The sheer growth of e-commerce sales should be enough for merchants to understand the importance of accepting payments online.
Industry-wide stats more than back up the rapid trajectory of the e-commerce market. In 2017 alone, online sales grew 16% to $453.46 billion. This figure is the highest growth the online retail market has seen since 2011.
Forrester Research’s data projects that online sales in the U.S. will reach $523 billion by 2020 — a sharp increase from the $335 billion seen in 2015. Online sales are estimated grow at a rate of 9.32 percent each year, from now until 2020. By the end of the decade, it’s projected that 26 million more shoppers will be both active browsers and buyers of online goods.
Leading the e-commerce pack, which is probably not surprising to most businesses, is Amazon’s rapid growth. What is noteworthy, however, is the rate at which this e-commerce behemoth is boosting sales. In 2017, Amazon hit $189.61 billion in sales — a combination of its sales and its marketplace sellers. Based on these figures, Amazon is accountable for roughly 70% of the overall e-commerce growth and accounts for nearly 35% of the entire retail market.
It’s easy to see why merchants should see the value in accepting payments online. Much of Amazon’s success has also been attributed to its accessibility and ease of use in paying online, including its one-click options, and technology that securely stores payment information.
Accepting Payments Online: Components to Consider
There are four basic steps merchants needs to take when establishing an online payment strategy. This must consist of establishing a merchant account, credit card network agreements, choosing a merchant account provider and finding a payment gateway provider. A merchant account is necessary for any business who wants to accept credit cards online and must be done before your business establishes its online payments strategy.
After determining what credit card payment networks are best for your business (based on the terms and fees), you should compare merchant account providers. This allows you to pick a partner that best fits the needs of your business and your customers’ needs. When choosing a merchant account provider, there are a few key features to look for: Transparency in pricing, customer service, merchant account support, enhanced technology, and flexibility to choose a plan that matches your payment processing needs.
Another key element is finding a partner that provides a seamless payment gateway to power your online channels. Essentially, a payment gateway is an eCommerce application that connects your merchant accounts to your payment processing to allow businesses to accept and process credit card payments online. An online payment gateway is a critical component to powering a fast, flexible and secure online customer environment. Having the right payment gateway can make it easier to integrate and set up the necessary shopping cart software needed to accept credit cards online and through mobile apps.
Accepting Payments Online: Risk Factors Involved
Accepting payments online ensures your business is getting money into merchant accounts faster, and through secure online channels. It also enables revenue-generating perks, like recurring billing and the ability to accept subscription payments for services. But merchants must also be aware of the risks associated with accepting payments online. With the increased threat of fraudsters infiltrating the eCommerce system, this adds another layer of risk to accepting credit cards online.
Given the right payment gateway provider, however, and your business will be set up for success with the necessary security tools to protect your company from outside threats. Because many threats are evident at the time of the transaction, relying on a payment gateway that integrates the latest real-time fraud solutions can put your business online without adding unnecessary risk.
Keeping your business fully protected means having two layers of security in place. To start, you’ll want to rely on a payment processor that leverages technology like tokenization and better authentication methods. Beyond secure software and hardware, you’ll want to ensure your payment gateway is integrated into an eCommerce site that relies on enhanced site security features.
One feature to look for when setting up your eCommerce site is an SSL Certificate, which creates an encrypted connection. This creates a secure connection between you and your customers, provides them with an additional layer of trust and ensures they are comfortable entering payment credentials on your site.
Once the proper security measures are in place, this also gives your business the capability to enable other key payment gateway features, such as subscription billing and account updater. Because both of these features allow your business to create a card-on-file transaction, it’s critical your system encrypts the credit card data. Having the right security measures in place also lessens the chance there will be an error in processing credit cards, which reduces the chances of increased chargebacks.
Accepting Payments Online: How Businesses Can be More Competitive
The greatest benefit of accepting payments online, besides keeping customers happy and enhancing revenue flow, is the droves of data that exists within an online transaction. Online payment processors provide more detailed customer insights into how and when consumers are using your e-commerce site to checkout.
Managing payments and revenue in any business is complicated. Having the right online payment processing to help automate this process can make payments the least of a business’ worries. Instead of worrying about how to accept payments, merchants should be able to focus on determining which online payment methods are best for their business and their customers. An online payment processor can provide demographic, geographic, psychographic, and economic attributes of your customers so your business can better understand their target market.
Data linked to your online payment processor can also provide insights into what products are selling best — including to where, to what frequency, and to whom. This data can also provide real-time data into inventory needs and can help you generate better customer personas for future marketing and production of your products and services.
Beyond just being able to integrate online payments seamlessly, efficiently and securely, accepting payments online provides your business actionable data and a strategic vision into how to grow your customer base and boost your revenue potential. Online payment methods are also more diverse and innovative than traditional payment methods accepted in physical stores.
From mobile payments and digital payment solutions to buy buttons and traditional credit/debit cards, the options for online payment solutions also allow your business to be more flexible in how they work with customers. Tailoring your payment solutions to be quick, secure and convenient for your customer base increases the chance of boosting loyalty and driving repeat sales. For any e-commerce merchant, that market is the bread and butter audience that leads to scalability. At the heart of this is establishing the ability to accept payments online — and with the right partner by your side.
Anna Kragie is a content contributor for Payline Data. She previously wrote for PYMNTS.com, as a Sr. Content Producer, where she focused on financial services and payments innovation, fraud and security, emerging payments, and FinTech news, research and thought-leadership content across the payments industry.