by Thomas Pays
South African e-tailers who provide customers with alternative digital payment options beyond those of credit cards can benefit from a bumper festive shopping season when traditional payment service providers might not be able to cope with demand.
The recent Black Friday (23 November) event illustrated how large online stores went to great lengths to ensure their systems and Web sites were robust and able to handle the increased traffic on the day.
But despite this investment to ensure sites would not go down, the inability of several major payment service providers to cater for the influx of customers had a massive impact on sales. Those stores who did offer alternative payment options such as instant EFT could not only cope with demand but secured additional customers from the sites that could not.
This points to a changing of the guard where alternative online payment methods will become increasingly popular and take their place alongside traditional payment methods.
Considering that December is the peak shopping time for many online stores, they need to remain focused on ensuring a hiccup-free experience. This is especially relevant during the festive season rush where people want to avoid packed shopping malls, long lines, and parking problems all while the country is experiencing a heat wave.
When it comes to the online environment, South African consumers want something that is easy to use and hassle-free. This is not only limited to streaming movies and music, surfing the Web, or engaging in social networking activities, but also extends to online shopping.
If a merchant is unable to facilitate a transaction (whether due to a site issue or payment problem) during this festive season rush, a customer is likely to move to a competitor. And considering that the global online shopping cart abandonment rate is hovering at around 77%, merchants must do everything in their power to get customers to complete their purchases. Giving them more payment options is certainly a step in the right direction.
Brand loyalty is a thing of the past. If people are unhappy, they are spoilt for choice and can easily go elsewhere. This is why digital payment services, such as instant EFT, are so important because they cut out the middleman and leverage a direct relationship with the financial institution. There is no need for the customer to register or even have a credit card. It is as easy as securely logging in to their bank account and making payment immediately.
Even better, this technology supports any mobile platform. Considering that South Africa, and the rest of the continent, is seen as a mobile-first environment, this empowers people who do not have access to a laptop or desktop computer to be part of the digital economy.
With the number of smartphone users in the country expected to increase from 16.42 million in 2016 to approximately 25 million by 2022, there is massive growth potential for merchants.
The increasing use of a platform like instant EFT during high traffic days such as Black Friday and the peak festive season signals that the country has finally woken up to the brave new world of digital payments. Customers will expect their merchants to give them the freedom to choose how they pay. Traditional solutions on their own are no longer good enough.
Merchants need to embrace more effective ways of giving online customers a wider choice of payment options. Alternative payment environments improve processing times, clear funds almost instantaneously for real-time order fulfilment, and reduces customer drop-offs.
Come January, those e-tailers who remained with only traditional options might very well have to cut their losses and make the transition. During these challenging economic times, every cent matters and payment availability could be the difference between business success and closure.
- Thomas Pays is CEO of i-Pay