Digital product ecommerce is a special breed of ecommerce because of the expectation of instantaneous product delivery. Because the product is digital, today’s buyers rightfully expect to receive it immediately upon completion of the purchasing process.
However, many customers prefer to pay for products via payment methods that require an offline step, such as Konbini, Boleto Bancario, wire transfers and even PayPal. Don’t lose sales because you aren’t aware of these offline payment methods, which require special handling in your ecommerce system.
With offline payments, a customer places an order for a product online, but completes the payment at a later time and through a different interface. For example, the Japanese Konbini payment method requires the customer to print out a transaction receipt, take it to the local convenience store and pay the cashier for the product.
The Konbini system notifies the merchant that a successful payment has arrived, and only then is the order fulfilled. This entire process can be completed in as little as 15 minutes, or take days or even weeks, depending on the obstacles presented to the customer from the time that the order is placed until the payment is made. The graphic below describes the different steps required to complete an offline payment.
In real life, any time an offline payment order is submitted, there will be a significant percentage of orders that are never paid. This is a fact of life because some buyers experience remorse after placing the order, realize they have insufficient funds or have an honest memory loss about the order. The hard truth is that the majority of these orders will remain unpaid.
However, there are ways to recapture some of these “lost” orders, and more importantly there are huge advantages to offering offline payment methods like Konbini, Boleto Bancario, wire transfers and PayPal.
ADVANTAGES OF OFFLINE PAYMENT METHODS
Unlike credit cards, where a customer can simply call their bank and rescind the payment through the chargeback process, when money arrives for an offline payment, there’s often no opportunity to automatically rescind the payment. Rather than having to keep a reserve of money for up to six months to cover credit card chargebacks, money received by offline payment can typically be used immediately.
Another advantage for offline payments is that there’s frequently less private information stored to attract hackers. In the case of PayPal, the only personal information stored is a customer’s email address, which is captured during the order process any way.
PayPal’s website is an attractive target in this case. But even though fraud caused by stolen account credentials can be a problem with PayPal, you usually know about any fraudulent orders within two to three days because emails are sent to the account holder following any payment activity.
DISADVANTAGES OF OFFLINE PAYMENT METHODS
It’s extremely important to ensure proper processes are in place to prevent products from being delivered to the customer before the payment is cleared. If your process functions like a credit card transaction, where the order submission triggers delivery of the product, lost sales will result because customers receive the product before payment is made. The graphic below shows the proper location for your fraud screening capabilities in the order process.
Costs for offline payment methods vary widely– from virtually free (when automation is possible) to 25%+ of the transaction amount! However, even if the cost is significant, any additional sales will most likely offset these costs because, as pointed out in a recent post, customers are more likely to purchase when they have their preferred payment methods and currencies available.
: Offline payments may be more complex to support than credit cards, but you should consider the advantages of offline payments when deciding whether or not to support them.
Do you have any fears about supporting offline payments from other countries? Which countries are the most frequent users of offline payments?