How Merchants Encourage Customers to Use Their Preferred Payment Methods

Cybersource’s 2022 Global Fraud and Payments survey interviewed merchants about their approaches for encouraging customers to use their organization’s preferred payment methods. The chart below shows the top five most often cited responses.

Advertising preferred payment methods on their websites and displaying payment methods before customers reach the payment selection page are tied at 42%. Both approaches aim to reduce shopping cart abandonment rates by informing customers early on about the payment options available.

Another measure cited by 40% of merchants is offering incentives to customers for using a merchant’s preferred payment method. Incentives can include price discounts or loyalty and cash back rewards. While customers are encouraged to make a purchase, merchants benefit by avoiding payment processing fees that reduce a company’s net revenue.

38% of merchants offer a more subtle approach, directing consumers to their preferred payment method by pre-selecting payment methods in the checkout process. By sticking to the default payment method, shoppers use the option that merchants have set up for them. Needless to say, this approach runs the risk of users simply selecting a different method, which can easily happen if no further incentives or disincentives are provided.

Speaking of disincentives, 28% of survey respondents said they add surcharges for non-preferred payment methods. While studies have shown that consumers respond more strongly to surcharges than to discounts, this approach is used less frequently than the incentives approach. One factor contributing to this low rate may be that some marketplace regulations prohibit merchants from imposing additional fees on payment methods they wish to avoid.

The Cybersource report shows that merchants use a variety of tactics to steer customers toward their preferred payment methods, ranging from promoting preferred methods, providing early information about payment options, and offering incentives, to pre-selecting options and disincentives. By using different approaches to get customers to use their preferred payment methods, merchants can avoid payment processing fees that eat into their profits.

SOURCES: 

Cybersource 

PLOS