Lightspeed Commerce Inc.

12/03/2024 | Press release | Distributed by Public on 12/03/2024 15:13

How Flexible Payment Options Can Attract Customers and Drive Sales

These days, consumers expect nothing less than seamless shopping experiences from start to finish. As the final step, checking out is equally as important as the rest of the buying process. And as retail competition grows in a global marketplace, flexible payment options can make or break a sale.

In the purchasing journey, convenience and a variety of options are becoming increasingly important to customers. As an example, a McKinsey surveyfrom 2023 showed that 58% of respondents chose to use a digital wallet due to its ease of use, among other factors. The use of in-store digital payments is growing, too, especially among the 18-24 cohort.

A report from Payments Canadabacks this up further. As more digital payment options become available to consumers, Canadians are choosing to apply different methods depending on the scenario. This insight highlights the importance of businesses offering flexible payment options: being able to adapt to customer needs and preferences in any situation can improve your bottom line.

Traditional credit and debit cards are still on top when it comes to preferred payment methods, while cash follows further behind, according to the Federal Reserve.

The message is clear: businesses need to cater to all sorts of consumer paymentpreferences in order to stay ahead. We'll dive deeper into this topic by discussing:

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Why customers value flexible payment options

While we touched briefly on convenience, customers truly value having a choice. Here's why that matters:

Flexible payment options reduce friction

As a business, creating a smooth and positive experience for customers is key to retention and growth. When points of friction are introduced, such as at checkout, customers may leave feeling dissatisfied with their overall experience.

This is especially important for online purchases. It's easier than ever for consumers to find anything they need online-the options are truly endless. That means a poor checkout experience could lead shoppers to abandon carts.

In fact, 21% of customersabandon a site or cart due to complicated checkout. One aspect of staying competitive in this landscape-and reducing abandoned cart rates-is providing a variety of payment options.

Flexible payment options show customers you're catering to their needs

Every consumer has a unique financial situation. The easiest way to address specific preferences is to offer a variety of payment methods.

Customers will see that you truly value them when you give them plenty of choice. It shows that you're focused on providing a customer-centric experience.

If a customer only uses cash to pay for small purchases-for example, coffee-they may feel disgruntled if the cafe only accepts credit or debit. It's little instances like these that lead to a less satisfactory experience for the customer, and could deter them from visiting in the future.

Let's say another customer is in a rush and wants to pay as quickly as possible with a tap on their phone using their digital wallet. If your store doesn't accept digital wallets, you could miss out on a sale.

These scenarios illustrate the value of catering to all types of customer preferences, leading to higher consumer satisfaction and fewer missed sales.

Payment options your business can implement to attract customers

There are several ways you can diversify your payments. Let's go through some of the options at your disposal.

Traditional payment options

Credit and debit cards are essentially a given at most businesses. Consumers have grown to expect these payment options to be available everywhere they shop. In 2023, more than 60% of payments were made using credit and debit cards.

Bank transfers are also a traditional payment option, but are usually used in industries that involve large transactions. That includes real estate, construction, professional services and more.

Contactless and digital wallet payments

Contactless payment methods continue to grow in popularity. In fact, according to research by Mastercard, more than half of Americans use some form of contactless payments. The report specifies that they typically use this payment method for groceries, at the pharmacy, and at retail stores and quick-service restaurants.

So, it's safe to say that businesses are widely expected to accept contactless payments. Cards can be contactless (the customer simply hovers their card over a terminal to complete a transaction) and so are digital wallets.

A 2023 report by Capital Oneshowed that 53% of adults in the US used digital wallets more frequently than traditional payment methods. Apple Pay, Google Pay, Samsung Pay and other wallets allow you to store your payment information on your phone (or watch) so you can pay with a hover or tap. It's fast, easy and secure.

Related: Learn more about contactless payments in our in-depth guide.

Buy now, pay later

With buy now, pay later (BNPL) customers don't have to pay the full amount for their purchase up-front. Rather, they pay in installments either weekly or biweekly (usually interest-free) until it's paid for in full. The payments are automatically withdrawn from their account.

This is a useful solution to implement for your online business. When customers don't want to commit to paying a large sum in one go for bigger purchases, like furniture, they can pay over time to make it more manageable. It's a handy payment option to offer for high-ticket items, ensuring you can capitalize on more sales and cater to impulse buyers.

BNPL services had a big boom over the pandemic, and are still growing in popularity (although at a steadier pacenow) among consumers.

Subscription and recurring payments

Does your business have a membership component? If so, it may be worthwhile to offer subscription payments.

As an example, pet stores and beauty retailers would normally offer recurring payments to customers interested in product replenishment (on a monthly basis, for instance). Not only does this create a passive stream of revenue for your business, it increases efficiency and ensures that customers' needs are met.

Other payment methods

Depending on the nature of your business, you may even consider cryptocurrency payments. Many businesses now offer this as a form of payment, but it's not necessarily that popular among consumers yet.

Peer-to-peer payment apps like PayPal and Venmo are good options to offer on your ecommerce site, especially for US customers, where these apps are widely used.

And as always, if you're a global seller, it's a great idea to ensure that your payment options are localized to the countries you're selling in. That way, you are catering to an international customer base and opening up your sales potential.

Did you know? Lightspeed Payments allows you to accept any payment method, from debit and credit to digital payments. Reach customers easily online and offline with a seamless checkout experience.

How flexible payment options can help grow sales

Throughout this article, we've touched on several ways that flexible payments can drive sales.

But let's go a little deeper.

Increasing conversion rates

Cart abandonment is a real issue. By offering an array of payment options, you've eliminated one reason why shoppers may abandon their carts while on your site. Losing customers at checkout-meaning they have already decided to commit to the purchase-could be a blow to your bottom line.

Appealing to impulse buyers

We've all been there: we go into a store with no intention of buying anything, but end up doing it anyway. These unplanned purchases are super common: in fact, 73% of Americanssay the majority of their purchases are an impulse buy. Business owners can capitalize on that by providing customers with fast and easy ways to buy their items.

Improving customer retention

Don't underestimate the power of a good checkout experience on a customer's impression of your business. If they leave satisfied with their experience, they're more likely to come back in the future. In that way, flexible payment options can drive repeat purchases and help you retain your customers.

Tapping into new customers

With flexible payment methods, you gain access to new customers. As we mentioned earlier, younger customers are more likely to use digital payments, so you're opening yourself up to a large demographic. Not only that, if you're growing your business internationally, you are tapping into new markets through localizing payments to each country.

Gaining valuable insights

With flexible payments, come greater insightsthrough meaningful data. You'll have a well-rounded picture of customer preferences. By collecting information with every transaction-preferably with a system that does it automatically, like Lightspeed-you can make accurate decisions relating to customers and inventory.

Did you know? With Lightspeed POS and Payments, data related to each sale is automatically recorded in your system. You can access reports on sales, inventory and customer preferences, generated for your exact needs.

How to implement flexible payment options

Most important: partnering with a reliable payment provider. We recommend using an embedded payment processor-one that comes bundled within your POS so you can create the ultimate checkout experience for customers. Aside from the obvious fact that your provider should enable you to accept all types of payments, here are a few other factors to consider:

  • Support:The customer service and support you get from your payment provider is super important. Consider your needs and the complexities of your business. Are you looking for comprehensive industry support? 24/7 call lines? Bottom line: support should be high on your list.
  • Omnichannel capabilities:If you plan to sell online, your payment provider should have ecommerce and in-store capabilities. You should be able to view all your sales and transactions across each channel, in-store and online.
  • Pricing: These needs vary from business to business. Consider the per-transaction pricing, the provider's pricing model, and the transparency behind their offerings.
  • Security:When it comes to payments, protecting your customers' sensitive information is the number one priority. That's why your payment provider needs to be PCI compliant. All customer payment information must be encrypted and transactions secure, everywhere you sell.

An embedded payment processor and POS guarantees that all your channels are seamlessly integrated. This reduces errors related to reconciliation, automates checkout processes, and allows customers to pay in any way they choose. Plus, providers like Lightspeed are constantly innovating so your customers can pay in new and up-and-coming ways.

If you want to go a step further, you can implement customer surveys to get feedback from them on their checkout experience. This will allow you to refine and improve the process.

Growing your business through flexible payments: a case study

The White Orchid, nestled in the mountain tourist town of Estes Park, Colorado, specializes in women's apparel and accessories. Founder Diane Muno caters to a steady stream of customers with a curated selection of products.

Before they took on Lightspeed in 2017, The White Orchid was saddled with inadequate systems. It made it difficult for Diane to order inventory efficiently, and rising costs were also a struggle.

Related, catering to customer preferences had been difficult with an outdated system. Customer needs were evolving quickly, Diane says, specifically when it came to using modern payment technology. "They want to be able to pay with their phone, with their watch and every way that suits them. They're surprised if they have to pay through an old fashioned method."

After switching to Lightspeed, an embedded payment processor, Diane unlocked flexible payments.

Now, customers can pay with their card or phone, tap or swipe. She can now offer a variety of payment methods to customers, and overall her business operations have become more efficient. It's helped her drive sales and save money.

Flexible payment options can better your business

The benefits of offering flexible payment options to your customers are endless. Retain customers, drive sales and increase conversion by adapting your checkout to customer needs.

Lightspeed Payments is an embedded solution that gives businesses the ability to offer any payment method, at a rate that you can negotiate to fit your unique needs. Talk to an expert today about our POS and payments solution.