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Integrating payment methods: Optimizing for the future in times of crisis

Contact bans, social distancing and restrictions in retail: in recent weeks, we have all had to adjust to a new normal as a result of the spread of COVID-19. Many aspects of life are changing, including our purchase behavior. Many businesses have had to stay closed for weeks, and the easing of official restrictions is only slowly improving the situation. Instead, people are increasingly ordering online. This trend offers opportunities for companies. For merchants, it's now important to respond quickly and prepare their shops accordingly, especially with respect to the payment methods available and the financial processes . This will benefit both merchants and customers in the long term.

Customer loyalty: Companies need to keep the current situation in mind

For companies in e-commerce, this means they should address new user behavior and optimize their online shops with respect to the payment options if they wish to acquire new customers and retain them in the long run. This can be ensured by an optimal customer journey, starting with the various payment methods offered at the checkout. According to a study by the business research institute EHI, purchase on account is one of the most popular payment options among German online shoppers, responsible for more than a quarter of all revenues.

Particularly in times of financial uncertainty, the option of purchase on account is favored since the payment due date can often be pushed into the next month, thanks to the 14-day deadline. However, we also see that not all online merchants offer this option at present. The risk of presumed bad debt losses seems too high. Yet it is also possible to assess and minimize the risk when using this method of payment. When the ideal payment mix is viewed as merely a component of an optimal online shop, a further benefit can be implemented before the checkout: an automated order and credit rating check reduces this risk.

Smartly combine complex processes

After all, customers are diverse, just like their payment preferences. For instance, the restrictions as a result of the coronavirus crisis have led to older generations also increasingly ordering online as well as new customer groups that previously did not shop online. These groups prefer purchase on account, since they often do not own a credit card, are unfamiliar with PayPal and are critical of the Sofort bank transfer service. In the last few weeks, we have seen with our customers and partners that the option for purchase on account was used by 56% of customers, direct debit by around 10% and credit card by 7%. What’s more, we have observed that the younger payment group is increasingly choosing e-payments via Apple or Google Pay. In CW12, e-payments recorded a high of 27% and have since stayed at a level around 25%. The value of the shopping cart and the number of orders are also having an effect on the accounting processing of companies. In CW11, the average shopping cart value initially fell by 6% and by another 11% in CW12. The situation is slowly easing again and shopping carts recorded an increase of 17% in CWs 14 and 15.[1] It was important to respond quickly to these fluctuations and correctly assess the effects on resources in payment method management as well as accounting.

What can companies do now? Be fast and flexible! Not only do they need to be able to integrate different payment options tailored to customers, but also make the customer journey as convenient as possible, in particular by smoothly handling financial processes in the background: from invoicing and payment receipt through to dunning and debt collection. This also includes coordinating the payment flows of all relevant payment methods, as well as monthly financial accounting.

[1] Group under review: Arvato Financial Solutions customers in e-commerce

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