E-commerce is at its height and still growing. Every day more people decide to buy goods online and the recent pandemic only accelerated the process, with the number of customers registering for mobile banking in the 1st year of restrictions rising by 200%. Since the COVID-19 outbreak, more than 85 000 B2B and B2C launched their online shops. All of it would not be possible if not for online payments.
What are online payments?
Online payments (also known as digital payments or electronic payments), which allow e-commerce to grow and develop, can be described as a way of transferring value from one account to another, using software and a digital device (smartphone, tablet, or computer).
According to Statista, by the end of 2026 total transaction value of digital payments is projected to reach $13.91 trillion, with a Compound Annual Growth Rate of 13.10%, making it one of the most lucrative and fast-growing services.
Benefits of online payments
With such impressive growth, it looks like digital payments have become customers’ favorites. But what are their benefits for business owners?
- Omnipresence
The most important benefit of online payments is that they can be done anywhere. Statistics say over 56% of online shoppers prefer to shop cross-borders – such a trend would have never been possible if not for online payments, which can be done in any part of the world and will still reach the accounts in no time.
- Convenience
Apart from omnipresence, a crucial advantage of online payments is their sheer convenience. From the clients’ point of view, it means doing shopping at any time they want and selecting the most convenient way of payment quickly and easily. For business owners, it means getting their funds immediately and hassle-free, with no additional costs and no waiting time before the money reaches their accounts.
- Higher security
Trusted digital payment methods are characterized by good security. Platforms offering online payments take great care of the safety of data – by using it business owners may be sure their clients will trust their shops even more and their data and money are in safe hands.
- Eco-friendliness
Online payments are great also because of their eco-friendliness: they are quick and easy, paperless, and reduce our carbon footprint.
- Speed
Online transactions are very speedy and happen immediately, allowing clients to get their products quicker and business owners to be paid without delays.
- Cost-effectiveness
If you want to give your clients the possibility to pay with cards, you need to get a card processor, which costs money to start with and also later. Online payments do not require any of such devices and are easy and inexpensive to sort out. What’re more, online payments reduce the need for new employees, who would normally need to keep an eye on additional bookkeeping of your transactions.
- Being contactless
One of the many things that became important after COVID-19 outbreak is the need for contactless payments. Customers are increasingly aware of the need of avoiding the human touch, and online payments are a great way for them to do it.
Types of online payment methods
When deciding to use online payments, selecting the right type of them is extremely important. Generally speaking, they can be divided into two categories: traditional payment methods (such as credit cards) and alternative payment methods (also known as APMs).
Here is a bit more about them:
- Bank transfers
Easily the most recognized method of online payments, transfers can now be done quickly and hassle-free. Most banks offer immediate, free transfers, which can be executed using their mobile applications. They are safe, quick, and popular all over the world.
- Credit and debit cards
Credit and debit cards have been around for some time now. With customers having just to enter their card number, expiry date, and CVV, they are easy to use, relatively safe, very convenient, and extremely popular.
- E-wallets
E-wallets, also known as digital or mobile wallets, are different forms of software working as wallets and storing other payment methods in one place. The most popular e-wallets include PayPal, Apple Pay, and Google Pay. Many countries have their own local solutions, often even more popular than the big global players.
In 2021, digital wallets stood behind 49% of total global e-commerce expenditure, meaning they were the absolute most popular digital payment method. It is expected their share of the market will increase by 4% in the next 3 years.
- BNPL
Buy now pay later (BNPL) is a great innovation, currently changing the world of e-commerce. Simply speaking, it allows sellers to be paid upfront before the customers pay for the transaction, with the BNPL providers taking risks related to fraud or delays.
BNPL is extremely popular in Germany and Scandinavia, mainly among people under 45. It allows customers to enjoy online shopping even more freely. Between 2021 and 2026 the number of BNPL users is projected to quadruple. The most popular choice of BNPL providers is Klarna, recently valued at $45.5 billion.
- Open banking payments
Open banking allows customers to pay by bank transfers directly to the sellers’ accounts just like in the case of traditional transfers but is quicker, easier, and more secure than the usual card payments and does not require any data entry. With its easiness of use and improved security, open banking is quickly becoming one of the hottest trends in online payments.
The future of online payments
The convenience, easiness, and user-friendliness make online payments a trend that will continue to grow and evolve in the years to come. Their development is greatly influenced by new technologies, hence online payment providers always look closely at tech innovations. The two most interesting of them, which will further simplify online payments, are:
- Biometrics – paying with the fingerprint or your iris, which image is saved on your mobile device,
- Wearable technology such as smartphones, allows people to pay for goods without their cards or phones – incredibly convenient for outdoors enthusiasts or during festivals or mass events.
Considering introducing new online payment methods?
If you are considering introducing new online payment methods, we’ve got some advice: don’t wait and do it as soon as possible. It will make your life much easier and allow your business to grow by opening it to new clients, keen to get their shopping done online and hassle-free. No matter whether you are a start-up or an already developed organization, e-payments are the way forward.
