More payment options create checkout success

As e-commerce accounts for an increasing share of retail sales, merchants will need to prioritize the payments experience and offer multiple solutions — like digital wallets and Buy Now, Pay Later – to accommodate the preferences of each generation and avoid losing sales at checkout.

Responding to ever-shifting trends and consumer preferences, retailers are experts at finding innovative ways to gain a competitive edge. They were early adopters of technology that streamlined online checkout to boost sales and attract new customers. Now, they’re finding that offering more consumer-friendly payment options improves sales and reduces cart abandonment.

E-commerce dominates the retail landscape

E-commerce’s popularity has exploded, driven by factors that include a wider selection of goods, price competition and the consumer’s ability to research products and pricing. The speed and security of online checkout are also factors.

In 2024, global retail e-commerce sales reached an estimated $6 trillion (U.S.). Projections indicate this figure will climb to nearly $8 trillion by 2028. With increasing competition for sales, online retailers are improving the shopping experience with more flexible payment options. According to a study by Digital Commerce 360, conversion increases when checkout takes less than 90 seconds. If it takes longer, the conversion rate may decrease by as much as 47% on average.

A generational shift toward digital payment options

While millennials represent the largest generation in terms of population, the influence of Gen Z on e-commerce and a variety of digital transactions is seismic. Gen Z lives daily life online. When making purchases, they crave speed, convenience and security. For instance, recent data about Gen Z shows that 79% use mobile wallets to pay for everything from online merchandise to recurring monthly bills.

While Gen Z embraces digital wallets and mobile apps, Gen X and Baby Boomers prefer credit cards for online transactions. The combined buying power of all these generations is enormous, so providing the payment methods they prefer is critical to increasing sales and minimizing cart abandonment.

Choice rules — the benefits of multiple payment options

Multiple retail payment options, including digital wallets, simplify the checkout process — a goal anyone who has ever had to find and manually enter their credit card number would cheer. Consider these findings from the Digital Commerce 360 study: Some 74% of merchants believe customers abandon carts when they must manually enter their 16-digit credit card information, and 55% believe customers abandon their shopping cart because their preferred payment option is not offered.

Payment options like digital wallets lower cart abandonment rates by providing:

• Seamless guest checkout. Customers can skip the hassle of setting up accounts and logging in to make a purchase — the digital wallet stores the cardholder’s account information, including name, address, payment card data and contact details, allowing the user to bypass entering any of that information.
• Increased security. Customer financial data doesn’t interact with the merchant’s environment, safeguarding personal information and eliminating the need to store account information on the merchant site.
• Additional brand benefits. Digital wallets can enable sought-after features like digital smart receipts and loyalty points — services that expand consumer loyalty and purchase conversion.

Another trend is gaining traction

As the consumers of today (and tomorrow) flock toward multiple payment methods, financial institutions are taking note. Some are launching bank-backed digital wallets, removing the need for third-party providers like Apple Pay, Google Pay and PayPal, and building on the reputation they’ve already established with consumers who trust them with sensitive financial and personal data.

Retailers know that understanding and prioritizing consumer needs and preferences at every stage of the purchasing journey is critical. Providing an optimal checkout experience that includes multiple convenient payment options like credit/debit cards, digital wallets and Buy Now, Pay Later boosts satisfaction, reduces cart abandonment and raises brand credibility.

If you’d like to learn more about retail payment options, we can help. Learn more about our payment acceptance solutions.