Myth 1: Having too many payment options reduces conversions
The Paradox of Choice was developed by Barry Schwartz in 2004, and suggests that reducing the number of choices can greatly reduce shopper anxiety. Whether you call it the paradox of choice or choice overload, the idea is that people have a difficult time making a decision when presented with too many options.
Interestingly, this phenomenon seems to apply to jam (which is what they used in the study) but not to payment options. While many retailers are hesitant to add any more than a few payment options to their site, customers want as much choice as possible.
In fact, a study by Morning Consult found that 75% of shoppers feel that retailers should accept as many different payment types as they can. While accepting every payment type isn’t always an option, this statistic illustrates how consumers demand choice.
So how many payment methods should you have? Research by PYMNTS.com found that the average number of payment options among the top online retailers is 6.8. The report also found that some of the best retailers have as many as 15 payment options.
Myth 2: Shoppers only use their phones for research, not buying
A number of ecommerce retailers still feel that mobile is only used for researching products and not for purchasing. But while it’s true that mobile is perhaps the most important channel for researching products online, mobile has also become a significant tool for online purchasing. Research by Internet Retailer shows that mobile accounts for 30% of overall online sales. And mobile will only grow in importance. The UK has been a few years ahead of the US in terms of mobile commerce for a while now, and this provides some foreshadowing on things to comes for mobile commerce. Data from Business Insider found that mobile transaction make up an astounding 50% of total ecommerce in the UK.
But like many myths, this one is based on a kernel of truth. Mobile has consistently converted shoppers at a lower rate than the rate on desktop, but that has more to do with a poor mobile shopping experience than shopper intentions.
One of the reasons why mobile is lagging in terms of conversion rate is because too few retailers have a mobile friendly payment option. Asking mobile shoppers to fill out long forms on a small screen adds a considerable amount of friction to the checkout experience, and mobile payment methods help to cut down on this friction.
One retailer that has done particularly well in terms of their mobile shopping experience is AO.com. They have focused on minimizing friction for mobile shopping experience by keeping form fields to a minimum, by accepting a range of payments, and by effectively using a dropdown menu in the checkout.
Myth 3: You only need to accept credit cards
Payment options aren’t just what your customers pay with – it’s how they pay. This is a fairly significant distinction when we consider how different payment options connect with different shopper types.
Many shoppers, for example, are convenience oriented. These types of shoppers want the entire shopping experience to be as fun and easy as possible and don’t want to spend a lot of time checking out. Retailers can appeal to convenience-minded shoppers by providing them with a fast and simple payment method that takes the hassle out of checking out.
By only accepting credit cards you’re also shutting out a huge portion of Millennial consumers from buying from you. A survey by Bankrate found that 63% of Millennials don’t have a credit card. So if you only accepting credit cards, over half of the largest generation in the U.S can’t buy from you.
What this shows is that different shopper types have different preferences in how they shop. Retailers can better serve these shopper types by providing them with a payment option that fits their unique needs.
Myth 4: Shoppers are mostly concerned about security
The number one concern for online shopper is security, right? Not so fast. A number of recent studies suggest that shoppers are actually more concerned with things like convenience than security.
For starters, by looking at the top reasons for cart abandonment we find that having to create an account (23%) leads to nearly twice as much cart abandonment as security concerns (13%). This suggests that shoppers are more motivated by convenience than security.
The highest reported reasons for abstaining from using mobile wallets also suggest that convenience trumps security. Of the iPhone users not using Apple Pay, security concerns ranked fairly low on the list at 19%. What the survey suggests is that the success of mobile wallets will largely hinge on their ability in provide a convenient shopping experience.