Payments 101 digest is back with another insightful post for payment enthusiasts. While E-commerce has known a drastic increase in volume this year, an integral aspect is often overlooked. While businesses are often looking at increasing conversion rates, many tend to forget their payment acceptance in the equation. In many occasions this could have a drastic impact on an online business’ revenues.
So what is an acceptance rate? It is the percentage of the accepted transaction out of the attempted payments. For example, if your business’s payment system accepts 90 out of 100 transactions placed by the customers, the acceptance rate would be 90%. This is a vital business metric that online businesses must optimize. If your business accepts more payments, it can generate more revenues; in many occasions carts are abandoned due to inaccessible payment options.
Businesses that operate online must treat optimization of acceptance rate as a core part of their payment strategy. The higher the acceptance rate, the higher the revenue generated. But what does this mean for your business? This means that an analysis should be made around your payment solutions and the typical profiles of your abandoned carts. In many markets, credit cards are not the most popular payment method. Bank transfers, carrier billing and specific digital wallets tend to be more popular in certain markets. Not catering to these payment methods could very likely lead to a drop in sales in specific markets which translates into a lower acceptance rate.
An example of that would be in the Netherlands, transactions are overwhelmingly made using the iDEAL network. This network basically consists of bank transfers. People within the Netherlands hold a great amount of trust to iDEAL for online payments and not many people actually have a typical MasterCard or VISA credit card on hand. Adding iDEAL to your payment stack could significantly increase your acceptance rate and your sales in the Netherlands.
While your sales funnel is optimized, overlooking your payment offerings can lead to overlooking a significant hole in your funnel. This is why businesses should put in an enormous effort to get their revenue performance better by focusing on payment acceptance.
While there are many other reasons why your acceptance rate can decrease, such as credit card testing and declines due to lack of funds, making your payment stack much more accessible to the global market will most likely have a drastic impact on your revenues.
Another way to increase your acceptance rate would be by automating the card updating procedures. If a subscriber’s credit card on your online business is about to expire, you can avoid declines by using automatic billing update services that will update the credit card on file with the proper credentials. Similarly, it is also possible to notify customers to update their billing information.
With the rise of financial technology solutions, there are new offerings that could also play a role in increasing acceptance rates. When it comes to larger ticket items, paying for the whole amount upfront can be quite intimidating. Offer a buy now pay later type of solution, offers the kind of flexibility to your customers that will make larger transactions more financially accessible.
To conclude, in order to know exactly what might be causing a business’ payment acceptance to be low, it is important to have access to the proper data sets and reports. WhenThen’s Insights allow merchants to have a full scope in their payments and to see payment behaviours in real time. WhenThen is able to measure through a full-fledge algorithm how many customers have the intent to purchase. To know more about ways to maximize your acceptance rate, take a look at www.whenthen.com
