According to BI Intelligence, a research service from Business Insider, the number of people shopping online in the U.S. has grown by about 20 million from the year 2015 to 2016. By the year 2020, people are expected to spend more than six billion dollars online. Online payment services, to a large extent, determine the rise of these numbers and ensure a flourishing e-commerce system.
Some of the more common online payment service providers include WePay, PayMill, PayPal, Google Wallet, Stripe, Skrill, Braintree Payments (with PayPal for a parent company), Square Register and Recurly. PayPal currently holds the distinction of being the most widely used one of these providers.
Online payment services are payment gateways offered by a payment provider that gives its customers different pricing and features to choose from to facilitate their online transactions. For instance, PayPal offers online payment services such as PayPal Express Checkout and PayPal Payflow Pro.
Why have online payment services seen a relatively significant increase in the usage?
Growth of e-commerce
E-commerce is online buying and selling. Online businesses, in order to operate, may require online shopping sites, a system to gather and use online demographic data, online marketing, online financial exchange and online marketplaces that facilitate third-party interventions. It is in here that Payment service providers (PSP) found a means to step in. By filling a gap in the payment pathway, the one between the merchant and the purchaser, they capitalized on current online market trends. E-commerce has mostly grown because online products are readily searchable, online merchants gather information and promote relevant products and services to their customers, and because it makes online information hugely transparent. The growth of e-commerce has made online payment services almost essential.
Ease of process
A process that gives the desired result with less effort has a bigger chance of being favored. That is one of the reasons online payment services continue to be a success. They provide a hassle free transaction experience. When a purchaser or a member wishes to buy or join or donate, they expect the process to be a smooth one. In today’s world, a website that doesn’t have an option to get online payments done is already being viewed as outdated. Online payment services help make the world a much smaller place with the ease international transactions can be carried out.
A purchaser, pressed for time, will always choose a process that helps them use their time effectively. Online payments, to begin with, speed up the entire transaction, and payment services make it even easier for the customer to save time. With an immediate confirmation of transactions to improving cash flow in the system, online payment services prove to be a boon.
Online payment services exist to help online sellers accept payments by giving a single interface that offers one or more payment methods. A customer can pay through credit or debit cards, bank transfers or digital currency. Given this, one of the biggest advantages offered by online payment services is the guarantee of safe and secure online transactions. Merchants and consumers alike are assured that their payment information is protected from fraud and theft. Online payment services include risk management for the card and bank-based payments, increasing their appeal to a customer navigating the sometimes unintelligible world of online payments. In addition to this, online payment services let the merchants know if the payer has enough funds for the transaction to go through. Bounced checks, thanks to this, will soon be a problem of the past. Online service providers based in the U.S. are supervised by the Financial Crimes Enforcement Network, which collects information to deal with money laundering and financial crimes. This lessens risks and improves the trust factor for the customer engaging in online transactions.
Value for money
It is understood that online payment services charge a transaction fee based on their service. Some go as high as 8.9% per transaction. In the long run, it is still a lesser price to pay considering the almost negligible effort taken in conducting a transaction, the time saved in terms of travel to get a transaction done or of processing a card manually since everything is automated. For the merchants, studies show that having a PayPal button on their website will increase sales by 31%. Of course, the price shouldn’t be the main factor when choosing anything. The cheapest is not always the best. Quality of service provided, the technology incorporated, the ease with which one can set up and use a service, the availability of good customer support should things go wrong, lack of hidden charges or unexplained costs all go into deciding the value you get for money paid as a transaction fee.
Given that 102,728 e-commerce retailers in the country are generating at least $12,000 per year in revenue, online payment services is an effective means towards an effective end.