One of the more significant barriers that online sellers initially had to work through many years ago was the matter of accepting payments. When ecommerce was relatively new, many consumers were apprehensive about providing their personal financial data online.
Over the years, online payment processing solutions have become increasingly secure. They’re also faster and easier for shoppers to use from a wide range of connected devices.
With the percentage of retail sales online growing, the impact of innovations in ecommerce payments has been irrefutably substantial. However, there’s still ample room to improve.
Both ecommerce businesses and online consumers are benefiting from developing trends for ecommerce payments, with access to new payment solutions and checkout options. In order to make savvy decisions related to your store’s operations and growth, you will need to stay on top of the latest worldwide developments.
Here are some of the noteworthy trends that are likely to affect the global future of ecommerce and how online stores manage payments for 2024 and beyond!
Table of contents
- 1. Multi-channel selling
- 2. Increase in mobile payments
- 3. QR codes are prevalent
- 4. Global focus on data privacy
- 5. More businesses using a subscription model
- 6. Increase in cross-border shopping
- 7. AI and machine learning in fraud detection
- 8. Increased use of digital wallets as new payment methods
- 9. Cryptocurrency payments
- 10. Buy now, pay later (BNPL) expansion
- 11. Sustainability in payment processing
1. Multi-channel selling
One of the perceived benefits of online shopping to consumers is convenience. Today’s consumers often prefer to shop from their laptop or smartphone rather than to waste time hunting down the perfect item in a local store.
This convenience is boosted to a new level through multi-channel selling. Multi-channel selling essentially means that your business is offering goods and executing transactions through various platforms rather than only through the website.
Some of the common platforms used for multi-channel selling are Facebook, Instagram, Etsy, Amazon, and eBay. From a business perspective, multi-channel selling enables you to potentially expand your reach to new customers while managing expenses.
At the same time, you’re connecting with customers on their preferred platforms as a convenience to them.
Keep in mind that some consumers don’t finalize their purchase in one sitting. They may start their purchase on their desktop computer and complete it on their smartphone or even through a store’s mobile app.
When possible, your online store should be connected across multiple platforms or channels to ensure a seamless shopping experience.
2. Increase in mobile payments
Do you have a firm understanding about where and how your customers are making their purchases?
Statista reports that in 2023, mobile ecommerce sales hit $2.2 trillion, accounting for 60% of total global ecommerce sales. This number is only expected to grow, according to ecommerce statistics, so your store should be positioned to deliver an excellent experience through mobile apps and browsers and not miss out on big opportunities to increase sales via mobile shoppers.
There are a few reasons why mobile commerce is becoming increasingly popular. For instance, consumers have grown more confident in the security of online transactions.
This is particularly true when the transactions are with known and trusted businesses. Security badges on shopping cart pages can help instill confidence in online consumers.
Another reason for increased mobile transactions is that websites and apps have streamlined checkout processes that are easy to complete on a device with a small screen.
In addition, there are advanced ecommerce payment gateway solutions available that allow for more payment methods and make the processes safer, faster, and easier from any device.
For example, consumers may only need to log in to their PayPal accounts to make payments and complete mobile purchases rather than manually input credit card information.
3. QR codes are prevalent
QR codes became increasingly prevalent during the COVID-19 pandemic when consumers shifted away from physical cash and payment cards due to lockdowns, social distancing measures, and health concerns, increasing their reliance on digital payment methods.
QR codes continue to be commonplace in ecommerce due to their simplicity and contactless nature, offering a secure and quick payment method that enhances the customer experience. Based on a study by Juniper Research, the global QR code payments market is predicted to grow 59% from 2023 to 2028.
For retailers, implementing QR codes will reduce transaction times, lower payment processing fees, and provide an easy integration with loyalty programs and marketing campaigns. Consumers benefit from the convenience and enhanced security, as they don't need to enter sensitive card details at checkout when they're ready to pay.
To adapt to this trend, online store owners should integrate QR code payment solutions during the checkout process, promote it as a secure payment alternative, and ensure their systems can handle the data insights generated from QR transactions to tailor marketing strategies effectively.
4. Global focus on data privacy
With the growing number of ecommerce transactions, data privacy and online security are increasingly important worldwide, regardless of niche or market. Cybercriminals are constantly fine-tuning their efforts, and this means that ecommerce businesses must be at the top of their game in this area at all times.
If you haven’t reviewed your website’s compliance with data privacy standards and the Payment Card Industry Data Security Standard (PCI DSS), now’s the time to do so.
General Data Protection Privacy Act (GDPPA)
The General Data Protection Privacy Act has been in effect across the European Union since 2018. It establishes minimum requirements for transferring sensitive data within the EU and abroad.
Second Payment Services Directive (PSD2)
The PSD2 has set up standardized regulations for payment and data security throughout the European Union and in other countries in the region.
Under this directive, all providers who process payments for consumers in the region must remain in compliance with the established standards.
California Consumer Privacy Act (CCPA)
This is a new regulation that started impacting Californians in 2020. It offers some of the same protections as the GDPPA. For example, it gives consumers the right to prevent the sale of their personal information and to know when their data is being obtained.
These are only a few of the many regulations that affect ecommerce. Staying updated about new and changing regulations is a heavy burden for some ecommerce businesses. All-in-one payment processors are assuming this responsibility in the services that they provide.
5. More businesses using a subscription model
Subscriptions have traditionally been used to meet a consumer’s recurring need for the same service or item. Ecommerce businesses are now incorporating subscriptions into their business models more frequently.
The actual subscription model will vary based on the business’s offerings and customer base. However, subscriptions enable companies to maintain flexible offerings to meet their customers’ needs and budgets.
Subscriptions offer profound benefits to businesses as well. The nature of the traditional ecommerce business model requires companies to maintain a solid stream of online traffic to maintain steady revenue.
Furthermore, the store must have a healthy number of loyal customers, a high conversion rate, or a balance of both. Through subscriptions, companies are able to maintain revenue even when online traffic slows.
Technology has facilitated the growing popularity of subscriptions in ecommerce. Some payment processors have specific features that support managing and collecting subscription payments. This takes a heavy burden off of ecommerce businesses and boosts the benefits of subscriptions.
6. Increase in cross-border shopping
Many of the challenges associated with serving customers across international borders are overcome through access to modern technologies and services. To sell products in another country successfully, businesses previously had to make currency conversions.
In addition, there was a need to monitor and comply with taxation regulations. While these requirements remain in place, they can be addressed without hassle by modern ecommerce businesses through online payment methods.
The ability to expand your store’s reach across borders can have a profound impact on your bottom line and growth. Consider that, according to Statista, the value of the cross-border online shopping market was approximately $785 billion in 2021, and this figure is predicted to reach $7.9 trillion by 2030.
Ecommerce payment platforms handle the conversions and tax compliance on your behalf so that you can reap the benefits without the hassle.
7. AI and machine learning in fraud detection
Advanced AI and machine learning algorithms are revolutionizing fraud detection in ecommerce by analyzing vast amounts of transaction data to identify patterns and predict fraudulent activity in real time. These technologies can swiftly adapt to new fraud tactics, making them highly effective.
For online merchants, this means reduced financial losses and fewer false positives that can block legitimate transactions, enhancing operational efficiency. Shoppers benefit from increased security and a smoother buying experience, as AI-driven systems efficiently differentiate between genuine and suspicious activities.
This proactive approach reassures customers, fostering trust and loyalty, which are crucial for the long-term success of online businesses.
8. Increased use of digital wallets as new payment methods
Digital wallets, also known as e-wallets, are electronic devices or online services that allow individuals to make electronic transactions. This can include purchasing items online with a computer or using a smartphone to purchase something at a store. Examples of digital wallets include Apple Pay, Google Wallet, Samsung Pay, and PayPal.
This payment method has become a significant trend in ecommerce due to its convenience, security, and speed, offering a seamless checkout process by storing payment information securely and facilitating quick transactions.
Online merchants should accommodate digital wallets to cater to consumer preferences, enhance the user experience, and reduce cart abandonment rates. Offering digital wallet options can also attract a broader customer base, improve conversion rates, and provide robust security measures, which protect both the merchant and the customers from potential fraud.
9. Cryptocurrency payments
A growing number of ecommerce businesses are accepting cryptocurrencies as a payment method due to their growing mainstream acceptance and the appeal of lower transaction fees. Cryptocurrency is a type of digital or virtual currency that uses cryptography for security, making it difficult to counterfeit.
These currencies are decentralized and typically operate on technology called blockchain, a distributed ledger enforced by a disparate network of computers. Examples include Bitcoin, Ethereum, and Litecoin.
Allowing for cryptocurrency payments lets you to tap into a tech-savvy customer base that values privacy and transactional transparency. Integrating cryptocurrency payments can also position a brand as innovative and forward-thinking, potentially increasing appeal to a broader, more diverse audience while ensuring transactions remain secure and private.
10. Buy now, pay later (BNPL) expansion
BNPL services like PayPal’s Pay in 4, Klarna, Afterpay, and Affirm are also expanding rapidly, providing customers with flexible payment plans, which are particularly attractive for larger purchases. These services allow consumers to purchase goods immediately and defer payment through structured installments.
Unlike traditional credit, BNPL often comes with no interest if payments are made on time, and it is typically facilitated through quick, online approval processes. This payment method has become popular in ecommerce due to its flexibility, enabling customers to manage their finances more effectively and make larger purchases without immediate financial strain.
BNPL options can help enhance customer satisfaction and attract a wider audience, especially among younger shoppers who may prefer not to use traditional credit cards. Offering BNPL can also boost conversion rates, increase average order values, and reduce cart abandonment by providing a more accessible way to finance purchases directly at the point of sale.
11. Sustainability in payment processing
Sustainability in payment processing refers to adopting eco-friendly practices within financial transactions, such as using less paper by eliminating printed receipts and opting for digital alternatives or supporting green energy by powering data centers with renewable energy sources. This trend is gaining traction in ecommerce as consumers increasingly prioritize environmental impact in their purchasing decisions.
Online merchants should integrate sustainable payment options to align with the values of eco-conscious consumers, enhance brand image, and contribute to environmental conservation. By prioritizing sustainable payment methods, businesses not only meet customer expectations for responsible practices but also differentiate themselves in a competitive market.
What is the preferred method of payment in ecommerce?
As an entrepreneur involved in web commerce, you may be wondering what the best options are when it comes to the payment solutions you should supply on your online store with all the different methods for making payments available on the market today. When online shoppers click "Buy now" and get to the checkout stage, what methods will push them to pay and finalize the transaction?
The truth is there's no one-size-fits-all solution that will work for e-merchants everywhere.
The preferred method of payment in ecommerce varies worldwide, but digital wallets are increasingly dominant. They offer convenience, security, and speed, making them highly popular in regions with strong mobile connectivity and technology adoption, such as Asia-Pacific and parts of Europe. In the United States, credit cards and debit cards still hold substantial sway, but the widespread adoption of digital wallets and alternative payment methods like Buy Now, Pay Later (BNPL) schemes are shifting consumer preferences.
As preferred payment methods can be quite different depending on your location and the people in your target market, it's essential for online merchants like yourself to monitor the ecommerce trends in payments and other aspects of digital technology. When you understand the latest resources, services, and technologies for making payments in use today, you will be able to more strategically position your business to take advantage of them.
At the same time, you can remain attuned to customer expectations and concerns so that you can provide consistently great service to your customers. Now that you know what the developing trends in ecommerce payments are, you can identify areas where your business has room for improvement and growth!
