Online retailers on average are offering customers 3.5 payment methods, up from 2.1 methods in 2005, according to a new survey from CyberSource Corp. Larger merchants-those with $25 million in annual online sales-offered 4.7 payment methods, up from 2.6 payment options a year ago.
“If you’re a merchant of any significant size, you have to support plastic online-credit and debit cards,” says Doug Schwegman, director of customer and marketing intelligence. “Most merchants are doing that plus one other payment type, whether it’s electronic checks, gift card certificates, PayPal or Bill Me Later.”
The impetus behind online retailers’ adoption of payment alternatives to credit and debit cards is higher conversion rates, Schwegman says. Retailers offering three or more payment options experienced on average a 14% lift in conversions, CyberSource found.
The alternative payment option most popular with online retailers is PayPal (36%), followed by electronic checks or automated clearinghouse payments (26%), gift cards and certificates (25%), private label cards or merchant installment or financing plans (12%), Bill Me Later (17%), and Google Checkout (6%), according to CyberSource.
CyberSource surveyed 337 online retailers for the study.