India’s digital payments ecosystem is growing at an extraordinary rate, with transaction values increasing by 58% in FY 2022–23 compared to the previous year. Providing customers with multiple, easy-to-use payment options is no longer a choice; it’s a fundamental necessity for businesses to remain competitive.
As digital transactions become increasingly seamless, secure, and convenient, business owners need to stay informed about the evolving payment landscape. Doing so ensures smoother transactions and enhanced customer satisfaction and loyalty. The types of payment methods you offer are crucial for shaping the user experience and driving transaction success.
Top 12 Payment Methods
The purpose of a payment system is to facilitate money transfers from customer to merchant, which remains consistent across the payment methods, but the user experience can differ significantly.
For instance, reCharkha seamlessly integrated PhonePe PG during its shift from offline to online operations. It benefitted from a smooth transition that allowed customers a familiar and trusted payment experience.
In e-commerce, understanding the nuances of different payment systems can greatly impact the user experience and transaction success. Here are some of the most common e-commerce payment systems that businesses are using to meet diverse customer needs:
Debit Card Payments
Debit card payments involve using cards linked directly to bank accounts, allowing customers immediate access to their funds. For businesses, procuring POS (Point-of-Sale) devices that accommodate debit transactions, including contactless payments, is a smart move to enhance customer convenience and streamline the payment process.
For instance, supermarket chains like Reliance Fresh and DMart have adopted this approach by offering both swipe and contactless payment options, ensuring smoother and quicker checkouts for their customers. Additionally, in the e-commerce space, the usage of debit cards for payments is a growing trend, offering businesses an opportunity to cater to this segment effectively.
Credit Card Payments
Credit card payments allow customers to borrow money temporarily for purchases from their credit line. Businesses must install support for multiple payments using credit cards, including chip and contactless cards. This allows the customer flexibility when it comes to managing high-ticket expenses. Large retail stores like Lifestyle and Shoppers Stop accept credit card payments, allowing customers to buy high-ticket items with the flexibility to pay later.
Bank Transfers (NEFT, RTGS, IMPS)
Bank transfers enable the direct transfer of funds from one account to another via online banking systems. As a business owner, offers NEFT, RTGS, and IMPS for transferring funds, especially for bigger transfers. This increases customer trust in your payment process. Small and medium-sized enterprises (SMEs) often use NEFT or RTGS to settle vendor payments. For example, an electronics distributor might use NEFT to pay suppliers or manufacturers.
Mobile Wallet
Mobile wallets enable one to store money and pay with their smartphone. Businesses should offer various payment modes for mobile wallet transactions, enabling online and offline payments. It is a convenient feature that develops customer convenience and expedites checkout. Food delivery apps like Swiggy and Zomato accept payments via PhonePe, offering customers the convenience of paying directly from their mobile wallets.
UPI Payment
Unified Payment Interface (UPI) is a real-time payment system linking multiple bank accounts for instant transactions. Businesses these days include UPI acceptance by allowing QR codes or direct pay to ensure smooth transactions. This benefits tech-savvy customers who want to use rapid and simple online payment methods. Many small businesses, such as local pharmacies and cafés, use UPI platforms like PhonePe PG, allowing customers to scan a QR code for quick payments.
QR Code Payments
QR code payments include scanning a code to allow for instant digital payments. Make a business-specific QR code connected to your payment account to provide convenience for customers. Many tea stalls, small eateries, and local service providers use QR codes for payment, often displaying them at checkout counters. Customers simply scan the code using their preferred UPI app, such as BHIM, for an instant transfer.
Contactless Payments or Tap and Pay
Customers can touch their cards or devices next to a terminal with contactless payments. Ensure that your payment system allows these transactions to be made as quickly as possible. This is convenient and may reduce wait times, which enhances satisfaction. Many chain stores, such as Reliance Retail and KFC India, offer contactless payments. Customers can use their cards or mobile devices to make payments with just a tap.
Point-of-Sale Terminal
Physical stores can accept different types of digital payments using a Point-of-Sale machine (PoS). You can cater to customers wanting to pay using credit cards, debit cards, contactless cards, UPIs, QR codes, or digital wallets with an all-in-one POS terminal. For example, merchants can link their merchant account with the PhonePe business app and integrate it with the POS machine to easily manage both online and offline payments.
Buy Now, Pay Later (BNPL)
BNPL services allow customers to pay off their purchases with smaller, interest-free installments. Make sure you offer BNPL as an option through your checkout so customers can choose flexible repayment options. This way, you will encourage spending because products are made more accessible to the customer with smaller monthly payments. E-commerce websites like Flipkart offer BNPL options, which allow customers to pay off larger purchases in smaller, interest-free installments.
Direct Debit
Direct debit is an automatic payment of regular sum deductions from a customer’s current account, hence removing the complexity of billing. Provide a direct debit option for a subscription to make payments on time. This mode also helps with cash flow management and increases billing efficiency. Popular OTT platforms like Netflix and Amazon Prime in India offer direct debit options, allowing customers to pay subscription fees seamlessly each month from their bank accounts.
Payment Links
Payment links are an online payment method wherein a business sends a secure link to its customers for them to make a payment. Use platforms for payment processing that can send these links via SMS or email. Freelancers, consultants, and small businesses like boutique stores use pay by link services from PhonePe PG to send payment links to clients, especially for remote or online services.
How to Choose the Right Payment Methods for Your Business?
Choosing the right payment methods for your business is essential to provide a seamless checkout experience and enhance customer satisfaction. Different customers have different preferences, so offering a variety of payment options can help you cater to a diverse audience and even boost sales. Here are some key considerations to keep in mind:
Target Audience: The young generation would prefer digital wallets and UPIs, while older customers prefer traditional cards.
Multiple Methods: Create payment systems that allow people to use multiple methods so it becomes simple as well as accessible for the customers
Convenience and Safety: Ensure easy and safe transactions to build customer trust in your payment system, which will increase repeated transactions.
Transaction Limit: Evaluate transaction caps and choose payment gateways that support large transactions depending on your business needs.
Hidden Charges: Beware of payment processing systems with hidden fees that can increase the transaction costs for the business.
Geographical Presence: Global e-commerce businesses need payment solutions that can accept payments in multiple currencies with lower exchange rates.
System Integration: Ensure that the payment methods seamlessly integrate with your business model and accounting solutions.
Analytics: Many payment platforms offer detailed analytics and reports on customer transaction trends and preferences. Choose the ones that help you analyse consumer preferences and behaviour.
A payment aggregator such as PhonePe PG can help integrate different types of payment methods with your online and offline store. Adopting a robust payment processing system suitable for your business needs allows you to keep pace with technological advancements, meet diverse customer preferences, and ultimately drive growth. Businesses that stay agile with modern online payment systems can maintain relevance and gain a competitive edge.
