trilab: E-payment for everyone: how to reach your online customers

E-commerce suppliers restrict their customer bases when they determine their payment procedures. trilab shows how different payment methods can be combined to achieve the best possible reach.

The best offering is useless if the customer cannot conclude his/her purchase over the Internet because the necessary means of payment are not available. The sales are lost and the customer will never be seen again. For that reason, choosing the right payment method is crucial for Internet traders' success. But what is the ”right payment method“? The diversity of payment options seems great, the estimation of the cost-benefit ratio difficult. But it's really quite simple.

Credit card and direct debit have the biggest reach

The most important criterion for every Internet trader must be how many potential customers he/she reaches with his/her range of payment methods. If an international customer base is being served, the credit card is a must as the only cross-border means of payment. It can be used to reach up to 20 million cardholders in Germany, 250 million in Europe and two billion around the world. If the target market is restricted to Germany, credit cards, direct debit, online money transfer and pre-paid cards are available. Of these, direct debit has an unbeatable reach: with the number of current accounts at over 80 million, almost 100% of adults can be reached. Second place is occupied by the credit card (20 million), followed by online money transfer (approx. 10-15 million). Pre-paid cards account for only a fraction of the total.
If the decision is based on these figures alone, it's an easy one to make: it's got to be the credit card internationally and direct debit in Germany. It isn't always that simple, however.

The right way to pay: it's all in the mix

Other factors, in addition to reach, that influence the use of a payment procedure are the customer structure, the value of the goods being ordered and the risk that traders and customers are entering into. If the target customer base consists of under-age persons, pre-paid cards are attractive. After all, not many kids have their own bank account, let alone a credit card. Credit cards are seldom economical for micropayments under EUR 5 because of the charges associated with their use. The card, on the other hand, is far superior to direct debit when it comes to the risk of default on payment: online checks and the 3D secure procedure are efficient in preventing card abuse. Online money transfer and pre-paid cards are even better for traders: with these methods, receipt of payment is de facto guaranteed. This is good for traders but bad for customers: in contrast to direct debit, which the customer can simply have reversed, using the other methods means that his/her money is gone for now.
We can conclude that the best approach is to offer different payment methods at the same time. This means that no customer will be left out and the risks and costs can be spread more widely.

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