How to Optimize Alternative Payments on Your Website
Retailers are going above and beyond this holiday season to attract consumers to their e-commerce sites, making it as convenient as possible for them to purchase goods and services — and manage tight budgets. One tactic they're using to differentiate themselves is offering a variety of alternative payment methods, such as Bill Me Later, PayPal and eChecks. Studies have shown retailers see increases in online sales when they offer a variety of payment methods, while consumers are attracted to the convenience and secure method that reduces the chance of fraud.
Before integrating alternative payments into your website, determine and align your goals. While numerous alternative payment methods are available, understand the relevance of each method to your business. Listed below are some tips to help you navigate the process:
- Outline your goals. Not all payment methods are appropriate for every retailer. Before implementing, determine which method works best for your audience. Are you looking to target new customers or retain existing ones who may be affected by the credit crunch?
- Are you eligible? Not every retailer qualifies for each method of payment available — certain requirements must be met depending on the source. In addition to dollar limit obligations, many providers have acceptable-use policies, so services aren't offered to specific merchants. Bill Me Later, for instance, requires retailers to bring in $20 million in card-not-present card sales to use its service, so small businesses wouldn't qualify.
- Negotiate. Once you've been approved for a payment method, negotiate. Alternative payment providers depend on online merchants, so there are bargaining chips available. Some things to consider include potential marketing support and lower fees.
- Measure to capture its true effectiveness. Work with your payment processing provider to measure the effectiveness of your new alternative payment. Is it producing the desired result? A good payments reporting engine tracks your results to help you determine if you're attracting new customers and increasing revenue or just cannibalizing another form of payment.
- Success doesn't happen overnight. Once your payment method has been implemented, remember that success takes time. Tune the available controls iteratively to see what works best for your business. It could take eight months to a year to establish a baseline view and decide whether the method of payment is cost effective and if you should continue or cancel.
Even in the midst of this down economy, merchants have the ability to accelerate profits and cut costs by leveraging alternative payments to acquire new customers and reduce transaction fees. To make this happen, merchants should work closely with payment processors to select the best alternative payments for their particular businesses and goals — ones that can monitor their long-term operational values to ensure success.
Bala Janakiraman is a principal product manager for Lowell, Mass.-based Litle & Co., which provides card-not-present transaction processing and consultative merchant services. Bala can be reached at email@example.com.