It Pays to be Different: Why You Should be Offering Alternative Payment Methods

There are a lot of reasons as to why your customers prefer alternative payment methods, but what specific benefits can they offer you as a merchant? Here are the big five.

Want your customers to buy more without hesitating? The trick to engaging today’s shoppers is to put them in control of how they want to pay. In 2019, 55 percent of all online transactions are predicted to be made using alternative payment methods. And since today’s online shoppers are accustomed to getting exactly what they want, it’s up to merchants to deliver on evolving consumer preferences or else risk losing sales. Alternative payment options like Pay later in 4 installments, Slice it, and more could make your cart abandonment problems a thing of the past.

Klarna recently partnered with Researchscape International to survey more than 2,000 consumers in an online study about instant financing. The results were astounding. 47 percent of consumers would like an instant financing option while shopping online, while 40 percent would spend more money on a purchase if they had the option of instant financing.  Additionally, 73 percent would be likely to select an online merchant that offered instant financing over one that didn’t!

Still not convinced? Here are the five biggest reasons why merchants like Topshop, H&M and Lenovo are finding success through alternative payments.

1. Bigger Purchases

Significant numbers of online shoppers want choice when it comes to paying online. Perhaps that’s why the most successful online merchants offer 8+ payment options, allowing shoppers to finance items over time, split their purchase into interest-free installments, or try items at home before paying at all.

The more flexible payment choices retailers offer, the more likely it is that a customer will find an option which suits them. And when more shoppers start completing purchases that might have otherwise been cost-prohibitive, merchants see a huge boost in AOV. With Klarna, merchants saw a 58 percent increase on average, more than any other payment provider.

2. Improved Conversion

Designed for the digital world, alternative payments can help eliminate time-consuming data entry, creating a faster and smoother experience with higher conversion rates than when using card-based payments. Second only to bad returns policy, one of the top reasons for U.S. shoppers abandoning a purchase online is that the checkout process took too long. Klarna retailers typically see a 44 percent increase in sales conversions.

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3. Mobile-Friendly

According to a study from Nielsen/Google, 65 percent of users who shop online started their research on a smartphone before making a purchase. Mobile shopping continues to grow, a surprising amount of online retailers – including many of the largest ones – still lack a mobile-friendly design. Optimizing your store could mean competitive advantages, and with the right partner, it’s an easy fix too. By cutting out unnecessary data entry and enabling one-click purchase on mobile stores and in apps like Instagram, merchants can speed customers through checkout and stop missing out on mobile sales.

4. Low-Risk

When using unfamiliar retailers, consumers are sometimes reluctant to share credit/debit card details online.  With a well-known alternative payment method however, users feel safer because their details are kept within an environment they already trust.  Additionally, merchants who hesitate to offer flexible payment options such as interest-free instant financing now have the option to transfer their risk to a payment partner. With Klarna, merchants always get paid upfront, even if a customer defaults on a payment.

5. Global Growth Potential

As websites do more and more cross-border business, they can appeal to international markets, ensure easy checkout integration, and deliver a consistent experience via a global payment platform. Available in 14 countries, Klarna makes international refunds and customer support easier for rapidly-expanding merchants. Additionally, with 60 million users, Klarna opens the door for potential new customers all over the world.

Alternative payment methods are the way of the future, but they can benefit your bottom line today. Klarna lets you seamlessly integrate your choice of alternative payment options, while always paying you upfront in full. If you’d like to learn more about the power of alternative payment options, download our free Klarna Confidential: Alternative Payments guide.

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