Top 10 online payment methods for e-commerce sites

Successful e-commerce stores share numerous must-have features, and arguably one of the most vital is a payment method. Without a seamless and effective way to get paid, your online store cannot deliver value to customers, and you can’t make money either.

Consequently, payment must be a priority whether you’re just starting your B2B e-commerce business or have a thriving setup. But picking a payment method can be harder than it appears.

There are many things to think about, including the available payment options in your location and potential fit with your business. There’s also the problem of selecting from the hundreds of options available, both locally and internationally.

No worries, though. We’ve created this detailed guide to help you through sellers’ most common questions, such as the main types of payment methods and ways to find the best options. This guide also contains a comprehensive list of top online payment methods to consider in 2022. Let’s get in!

What are online payment methods?

Online payment methods are services that process payment information on e-commerce websites. Digital selling has considerably relaxed and sped up the process of making purchases. Payment methods ensure that customers can select products on the internet and pay online.

Payment methods are of various types, and they may provide varying services. But, at their core, payment methods are there to help with seamless payment processing. Usually, they involve:

• Payment gateways: They provide the interface where customers enter their payment information. Payment gateways link your e-commerce store to a payment processor’s portal.
• Payment processors: Processors are responsible for receiving customer information, verifying that the customer has funds, and sending a request to the customer’s bank for payment. If the customer has funds, they receive payment and deposit the same in your merchant account. But if there are no funds, the processor will communicate to you.
• Bank providers: These are the traditional banks we’re familiar with, where customers maintain accounts. The bank provider settles the payment request or informs the processor of inadequate funds in the customer’s bank account.
• Merchant accounts: As an e-commerce store, your account is a merchant account. This is where you receive the payment charged to the customers after a successful purchase.

As you can see, successfully receiving an e-commerce payment involves many steps. But it’s your job as an online store owner to ensure the process is fast and stress-free for customers. That’s because an unnecessarily lengthy or complicated payment process can cost you sales and revenue.

The Baymard Institute found that complex or unduly slow checkout processes contribute to high cart abandonment rates.¹ Further, cart abandonment is generally around 70% for all online sellers, showing the importance of a fast and seamless process.¹

Further, customers want to know that their payment information is safe with you. E-commerce stores are a common target of hackers who try to hijack customer payment details. B2B online sellers without secure payment infrastructure risk lost customers and reputational damage from compromised payment details.

As a result, it’s essential to carefully select your online store payment systems and those who provide payment services to your store.

Why offer multiple online payment methods?

You know the importance of a fast and reliable payment provider. But what about the idea of using more than one payment method? Should this be a priority for your business?

The easy answer is: it depends on your preferences. If you believe that a single payment method meets your business needs, there’s no real need to employ more than one system. Likewise, if you think your business model requires more than one payment method, that’s likely the way to go.

But it’s worth considering the larger implications of providing only one payment method. According to the Baymard Institute study, 8% of online shoppers who abandoned their cart left because there weren’t enough payment options.¹ Another 19% left because they didn’t trust the website with their payment details¹ – likely because they didn’t see an option they trusted.

Buyers enjoy the variety that multiple payment options provide, as found in a 2021 Fiserv study.² And if they don’t have that variety, they are less likely to complete a purchase or check out their basket.

Apart from this, you should also consider the practical benefits of providing multiple payment systems. These include:

• Geographical availability: If you’re providing B2B services internationally, as will often be the case with Alibaba.com B2B e-commerce, you want to offer payment methods available to your foreign customers. For instance, certain payment providers like PayPal are unavailable in some countries. So, multiple payment options ensure you’re not excluding some clients.
• Functional backup: On occasion, you might find that one payment service is down or temporarily cannot process payments in some locations. Requiring customers to wait until that payment option becomes available would be inconvenient. Most likely, it would also result in cart abandonment. Providing an alternative or several alternatives solves this problem and endears you to buyers.
• Customer convenience: Certain consumers may have preferred payment providers they have used for years. Having a mix of payment avenues popular amongst your customers lets them enjoy those payment services while shopping on your e-commerce store.

So, when answering the question of multiple payment methods, think about the practical and business implications before deciding.

Types of online payment methods

As mentioned above, online payment methods are of various types. Even a cursory search will likely turn up hundreds of options, with the majority offering differing terms and services. But most of these payment options typically fall within one of three categories: bank cards, digital wallets, and payment gateways.

Bank cards

Credit and debit cards play a prominent part in e-commerce as a global payment method. They work alone on e-commerce stores, as with online bank transfers, or in concert with other payment options, like payment gateways. For instance, using a service like PayPal will require customers to fund their accounts through their bank card, among other options.

Local and international banks typically issue bank cards. However, they usually leverage global payment processors like Visa, MasterCard, and American Express. These three are also amongst the most popular globally due to their presence in hundreds of countries.

Credit and debit cards typically present a fast and easy payment route in local transactions. For example, a transaction with bank cards can be approved nearly instantly in many locations. However, this payment method is marginally slower when it comes to international payments.

Payment gateways

Payment gateways have attained a prominent role in facilitating international e-commerce transactions. Most online retailers incorporate payment gateways into their e-commerce stores due to the ease of use and speed these services provide.

Payment gateways play the role of trusted third parties that connect payment processors, bank providers, and merchant accounts. Some of the most popular payment gateways include PayPal and Stripe.

However, these services typically vary in transaction and platform access fees. Many can be expensive for B2B e-commerce sellers, so it’s important to carefully compare terms before deciding on one provider.

Digital wallets

Digital wallets are a new way of paying for e-commerce purchases. Led by m-commerce offerings from providers like Apple Pay, Samsung Pay, Google Pay, and Alipay, digital wallets are changing how customers perform e-commerce payments.

How digital wallets work is that customers fund their virtual wallets with the provider, often through their bank card. They can then directly pay for online purchases using their e-wallet and without needing to reproduce their payment details on every checkout.

Many mobile phone manufacturers also implement smart payment technology with digital wallets so that customers can pay with a single touch of their phone screen. Online retailers looking to execute even faster payments can consider adding digital wallets to their stores.

Top 10 online payment methods for e-commerce sites

With a clearer understanding of how payment methods work and the basic types available, we’re in a great position to consider the top online payment methods. As you work through this list, consider how each payment solution compares to your business needs and its relevance to your business cases.

Here are ten of the top online payment methods for e-commerce sites.

1. Credit/debit card

As we’ve explained, credit and debit cards are at the base of most modern e-commerce payment methods. Customers typically use a credit card to fund other payment options such as digital wallets. Likewise, they could authorize debit card payments with their bank, using funds currently at their disposal.

Another reason why this method is worth considering is the general preference of B2B clients for payment methods that are tried and true. Card providers and payment processors like American Express, Visa, and MasterCard have been around for a while. As a result, small businesses and other B2B buyers trust them, which creates a case for their inclusion by e-commerce merchants.

2. PayPal

PayPal is the largest online payment provider in the world, with a presence in over 200 countries globally.3 The company has in excess of 250 million users worldwide,³ so it’s a payment method many of your customers are likely to use. PayPal is also used by 17 million businesses, highlighting its broad appeal among companies and individuals.

While PayPal says that businesses who use the service enjoy an 82% higher conversion rate,⁴ it’s also worth considering the fees associated with the service. The payment provider charges 30 cents plus 2.99% on each transaction it processes. In all, PayPal presents a compelling business case, which is why it’s so popular globally.

3. Apple Pay

Apple Pay is Apple’s m-commerce payment service. The method works as a digital wallet that offers contactless payment in physical stores. It also provides one-click checkout on e-commerce websites – customers can use simple touch identification to checkout – providing exceptional ease and flexibility for your customers.

If your customer's number among the 64% of adults who use iPhones in the US, Apple Pay will likely find acceptance among your clients.⁵ The service also leverages strong security measures. It uses tokenization, which replaces customer payment details with random tokens, to protect customers. Plus, the service is free for merchants, which is a great deal.

4. Google Pay

Leveraging its impressive technology and user base, Google Pay provides flexibility and convenience to online shoppers. Google says its payment service is potentially faster and easier than others since hundreds of millions of users already have their payment information saved to their Google accounts.

Consequently, e-commerce store owners can potentially provide added ease of use and speed with this payment option. Google Pay also works with PayPal and Visa Checkout – a payment service from Visa. Like Apple Pay, Google doesn’t charge you or your customers anything to use Google Pay. It’s entirely free.

5. Amazon Pay

As one of the world’s largest B2C marketplaces, Amazon already has impressive reach and influence. By adding a payment service, the company makes payments easier between its hundreds of millions of users. Like Apple Pay and Google Pay, Amazon Pay is also m-commerce-focused.

As per their usual business model, Amazon makes integrating with Amazon Pay extremely easy. Merchants can exploit the service’s Express Integration option to get started in only minutes. They can also integrate using the service’s API, which takes longer but provides better customization options.

Amazon charges a fee of 30 cents plus 2.99% on each transaction, similar to the payment methods discussed above.

6. Boleto

Boleto is one of the most popular payment methods available in Brazil. The service uses payment information issued on paper or virtual vouchers that carry a barcode, minimal payment details, and receiver/sender information.

When it comes to local payments in Brazil, Boleto offers incredible speed and access, as shoppers can make payments at thousands of locations across the country. The service uses push payments, which means that sellers send the payment details to their clients, who can then make the payment at their convenience, whether physically or online.

7. Stripe

Although it launched in 2010, Stripe has become a well-known online payment provider. The platform boasts feature-rich payment services that enable payment processes from multiple sources such as digital wallets, credit cards, online transfers, and more. As a result, businesses with a preference for various payment methods in one solution will find Stripe helpful.

Stripe allows non-coding e-commerce sellers to incorporate the service into their store with a simple line of JavaScript. In addition, the platform provides a robust API that supports deeper customization for more technically-inclined sellers. Stripe charges 30 cents plus 2.99% for payments using domestic credit cards.

8. Western Union

Western Union began as a telegraph business in New York before adding a money transfer service in 1971. The company first popularized wire transfer as a payment method but has added mobile money transfer and peer-to-peer payments to its services. Currently, Western Union is one of the largest payment services providers in the world.⁷

B2B clients enjoy using payment methods like Western Union due to its long history and proven track record. While money transfers using this service can be expensive and relatively slow (payments take one business day), many businesses have incorporated that expense into their operating model and are comfortable with the service.

9. Online transfer

Online transfers are somewhat similar to wire transfers, with the difference that they lean more on the use of bank cards and ACH (automated clearing house) payments. This payment method is also called electronic funds transfer (EFT).

It works by connecting a sender and receiver bank, who collaborate to send and receive payments over a network. For instance, that network may be the ACH, or it may be the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.

However, note that online transfer payments frequently apply only to domestic transfers or payments within a single market like the EU. Also, these payments can take anywhere from one to three business days.

10. Wire transfer

Wire transfer has been a mainstay of the business world for nearly a century, and it continues to play a central role in B2B payments. Wire transfer is appropriate for transactions where a business wants an urgent transfer or needs to make a large payment.

Keep in mind that these transactions can be expensive, though. They can charge up to $40 on international multi-currency transfers, although single currency transfers are cheaper. You can expect transfers using this medium to reflect within one to two business days. International transfers can take a bit longer, though, sometimes up to seven days.

Therefore, while wire transfers are still prominent in the business world, they may not be as fast or cheap as digital wallets or payment gateways. Nonetheless, considering the large sums that B2B transactions typically involve, businesses may prefer this measured approach to payments.

How to find the best payment methods for your e-commerce site?

Now that you know the top payment methods available for e-commerce transfers, your next step is deciding what solutions to implement in your online store. As you know, there are tons of options to choose from. So how do you cut through the noise and identify the best methods for your business?

Ask the following questions to determine your best payment gateway:

• Are you receiving international payments? As you’ve seen, not all payment methods support international payments. If you will be receiving such payments, it’s important to select a payment solution that supports foreign transfers.
• Do you need to accommodate multiple currencies? Multi-currency solutions are typically pricier than single-currency payment methods. If you’re receiving payments from a wide range of customers using their currencies, you might want to adopt a multi-currency platform.
• What payment methods are prevalent in your location? Your business needs to meet your customers where they live. That includes allowing them to pay you using methods they prefer or are familiar with.
• Does customer experience rank highly for you? Many customers enjoy the variety and ease that multiple payment options bring. If satisfying customers is a key priority for you, it’s worth looking into adapting multiple payment services.
• Are transaction fees a concern? While the concerns listed above are significant, your business still needs to turn a profit. So, keep a firm eye on applicable fees and how they might impact your bottom line.
• Is fraud protection a top priority? If you need to provide stronger payment risk management, consider using a payment solution that helps you better manage those risks with solid chargeback and fraud protection.
• Does the payment method provide security? Lastly, security is just as important as fraud protection. As we've explained with Apple Pay, certain payment methods are well-known for their robust security offerings. They give your clients confidence in your e-commerce store and can be an incentive to make and conclude purchases.

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Ultimately, deciding what payment method is best for your business depends on your unique business needs and customer preferences. When making a decision, consider how the method integrates into your existing business model, whether it adds to customer experience, and the level of protection it gives you and your clients.

Alibaba.com provides many of the top payment methods around, enabling sellers to provide cutting-edge payment solutions to customers. This removes the stress of thinking about what methods to implement. And even better, all of the top payment methods come integrated with your all-in-one Alibaba.com seller account.

Would you also like to enjoy the ease that B2B sellers enjoy on Alibaba.com? Open a seller account today.