How Payment Systems Affect Conversion in E-Commerce

Payment systems are at the core of every e-commerce business, as they connect buyers and sellers and make a conversion possible. More than just a tool for processing payments, a good system shapes how customers feel about your platform and your business in general. A fast and secure process leaves a lasting impression and makes it easier to turn one-time buyers into loyal users.

In 2023, the global average customer rate in e-commerce sales was 3.68%. New businesses often start with a goal of under 2% and try to increase the ratio from there. While factors like your industry or seasonal shifts are beyond your control, there’s plenty you can manage to improve. Now, let’s learn how the right payment gateway can support that.

Why Choosing the Right Payment Solution Matters

Choosing the right payment options is more important than it might seem at first. Processing digital payments is just one part of running a company. However, it influences how clients view your e-commerce business, how efficiently things run behind the scenes, and how well sensitive information is protected.

For users, the payment process is a pivotal moment. It’s often the last interaction they have with your business in a transaction, and that moment matters. A smooth, straightforward experience increases trust and encourages them to return, while a clunky or unsecured process will do the opposite for the results.

From a site’s operational perspective, the right system makes a big difference, too. Payment platforms help automate tasks by handling transaction processing, invoicing, and suspicious activity detection automatically. They also reduce errors by using secure, pre-programmed processes. For example, when a customer makes a purchase, the payment system takes care of verifying payment details, checking for fraudulent activity, and making sure the money is transferred to the merchant’s account, all without needing manual input. Also, a strong system helps protect your clients and your business from scams or data breaches — risks that could damage both your page’s performance and your reputation.

Flexibility is just as essential. People expect options when it comes to payments, whether it’s credit cards, e-wallets, or mobile payments. A system that provides these helps you better meet customer needs and connect with a broader audience.

Convenience and Ease of Payment Systems

The first thing to think about when choosing e-commerce payment options is how convenient they are for your clientele.

Shoppers abandon carts for many reasons, and you should keep them in mind to turn lost sales into completed transactions. A study by Baymard found that 50% of shoppers abandon their carts because of high costs, including shipping fees. Another 28% leave because they don’t want to create an account, and 21% give up because the checkout process is too complicated. Addressing these issues should help improve checkout conversion rates and turn a browse into a purchase.

The key is to offer a simple, convenient experience. When you offer a variety of payment options, buyers are more likely to find one that works for them, which reduces the chance they’ll leave without buying.

These days, shoppers expect a quick, easy checkout. If your platform is slow or the payments feel too complicated, they’ll probably bail. To keep this from happening, make sure your page runs quickly and is mobile-friendly — since many people shop on their phones. Also, offering guest checkout is a good move. No one wants to be forced into making an account for quick digital payments. Overall, the idea is that the smoother and faster the checkout, the more likely people are to complete their purchase.

Payment Security

Another way to improve commercial conversion efficiency is by using a payment system that increases security and builds trust. Fraud is a big concern in digital shopping, and global losses from it are expected to hit over $107 billion by 2029, a number that keeps climbing. That’s why having strong payment systems in place that prioritize security and privacy is indispensable.

Tools like Strong Customer Authentication and Know Your Customer processes verify client identities and protect against scam by making sure that only the rightful account holder can make a purchase. These methods give businesses real-time data to quickly spot legitimate customers and block fraudulent attempts, which cuts down on chargebacks and scheme-related losses. Moreover, when clients feel confident that their personal and financial information is safe, they’re far more likely to make a payment online, which has a direct effect on success ratio.

However, e-commerce security isn’t just focused on preventing fraud. Secure digital payments create a smoother, more trustworthy shopping experience. For example, SCA adds an extra layer of protection during payments. This makes the checkout process faster and easier and reduces friction and the chance of cart abandonment.

Moreover, keeping payment data secure helps businesses stay compliant with regulations like the EU’s PSD2 or the US’s PCI DSS, which sets specific security requirements for payments. This helps e-commerce businesses avoid legal issues and increases trust with consumers.

Rise of Alternative Payment Methods

Alternative payment methods are just different ways to pay that go beyond the usual cash, checks, or credit cards. Thanks to advances in technology and changing preferences, these options are quickly gaining traction and becoming the go-to choice for more people.

Buy Now, Pay Later, and Installment Payments

Buy Now, Pay Later allows users to split their digital payments into smaller, interest-free instalments rather than paying the full amount upfront. For many shoppers, especially those making larger purchases or managing tight budgets, this makes buying easier and more accessible. As a result, BNPL schemes have gained millions of users, and major retailers have jumped on board.

Adopting BNPL has led to a noticeable and lasting increase in consumer spending. Consumers who used BNPL were more likely to make a purchase, with the chances going up from 17% to 26%. Consumers feel more in control of their spending when they can break down payments. When they did buy, their average basket size was 10% bigger. Even more impressive is that this increase in spending wasn’t just temporary — it lasted for almost six months. This proves that BNPL isn’t just about short-term spikes; it drives sustained growth.

But there’s a downside — BNPL schemes can encourage consumers to make payments beyond their means, especially for those with credit cards. Without proper oversight or regulation, clients may end up overextending themselves, which could lead to financial difficulties. In response, businesses should ensure that their BNPL payments are transparent and include clear repayment terms. They should also have a reliable point of contact for users to ask questions or resolve any issues that may arise during the process.

Online Wallets

With e-wallets, buyers can store all their payment details — like credit and debit cards — securely in one place, meaning no more scrambling to find a card or typing in information repeatedly. This ease of use helps shoppers check out faster, which in turn lowers the chances of them abandoning their cart mid-purchase.

The shift toward online wallets is only gaining speed. In emerging markets, mobile wallets are often the first electronic payment method to really take off, especially in regions like Asia and the Middle East. However, Europe and North America face tough competition from established payment methods like credit and debit cards, which have been around for much longer. Anyway, offering new payment methods helps e-commerce businesses reach more shoppers, especially those who prefer e-wallets over traditional options. The best part is even small businesses can get started without needing to invest in expensive payment systems.

E-wallets also speed up the checkout process. For clients, that means fewer steps to make a purchase, which encourages them to follow through. Businesses get the benefit of faster transactions and fewer abandoned carts. It’s a win-win for anyone trying to increase the website's rate of turnover.

Local Payment Solutions

To stand out in today’s market, e-commerce businesses need to get a little creative. One way to do that is by embracing local payment methods. These are payment processors that people in different regions know and trust. In other words, it’s about offering the right options that make sense for where your customers are.

In China, for example, most people use mobile wallets like WeChat Pay or Alipay for payments, and in East Africa, M-PESA is the go-to choice. In India, UPI is the leader, and in Brazil, Pix is quickly becoming the top method for digital payments. In Spain, Bizum is popular, and in Switzerland, Twint is the choice. In Poland, BLIK is taking off, and in Italy, people are using Satispay for their payments.

One of the best things about local payments is that they connect with people on a personal level. In many places, credit cards just aren’t the preferred way to pay. People are turning to mobile wallets, instant bank transfers, or even paying directly through their phone service. When e-commerce businesses catch onto this and offer these options, they open the door to more customers — people who might not be interested in using credit cards at all.

Besides, in a global economy that’s not growing as fast as it once was, offering various digital payments is similar to diversifying your investments — it helps reduce risk and unlock new possibilities.

Conclusion

To get the right mix of conversion options, businesses should understand which devices their customers are using and what kind of payments they prefer in their region. Most shoppers stick to 1 or 2 methods they trust, and others won’t even consider using something else. A reliable payment provider can offer great advice on what works in different markets.

You can’t go wrong by offering at least the top three payment methods in any market. Most shoppers will use at least one of these.

E-commerce businesses should also focus on staying flexible. You need to keep an eye on what’s working and be ready to adjust. A good payment provider with global payment methods is one thing, but having the ability to quickly adapt to new trends and technologies is just as important.

Some solutions even offer products that adjust payment options based on the shopper’s risk level. They can check details, such as the shipping address and device info before the shopper even gets to the payment page. This allows you to offer secure options that reduce fraud while increasing conversions. When you get it right, the types of payments you support can make a big impact on your results.