Should your business offer alternative payment methods?

Whether you run a physical store or an ecommerce business, the checkout process is one of the most vital steps in a customer’s journey. It is the last thing that the buyer thinks about before they make a purchase, and it can be also be an unfortunate opportunity for your sale to fall at the final hurdle.

In ecommerce, customers abandoning their cart at the checkout stage is a frustratingly common experience. Logic dictates that the way to remedy this is to simplify the page and provide all the necessary information – but this could be overlooking a fact that many customers abandon their cart simply because they don’t see an opportunity to pay the way that they want to.

Indeed, a range of new payment methods have arisen in recent years, driven primarily by a boom in fintech products. This can be attributed as a part of the move towards a cashless economy – many young people are now eschewing physical forms of payment such as cash and cheques in favour of technology-based solutions.

But is it a good idea for your business to adopt these payment methods and offer them to customers? Here we take a look at the range of new alternative payment methods available and examine the pros and cons of using them.

Popular alternative payment methods

Arguably the most well-known alternative payment method is PayPal – it is the one that you are most likely to already accept other than card payments through your website. However, in recent years a number of new alternative payment methods have gained prominence.

Two popular examples are Google Pay and Apple Pay – both of which function as digital wallets. Users add cards or other funds to their digital wallets, and this money can then be used to pay for any services that offer this payment method.

Another brand gaining traction is Klarna. Klarna functions as an alternative to a credit card. Users pay for products and services with Klarna and then owe Klarna the money. Unlike a credit card, however, Klarna’s debt is interest-free (at least in the short-term) and credit checks are not required to use it.

What are the benefits?

A major benefit of alternative payment methods is trust. When new customers visit your website there can be a lack of trust. Customers need to feel safe and secure when they are making a transaction, and it still the case that many hesitate at the idea of entering card details into an unfamiliar website. However, if they see that you offer a payment method that they trust, they can feel happy to complete the purchase.

Increasing choice also gives customers the control over their finances and choices, allowing them to make the right decision when they are buying something.

Are there any downsides?

One downside with using alternative payment methods is the complexity of the system, especially when it comes to tracking all your payments. It can be sensible to work with experienced business accountants who have a firm understanding of alternative payment methods and how to track financial information.

There are other issues – integration can be a challenge, especially if you are not used to working with these sorts of technology. Alternative payment methods need to be integrated seamlessly into the checkout page of your website, and as many of these methods are still adaptive and changing technology there is the potential for confusion for customers.

There is also the risk that poorly integrated payment methods don’t work correctly and leave you with a headache to sort them out.

How does Xero integrate with Stripe?

The beauty of these types of payment methods is that they can often be combined for even greater convenience. Xero integrates with Stripe for seamless Apple Pay and Google Pay payments, enabling invoices to be paid easily.

It’s ideally suited to website transactions for customers to pay using their digital wallets, but businesses can also benefit when sending invoices to clients via Xero with payment links for a quick and effective way to get paid.

When you connect Stripe to your Xero account, you’ll have a ‘Pay Now’ button appear on your invoices so customers can pay with credit or debit card, Apple Pay, or Google Pay on their mobile device. Connecting these two accounts takes the work out of chasing outstanding payments – with Auto Pay, businesses can set up and receive recurring payments for repeat customers, for prompt payments that means customers don’t need to keep track of invoices.

What’s more, every Stripe transaction is accounted for and reconciled with a single click, and visible within Xero using the Stripe feed. Payments are automatically matched to the right invoice and account, which makes for clearer visibility and reduces credit control since fewer customers will need to be contacted regarding late payments.

If you are interested in learning more about our bookkeeping and accounting services or any aspect of business finance and payments, get in contact with the experienced team at Wellden Turnbull today.