Once upon a time, paying for goods online was a chore (remember postal orders?)—but in just a few years, the online payments industry has skyrocketed.
Today, it’s faster and so much easier to use one-click payment options and online wallets, with some virtual payment providers even offering currencies like Bitcoin and flexible payment options like Buy Now, Pay Later (BNPL).
With the cryptocurrency market on track to reach $5 million by 2026, and 4 in 10 UK buyers saying they’ve used BNPL to make e-commerce purchases, there are a ton of sales up for grabs if you can get your virtual payments systems setup right.
With the industry booming, it can be hard to keep up. In this ultimate guide to virtual payments, we’ll give you the lowdown on the most popular trends, the hype-free pros and cons, and the differences in using virtual payment technology for B2B vs. B2C selling.
Virtual Payments for Sellers: What We’ll Cover
- Why Virtual Payment Methods Are a Must-Have For E-commerce Growth
- The Ultimate Virtual Payments Breakdown for B2C and B2B E-commerce Brands
- The Path to Virtual Payment Methods that Keep Customers Hooked
Why Virtual Payment Methods Are a Must-Have For E-commerce Growth
It’s easy to see virtual payments as “nice to have” rather than essential for success, but this couldn’t be further from the truth.
Here are some undeniable reasons jumping into the virtual payment revolution could prove crucial to your long-term success:
- Gain a competitive edge: As the e-commerce landscape grows more competitive, it’s vital to find ways to coax shoppers into your store. Offering a variety of virtual payment methods may tip the scale in your favor and lead to more sales.
- Align your brand with societal shifts: These days, people are increasingly comfortable splitting resources, and it’s now completely normal to split bills online for things like cab rides, house bills, meals, and even presents. When you support consumer behavioral changes like this, customers are more likely to prop up your business by buying from you.
- Make life easier for your customers: Virtual payments set your store apart by making it easy for shoppers to purchase in a way that suits their lifestyle. They can avoid the inconvenience of multiple bank transfers and inputting card details, and opt for fuss-free and enjoyable shopping. At best, you’ll rock your customers’ worlds and keep them coming back. At worst, your brand would have done a good deed for shoppers.
The Ultimate Virtual Payments Breakdown for B2C and B2B E-commerce Brands
Flexible payment options are all the rage in today’s market. From start to finish, consumers value choice in their shopping experience.
Yet not all e-commerce stores have caught up with this customer trend—leaving forward-thinking brands like yours with the opportunity to boost sales from flexible payment options by offering them before your competitors do.
To get started, let’s break down each payment option:
What is crypto?
Cryptocurrencies are digital assets that hold a specific value that you can buy, sell, transfer, store, or trade. There are many cryptocurrencies on the market these days. The main one is Bitcoin, but others like Ethereum, Litecoin, and Ripple are steadily growing in popularity.
How do cryptocurrency transactions work?
Many people who trade in crypto use cryptocurrency wallets. These work in a similar way to regular cash wallets because you can store, send, and transact in crypto. Cryptocurrencies also come with 24-hour access perks, and you can trade them internationally, making them a very flexible payment option.
The Pros of Allowing Crypto
- Get in with the tech-savvy crowd: Cryptocurrency is popular among the younger crowds who are stepping into their full earning power and are the biggest online shoppers. Accepting crypto payments is a great way to get their attention, make shopping with your brand easier, and boost sales.
- Save on international transaction fees: Cryptocurrency is known for its low international transaction fees. Some providers even offer free international transactions. This benefit can pay off big time if you pursue cross-border expansion. Plus, you can pass on savings to reduce your prices and make your brand more competitive in foreign markets.
- Dodge chargeback fraud: One of the best things about crypto in B2B and B2C sales is that it removes the risk of pesky chargeback fraud. Cryptocurrency payments are assessed, actioned, and verified via blockchain and its artificial intelligence—with no middlemen.
The Cons of Crypto Virtual Payments
- Supply and demand dictate cryptocurrency’s value: The catch to using crypto for virtual payments is it has no inherent value. This is because crypto isn’t tied to any real assets, making it volatile and difficult to determine actual worth.
- You won’t have a safety net if things go wrong: One of cryptocurrency’s main issues is there’s no recourse if things go wrong, like a market crash. Unlike cash in bank accounts, governments don’t protect cryptocurrency funds. Worse still, price fluctuations are common. There are stories of crypto prices suddenly plummeting, swiping an eye-watering $300 million off the market in under 24 hours. Scams are also common in the crypto industry, which can cause costly losses for your business.
- No inflation penalties: Since crypto companies only release a specific amount of cryptocurrency into the market at any time, and supply and demand determine its value, interest in crypto can get very high. This shields crypto from inflation, unlike all other world currencies whose currency is determined and affected by countries and world events.
Should You Use Crypto for B2C and B2B Transactions?
For B2B sellers hoping to do away with conventional payment methods, or B2C sellers fed up with unpredictable disbursements, cryptocurrency is a no-brainer. Crypto as a virtual payment method can reduce your reliance on payouts and provide additional liquidity in your store.
However, you may want to regularly withdraw from it into your borderless account to help reduce your risk of having too much of your working capital tied up in crypto, in case the market takes another hit.
What are virtual wallets?
Virtual wallets, or e-wallets, are growing in popularity, and are used for all financial interactions from paying for virtual goods to saving money in various currencies, due to their inherently borderless nature. In fact, the amount of virtual wallet users increases by an impressive 140 million each year.
Virtual payments can also reduce cart abandonment issues by removing the tedious button-clicking and typing associated with some online payment solutions. The result is a seamless experience few other solutions can contend with.
What’s special about virtual wallets?
Virtual wallets allow consumers and businesses to pay directly from their money pool into an online fund. Some even allow you to store card details and authorize payments via the wallet. You can also have a virtual wallet in your business to do things like pay suppliers, store multiple currencies, and receive funds.
The Pros of Using Virtual Wallets
- Transactions with your business become easier: One of the great things about virtual wallets is how simple they make the transaction. Instead of inputting card details every time, shoppers can log into their digital wallet and pay straight away. Plus, most online wallets have mobile apps to simplify the payment process even further.
- Get better exchange rates for international customers: Online wallets have lower fees for international payments and better forex rates than banks and popular payment services like PayPal, meaning customers can save when you allow wallet payments. This can also help increase overseas shoppers’ spending power in your store. YOu also often have the opportunity to accept payments in a shopper’s local currency with minimal fees to convert to your preferred currency.
- Virtual wallet features pair well with a modern lifestyle: Many online wallets come with impressive features to help shoppers store personal data and share information. Some e-wallets even offer instant payments, and have great security features like two-factor authentication and facial recognition—all great to reduce friction in the buyer’s journey and increase sales.
The Cons of Virtual Wallets
- Compatibility and availability issues can cause customer frustration: The problem with e-wallets is that while they aid the customer experience, they can do more harm than good because:
- Not all phones are compatible with virtual wallets.
- Virtual wallet brands vary in popularity and it’s impossible to accommodate them all.
- Virtual wallets aren’t available in every country, so you’ll always need other online payment options available.
- It takes a significant investment to get virtual wallets integrated into your store: To get virtual wallet(s) set on your store, you need to invest in software and likely contract a programmer. These costs can rack up quickly, especially if you choose more than one wallet. Plus, you need to keep an eye on updates and complete them promptly to avoid service disruptions and preserve security.
- Virtual wallet adoption rates vary worldwide: The disparity in virtual wallet usage globally is hard to ignore. For example, in China, using online wallets has become second nature for online and in-person payments. In 2018, 92% of people in China’s big cities said they used virtual payment wallets. However, in the US, wallet solutions like Walmart Pay saw a decline in users from an already low 4.5% to just 3.3% in 2019.
Should You Utilize Virtual Wallets for B2C and B2B Transactions?
Virtual wallets win brownie points for their flexibility. You can use them the same way regardless of whether you sell B2B or B2C. They are a great option if you sell internationally and receive payment in various currencies. Plus, they can help bypass expensive foreign exchange services like Amazon’s currency converter.
Buy Now Pay Later (BNPL)
What are Buy Now Pay Later solutions?
BNPL solutions are one of the hottest payment trends to hit the e-commerce market.
They’ve made such an impression that 9.5 million Brits say they wouldn’t buy from stores that don’t offer BNPL at checkout. Also, the BNPL market grows about 39% yearly.
How does BNPL work?
Most BNPL services will pay your business in full within a few days of each sale, and your customer gets the choice to pay in installments or pay later in one go. Most BNPL providers also help retailers protect themselves against fraud and chargebacks by taking on some risks.
Many BNPL providers prequalify shoppers (meaning they estimate how much credit a person will be able to secure). Since they see this when creating an account with the BNPL service, there won’t be any nasty surprises at checkout.
To make things even more appealing for sellers, many BNPL solutions add extra marketing avenues for your brand by featuring sellers in-app, so shoppers can click straight through to your store and start shopping.
The Pros of BNPL
- Boost sales: BNPL services can help boost your customer base, conversion rate, and sales by reducing the friction that pricing can cause in the shopping experience. It can also help reduce buyer’s remorse which can lead to returns.
- Provide a hard-to-beat customer experience: Better payment options leads to increased customer happiness, meaning BNPL services are great for building a loyal fan base and brand advocates.
- Increase your Average Order Value: BNPL solutions give the shopper more purchasing power, so they’ll be more inclined to buy more things from your store.
The Cons of BNPL
- You foot a high bill for giving customers the BNPL privilege: BNPL providers charge fees to you and your customers for using their services. These aren’t cheap and can hit 2-6% (excluding interest the customer will pay).
- Backlash for encouraging reckless spending: There’s been a lot of debate on the negative effect BNPL has on inexperienced credit users who aren’t aware of the consequences of late or non-payments and consumer debt in general. This could tarnish your brand as feeding into irresponsible lending in some consumers’ eyes.
- It’s costly to get your brand set up: Merging your brand with a BNPL service isn’t a simple process. Once your brand is approved, you’ll need a programmer to integrate your store and you’ll likely need to pay for software and tools. This can affect liquidity in your business.
Should You Use BNPL Services in B2C and B2B Transactions?
Although B2C BNPL transactions will be more regulated as time goes on, BNPL is still an excellent way to get your store on the map and reel in shoppers who are interested in your products but can’t make it work financially.
If you run a B2B company, you can wave goodbye to outdated credit lines and paper-based applications to embrace advanced fintech solutions. This can help reduce overdue bills since many BNPL providers pay upfront, which will help you maintain healthy cash flow levels.
How to Win with Virtual Payment Methods
These days, consumers expect the freedom to choose the way they pay for goods. When you offer complete flexibility with virtual goods payments, it takes the stress out of the checkout process and shows your business cares about customer wants and needs.
Shoppers aren’t the only ones who benefit from virtual payments. By tapping into this new opportunity, your store gets the chance to position itself as a forward-thinking brand and stand out from the crowd to claim a bigger piece of the e-commerce pie.
To succeed in upgrading your payment methods, keep an eye on what your competitors are offering to uncover new payment technologies that could work for you. And remember: catering to virtual payment demand is a live-and-learn marathon, not a one-and-done sprint, so keep watching out for ways to improve.