + Conversion Rates

More than three-fourths of shoppers abandon their cart before making a credit card payment. This makes increasing conversion rates seem like an unachievable task for eCommerce businesses.

Both customers and businesses don’t want to be inconvenienced when it comes to the transaction. This is where conversion rates come in. Some businesses may be surprised to find out that their payment system in place may be causing them to lose customers. 

One example may be the use of magnetic stripe card readers versus the new chip reader machines. In a brick and mortar business, customers may have issues using a chip card in an old reader. In addition to this, a payment gateway that requires having customers sign a copy of the receipt is becoming outdated. Brick and mortar stores are now moving toward a payment gateway that enables “touch” payment where the credit card or smartphone is simply held to the card reader. 

eCommerce businesses are no different. There are online payment gateways that are not obsolete entirely but are phasing out. Manually entering payment information is a challenge for customers if they’re shopping on their phone or their credit card isn’t within reach. Autofill can only help so much since not every eCommerce platform  is  well-equipped to fill in all of the information. Even the best eCommerce websites have payment systems that are outdated and inefficient. Enabling an online payment gateway that is able to store the customer’s payment information is becoming a necessity for eCommerce businesses. For example, having ApplePay and GooglePay makes purchasing nearly effortless for most customers.

Payment gateways are getting increasingly efficient. What took a card reader using dial-up internet minutes to do back in the late ’90s now takes a fraction of a second now. The length of time it takes a customer to complete their purchase certainly affects conversion rates. Payment options are also a large facet of how payment gateways affect your online business. 

“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%.”

There are practical steps to ensure that payment gateways are working in your favor. 

Setting Up Checkout For Success

As we mentioned above, eCommerce businesses can have outdated checkout processes that aren’t user-friendly. Thankfully, your eCommerce business can make changes to its online payment gateway and overall checkout process that will make it relevant and helpful for customers. To set up your checkout for success, you’ll want to know how to use Shopify or whatever platform you are on to the fullest. Here are a few things to keep in mind:

1. Keep checkout to one page. This will help to keep customers engaged and to factor in any internet connection issues on their end. Scrolling from page to page increases your business losing a sale.
2. Alternative Payment Method. Offering APMs on your eCommerce platform will be inclusive of customers that don’t have access to traditional ways to pay. PayPal has had a large boost in eCommerce in recent years as an alternative payment method. Becoming even more popular are payment options like Affirm, Zebit, and FuturePay. These APMs are non-credit card options where the third party pays the eCommerce for the purchase and then the customer repays them over time.
3. Conduct A/B testing. There are numerous advantages of conducting A/B testing. Set up a test that analyzes your existing checkout process side-by-side to another checkout option your team has been considering. Allow 2-4 weeks to gather data. Which performed best? You may also test other aspects of your website to ensure that customers are getting the optimum benefits from their shopping experience.
4. Study the data. Which payment methods do your customers prefer? Are customers inclined to use APM? Assess your customers and use the data to steer your eCommerce checkout platform in the right direction. Is your business offering enough checkout options? Is the current payment gateway system in place the most efficient in meeting customer needs while also being cost-effective?
5. Working promo codes. Ensure that promo codes work before advertising them on your website or through email campaigns. Customers may be shopping exclusively to use the code. If the code isn’t embedded into your checkout properly and doesn’t work then customers will walk away.
6. Minimal personal information. Customers just aren’t comfortable giving too much information during check out. It is time-consuming and it’s also offputting. Only ask for the information that your business absolutely needs. Birthdays can wait. 
7. Implement a one-click payment system. This payment option has been convenient for shoppers since it allows shopping on the go and allows for impulse purchasing. Sensitive data is securely stored with the PCI certified Payment Service Provider (PSP) and tokenized for use on the site.

Final Thoughts

There are a few more things to consider when optimizing a payment gateway service for higher conversion rates. Remain updated on how customers are finding the online payment process. Provide 1-2 question post-purchase surveys to customers about their purchasing experience. Be mindful of any design changes made to your website as they might cause checkout to appear disjointed on mobile devices. Make your online business approachable by implementing alternative payment methods. Providing customers with a one-click payment option will help increase conversion rates. 

The ease of payment won’t only satisfy customers at the moment but will increase your chances of them referring your business to friends and family. Conversion rates are more reliant on payment gateways than anticipated. Getting ahead of any issues by providing an easy checkout will result in more purchases being completed.