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Payment Ecosystem Myths – Part 2

In part 1 of this topic, we discussed common myths around chargebacks and the difficulties of being the merchant of record.

Here are some additional myths that we’d like to refute:

The more payment methods, the better” – This revolves around the “bright, shiny object” theory. Companies are easily swayed by new payment methods and promises of better monetization, leading to a plethora of options available for customers. Studies have shown that three payment methods are optimal for most online purchases. More can be provided, but not on the initial purchase page; otherwise they’ll just confuse your customers.

Another way of looking at payment methods is to look at the margins, the customer dispute process, and the potential for cannibalization. The most common payment methods in the US are still credit and debit cards. You’ll obviously need to modify this thinking based on the geographical focus for your service and the demographics of your audience, but implementing 10 payment methods is rarely profitable.

“Everyone pays with PayPal, that’s all I need” – PayPal is a very ubiquitous payment method, especially for digital goods. However, offering only PayPal for payments excludes a much broader market of potential buyers. The customer purchasing process for credit cards is much smoother outside of the PayPal flow. Your users should be incentivized to spread the word about your product, not sign-up for PayPal.

The customer payment experience is less critical than new product features” – The customer’s purchasing experience is incredibly important and companies ignore it at their own peril. Companies like Zynga and Netflix are hugely successful and known for their optimized and customer-centric purchasing process as well as their products. Dedicated customers will find a way to pay despite the experience, but the broader population of customers will abandon purchases if the process seems too difficult or unsecured.

I don’t need to worry about fraud” – Fraud is a reality for any company selling services and content online, especially digital goods. Companies that ignore fraud will soon find themselves in severe trouble with the card networks (and their payment processors). The path to online success is littered with the stories of companies that were driven out of business by ignoring the fraud risk.

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