Should You Simplify Or Diversify Your Digital Payment Options?

One thing for sure is that the pandemic has catalysed behaviour change all over the world. In just a year, consumers and businesses have adapted their everyday habits to the new normal, including where they shop and how they pay. 

As huge numbers of consumers shifted their purchasing habits to the internet during the pandemic, many businesses scrambled to adapt to the surge in demand. As contactless payments accelerated, so did the demands of consumers for various payment options. Many existing systems weren’t ready for the sudden omnichannel expectations and they faced a sudden requirement to update their business models and IT infrastructure. Moreover, they had to perform critical enhancements while adapting to other virtual trends such as the rise of global marketplaces and social commerce.

How did companies manage this transformation? Many turned to a variety of solutions available in the market, including selecting technology partners to integrate their existing systems quickly through APIs. 

However, many merchants are also finding that dealing with a flow of funds into and out of their business through multiple channels complicated, not to mention the difficulties of integrating various payment options. Some merchants are turning to a single provider who can provide options to solve this complexity, such as connecting directly to consumers’ bank accounts via customized APIs. The provider offers one integrated package of payments, treasury services and commercial cards, and the client gets one set of APIs, one set of analytics, and one integration into the underlying technology

Whichever the case may be, Apigate has market-leading experience in enabling e-payments for telcos and digital content providers that provide unparalleled ease of transaction for consumers. 

Which is the right payment strategy for you – diversification or simplification? Here are some pros and cons for you to consider.

PRO: Customers are more likely to make a purchase 

A survey by Baymard Institute found that 70% of online shoppers leave a webpage without committing to a purchase. This is a massive loss of potential business. Companies must be able to meet buyers’ expectations for easy and convenient buying experiences. Offering various payment options makes sense as the chances of customers completing the purchase increase if they can see their preferred payment method offered.

PRO: Incentivise with rebates and rewards offered by payment portals

Many payment portals regularly run promotions to entice their users to make purchases with their solution. By including alternative payment options, consumers can choose which payment option offers them the best rewards. This can better encourage them to spend on your business and not elsewhere.

PRO: Opportunity to attract consumers in other localities 

As new digital payment players come into the market, consumer choice expands. With more options of how customers can pay for their purchases, e-commerce businesses stand a better chance of capturing consumers in other localities and countries who already have their preferred payment options. 

CON: Crowded e-wallet market will get more crowded

Competition in the digital payments space will get more intense in coming years. Some financial institutions and non-financial players are looking to launch their own e-wallets, adding more competition to the digital payments ecosystem. While this may give more choice to consumers, it also means the cost of onboarding and managing payment channels increases for merchants. Eventually merchants have to settle for a manageable number and sacrifice other options – and potentially customers who subscribe to those options.

CON: Crowded e-wallet market will likely see consolidation soon

The digital payment solutions that merchants are using today may not be around in the future. Most e-wallet platforms run on small margins and need to have scale to be profitable. With the proliferation of players in the market, it’s anybody’s guess who will be the eventual survivors in the long term. 

CON: Potential long-term costs involved in shifting market

Given the dynamic nature of the payment provider market today, experts expect massive consolidation to happen in coming years. Some smaller players will fall off. Various e-wallets may resort to mergers and acquisitions as an option to survive. If this occurs, merchants will have to reconfigure their e-payment platform again or perhaps even multiple times.

Talk to Apigate if you need a partner who is on the cutting edge when it comes to payment trends in emerging markets. We have more than technical pizzazz. We have the business acumen to identify opportunities as well as the technology to help you best capitalise on them.