Except you’re running a charity organisation, the primary goal of every business is to make money. As an online business, whether you’re selling via an e-commerce website or offering your services via a mobile app, receiving payment is crucial to the success of your business.
If customers are unable to pay you, nothing else you do matters. (Little wonder why FinTech companies are worth so much but that’s a conversation for another day.)
Richard Branson says – “Never take your eyes off the cash flow because it's the lifeblood of business”, so how do you ensure there isn’t a disruption in the flow of cash from your customers to your business, especially as an online business?
Keep reading to find out!
How do online businesses typically receive payment?
Before online payment gateways such as PayStack, Flutterwave became a thing, very few businesses could afford to integrate a payment gateway into their website so they either opted for selling on marketplaces such as Jumia, receiving payment via bank transfers (typically done after the order has been placed) or cash on delivery. This made it difficult to offer customers an end-to-end e-commerce experience.
However, now that online payment solutions have become relatively accessible and affordable to businesses of all sizes, more businesses are adopting digital payment solutions.
According to a 2021 report by the National Bureau of Statistics (NBS), 31.7% of businesses in Nigeria use online payment platforms. This is up from 25.4% in 2020. The report also found that the use of online payment platforms is higher among businesses in urban areas (36.2%) than in rural areas (26.4%).
The growth in the use of online payment platforms in Nigeria is being driven by a number of factors, including the increasing availability of internet access, the growing popularity of e-commerce, availability of an array of payment solutions and the government's efforts to promote financial inclusion.
Multiple payment methods have emerged over the last decade ranging from Cards, Direct Debit, USSD, Digital Wallet (also known as peer-to-peer), Bank Transfer, Cryptocurrency, Buy Now Pay Later (BNPL).
What are Payment Methods?
Payment methods are not to be confused with payment providers.
Payment methods are the various ways a person can make payment, basically the technology behind moving funds from the sender to the receiver while payment providers are the brands or companies that manage one or more of these payment methods.
- Cards: Physical or virtual cards are a convenient and secure way to make payments. They are also widely accepted, so you can use them almost anywhere. If you are looking for a convenient and secure way to make payments, a payment card is a good option.
- Direct Debit: Direct debit is a payment method where a customer authorizes a merchant or other organization to collect a specified amount of money directly from their bank account on a regular basis. This can be done either on a one-time basis or on a recurring basis.
- USSD: USSD allows users to make payments by entering a code on their phone. It is a convenient and secure way to pay for goods and services, and it is especially popular in developing countries.
- Bank Transfer: Bank transfers enable users to make payments by sending funds from their bank using a mobile app or an Internet banking platform to the receiver’s bank.
- Digital Wallets: A digital wallet is a secure electronic device or online service that allows users to store, send, and receive electronic payments. It can be used to make purchases online, in stores, and through mobile apps. Digital wallets are becoming increasingly popular as a convenient and secure way to pay for goods and services.
- Cryptocurrency: Due to its decentralized nature, cryptocurrency is considered one of the safest and most secure payment channels. Customers can pay businesses using various cryptocurrencies.
- BNPL: BUY-NOW-PAY-LATER is a payment method that allows users access short-term financing. The business gets the funds in full while the customer pays in a number of instalments to the payment platform mostly interest-free.
Why is it important to give your customers multiple payment methods?
Offering customers multiple payment options has a number of benefits both for the business and the customer. According to Michelle Dunn, a contributor on Entreprenuer, “ it's just good business to offer your customers options for making payments” because customers love to feel in control.
Businesses should offer multiple payment methods to customers because it increases convenience and helps to improve customer satisfaction. It also helps to reduce cart abandonment and increase sales.
Benefits of offering multiple payment methods
- Convenience: Customers appreciate being able to choose the payment method that is most convenient for them. Imagine a customer is in the process of making a purchase on an e-commerce website but at checkout, they’re offered only card as the means of payment, trouble is, this customer’s card has recently expired so there’s no way to complete that transaction.
In this scenario, if the e-commerce platform offered customers other payment methods such as direct debit, bank transfer or digital wallet, the customer would have proceeded to select one of the multiple options and completed their transaction.
- Customer satisfaction: Offering multiple payment methods can help to improve customer satisfaction. A study by Forrester Research found that 71% of customers are more likely to shop with a business that offers multiple payment methods.
- Reduced cart abandonment: Cart abandonment is when a customer adds items to their cart but then leaves the website without making a purchase. Offering multiple payment methods can help to reduce cart abandonment by making it easier for customers to complete their purchase.
Payment failures are further reduced as businesses become payment agnostic - meaning payment isn’t powered by a single provider but by various payment companies.
- Increased sales: Offering multiple payment methods can help to increase sales by making it easier for customers to purchase from your business, increasing conversion at checkout and improving the overall customer experience.
How to get started
We’ll be the first to let you know that integrating the full spectrum of payment methods available in the market can be cost and time intensive. To do this, you’d have to interact with multiple payment APIs, pay fees across multiple products, complete compliance with multiple companies and navigate multiple dashboards.
Thankfully, this isn’t the case with Bloc. We have integrated all the payment methods you’ll ever need to power your business like Cards, Direct Debit, USSD, Bank Transfer, BNPL, Crypto, and Digital Wallets. We have done all the hard work, so you don't have to.
With our powerful API and Dashboard, and in one integration, you can start powering several payment providers and payment methods across multiple countries.
Offering multiple payment methods to your customers is as easy as creating an account on Bloc and integrating our API or using our simple No Code Tool (Payment Links) to accept payments.