The Future of E-Commerce Payments


Too many choices can sap our brainpower and make it hard to think straight. Unfortunately, when making e-commerce payments, things aren’t all that different.

The time has come for retailers and digital financial services firms to make the online payments experience smarter—smart enough to hide payment options that aren’t relevant to the buyer. 

E-Commerce Payments: The Upside of Accepting Multiple Payment Methods

E-commerce brands typically support as many popular payment options as possible on their websites. And why not? Customers expect it, competitors offer it, and it prevents businesses from being dependent on a single payment provider. Besides, additional payment options generally lead to more paying customers.

But is a crowded checkout page with multiple options really the best experience?  Probably not. In fact, research from Baymard Institute found that the average e-commerce site can improve its conversion rate by 35% solely through design improvements to the checkout process.

The Downside of Accepting Multiple Payment Methods

When thinking about how to pay for something online, today’s customers face a dizzying array of options: card payments, direct bank deposits, multiple digital wallets, and peer-to-peer payments. Now add to that the acceleration of buy now, pay later (BNPL) providers such as Klarna and AfterPay—with Affirm and Apple as the latest entrants to the market—and consumers have even more choice. And this doesn’t account for emerging payment methods such as cryptocurrency, biometrics, contactless payments, QR codes, and bitcoin.

With all these choices, it shouldn’t come as a shock that checkout pages are busy. What’s more, merchants must select, on behalf of their customers, not only the types of payments their e-commerce sites will support, but also which brands. For example, one retailer may use Klarna, while another may use Affirm. So, a customer who’s shopping online at both retailers would have to create multiple payment accounts for multiple retailers and geographies. In the brick-and-mortar world, this would be akin to a customer deciding to pay by credit card and then finding out that the store only accepts a Citibank or Chase card.

More Choice, More Mess for Merchants

The proliferation of payment options doesn’t only make things more challenging for customers. The growth in digital wallets, and the number of payment choices out there, are making things more complex for merchants too.

Global wallet choices offered by U.S. providers alone include Apple Pay, Google Pay, Samsung Pay, and PayPal. In China, wallets are the most popular way to pay, with Alipay being a preferred payment method. Additionally, the four major credit card payment processors rolled out Click to Pay, and many merchants including Amazon, Walmart, and Fitbit, even offer their own payment solutions. So how’s a merchant to decide which ones to implement?

Payment processing companies, such as San Francisco-based Stripe and Dutch payments company Ayden, have begun to introduce turn-key support for multiple wallet options to make them easier for merchants to implement and manage. Such companies have built an economic infrastructure to support making and accepting payments. And they process card payments, ACH payments, as well as some digital wallets and local payment methods.

A similar trend is emerging to help merchants tackle the complexity in BNPL options. Companies such as ChargeAfter provide a single interface for merchants to choose which BNPL options they’d like to implement.

While such solutions may simplify the merchant’s development process, overcomplicating the checkout page will never be the answer. And moving forward, the continued evolution of the vast technological advance fueled by the internet only promises to make things more complex for merchants. Ronak Doshi, Partner at Everest Group, agrees.

“The rise in Web 3.0 and metaverse adoption will expand the number of channels and the payment methods that come along with them,” said Doshi. “At the same time, the rise of real-time payment schemes are poised to add more competition and players in the payment ecosystem. This will simplify the payment processes but increase the number of choices for e-commerce firms and their customers.”

E-commerce Payments: The Right Option at the Right Time

Consumers don’t necessarily need more payment options—they need the right option at the right time. This means that companies need to be able to put forth the proper payment platform for a specific purchasing scenario. Payments should take a page from the playbook of digital-native companies such as Netflix, YouTube, and Amazon, which use product recommendation engines to entice users with relevant suggestions based on their previous choices. 

Extending product recommendation engines to payments would enable the customer to select the best payment option for them. This requires a deeper insight on consumer buying preferences and predictive modeling. 

E-commerce product recommendation engines are sophisticated systems that use algorithms and data to predict the products most relevant to the customer in a given context—increasing the likelihood of a purchase.   

The proliferation of choice is less about the next big payment platform and more about being smart about how we use the payment platforms that are already available.

Which companies will be the first to improve the customer experience by personalizing the types of payments they offer at certain touchpoints in the purchasing journey? That remains to be seen.

But one thing is certain. Those that do will have a competitive advantage and provide customers with a great experience all around.

Eddie Chin, experience solutions lead of financial services & insurance at Rightpoint, a Genpact company, co-authored this article.


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