Lack of Payment Methods = Lost Sales
You may find reconciling the books simpler, or think saving on transaction and discount fees makes you financially smarter, but if you’re not targeting online shoppers by allowing them to pay with a method of their choice, you’re losing sales. They may be minimal, then again, they could lead to tremendous growth.
Visa and Mastercard - any online store with a merchant account accepts them gladly. American Express imposes higher discount fees, yet still, most merchants that will pass Amex’s mustard will gladly take this card. Then there’s Discover. Ah, the underdog of credit cards. The card most of your friends don’t even carry. The card… oh yes, that also carries many benefits for it’s cardholders without so many “non-qualified” surprises as you’ll find when you accept the Visa and Mastercard.
Non-qualified fees are those the merchant winds up paying because the card used earns the customer bonuses (such as points, air miles or money back). Credit card companies (banks) offer such bonuses to compete with each other. And the Merchant is the one who pays, despite ongoing arguments that it shouldn’t be their responsibility.
PayPal is a highly popular form of payment for many who do not want to give merchants access to credit card information, and some PayPal-ers refuse to shop any store that won’t accept it as a form of payment.
Truth be told, of these five “must-offer” payment methods, you’ll find that the lowest percentage of orders will be charged to Discover (less than 1% in most stores), with the next being PayPal (averaging 8% in my tests). But just as I’ve argued that design matters need to target the broadest possible audience, so do payment methods.
Take me, for instance. I carry American Express and Discover credit cards. I have a PayPal Visa Credit Card tucked away for emergencies only. I do have debit cards, and I cannot remember the last time I’ve shopped online with any of them. If an online store doesn’t accept Amex or Discover, I ask why, because it makes me wonder if they applied but were rejected. I’m not the only one.
When I ask clients why they don’t accept specific card types (like Amex and Discover), most often the answer boils down to keeping the books. It’s already confusing enough to keep track of merchant statements and reconciliation has, for years, been a complete nightmare for most. But there’s good news for everyone, as many merchant accounts (including Amex) now offer Pay-In-Gross options, whereas gross deposits are made daily for the full charged amounts, with discount fees being debited just once a month. American Express will even let you choose the date of fee withdrawal.
A close second excuse are discount rates. Amex is always higher, and depending on the business structure, Discover acceptance could garner higher or lower discount rates than Visa/MC. But when credit card and account companies have loyal customers who will only pay with their card type, how many sales are you losing? Losing even just one sale because you don’t accept a specific payment could lose you a loyal, repeat customer. Is it really worth the risk?
Don’t confuse payment options with checkout options. I doubt that not using services like Google Checkout or PayPal Checkout would cost you anywhere near as much. Neither is popular enough, in my research, to carry such a dedicated audience as with payment methods. Of course, I am always willing to be corrected.
The "other" methods...
I am not addressing Diners and the likes because, well, chances are you aren’t selling the product lines that normally would attract such cardholders, and there’s no sources that I’ve found that lend weight to claims that you’d be losing sales as a result. Those in an exclusive, high-end business should know their targeted clientele.
As for checks and money orders, a handful of store owners offering a “mail in payment” option have reported to me that roughly the customers who choose this as an option actually mail the check. However, merchants who don’t offer such options are sometimes contacted by customers asking if they can order via the mail. The check options that may be successful are online check methods, whereas the shopper enters their checking account information and submits it, similar to a credit card purchase. This method has become less and less popular, however, especially with so many phishing alert articles and identity theft claims. I actually recommend to most merchants to not offer an online check method and explain the reasons why (security, etc.). Same goes for bank draft and wire transfer, both of which should be negotiated outside of the standard online ordering process.
