Payment methods accepted by online SMBs will rise from 4 to 6 within two years
This also means a double digit growth for prepaid cards andmore choice at checkout according to the fourth installmentin the Lost in Transaction series.
For the past two years Paysafe has been publishing a series of reports examining how the payments industry is evolving. These Lost in Transaction whitepapers have surveyed consumers and merchants from across North America and Europe to answer questions such as how attitudes to both old and new payment methods are changing; how strong consumer demand is for innovation at the checkout; if, and when, merchants expect to satisfy those demands; and the competing factors that influence the payment systems merchants choose to adopt.
FOCUS ON SMALL AND MEDIUM SIZED BUSINESSES
In the fourth installment in the Lost in Transaction series, Paysafe takes a detailed look at the current payments opportunities and pain points affecting a specific demographic of merchants; small and medium-sized businesses (SMBs). 900 merchants from five countries were asked to tell how important it is for them to be ahead of the adoption curve for payment method acceptance, and whether they see payments innovation and user experience as a critical differentiating factor for their business.
MORE PAYMENT METHODS ARE BELIEVED TO BE ESSENTIAL
One of the most striking findings of part four of LiT: In the card not present market, businesses believe they need to rapidly expand the amount of payment types they accept. On average they accept four payment instruments, but expect this to increase to six within two years. 75% of merchants believe this will be essential to succeed in business - not desirable, but essential.
38% ACCEPT PREPAID CARDS, 14 % PLAN TO ADD THEM
Credit cards remain the most ubiquitous form of payment in online transactions as might be expected, with 84% of merchants accepting them. 73% accept debit cards and 43% take digital wallet payments. 38% already accept prepaid cards with a further 14% looking to adopt them over the next 24 months. That is a double digit growth till 2021. 35% accept direct bank transfers, to be joined by an additional 13%. 19% take payment by app. 16% accept installments and this will nearly double, 15% have loyalty cards carrying value and 14% accept e-vouchers. The message is clear: the mainstream payment methods will consolidate and plans are afoot to increase access to those that might currently be categorized as 'minority'.
»This also means a double digit growth for prepaid cards.«
Walter Tauchner, Vice President Partner Management, paysafecard
DIFFERENT PAYMENT CULTURES The geographical split is instructive. As might be expected, the US likes credit with 89% of businesses accepting plastic; the UK and Canada aren't far behind with 87% and 86% of merchants accepting it. Austria has the same acceptance level as the UK (87%), but Germany is a noticeable outlier with only 65% taking credit cards. The US is also the highest adopter of innovative payments such as digital wallets, with 52% of companies accepting money in this way, and 49% of businesses accepting prepaid cards. Acceptance of these cards falls to 29% in the UK and 23% in Germany, suggesting that the international market is undecided. You could imagine that Germany's rejection of credit cards would make it readier to accept more direct forms of payment and you'd be right; direct bank transfer is accepted by 52% of German businesses (and an impressive 41% of Austrians), 50% offer invoices (43% of Austrians), and 45% accept online cash replacement systems (49% in Austria). Germany also has the highest rate of payment acceptance by loyalty card at 27%, exactly three times that of the US. DEMAND FOR GREATER FLEXIBILITY AND MORE CHOICEThere are a number of conclusions to be drawn here. First, and most obviously, merchants are responding to demand from customers for greater flexibility and more choice when it comes to payment methods - and they need a payment service provider (PSP) that can be adaptable and mindful of the bigger picture of solutions as the market evolves. That customer demand is changing rapidly with 56% of merchants saying consumers are looking to pay with online cash and 64% saying their customers want more innovative ways to get short-term credit. Second, and conversely, the traditional means of online payment remain dominant. Even in Germany where credit cards are less accepted than in any of the other countries in the research, 65% of companies accepting them represents a healthy majority. Third, people wanting to trade internationally need to do more than simply switch currencies; they may also need to switch payment methods according to their target market's preferences, meaning there is a cultural as well as financial dimension to the matter. So for example, if a merchant wanted to trade in Germany they would need to place less emphasis on credit cards, not because the technology isn't equal to it, but because the culture in that country is lukewarm on paying by that method. More information here.