In 2020, according to data from the School of Management of the Milan Polytechnic, online sales of products in the B2C segment increased 45 percent over 2019, and further growth is expected in 2021. But what are the factors that are favoring this very positive trend? Certainly among the technological innovations with a substantial impact on web sales a prominent place is occupied by online payment systems, which allow the user to installment amounts when making a purchase on e-commerce platforms.
Many e-commerce users choose installment payments
The Adobe Digital Economy Index notes how in the first two months of 2021 the “buy now and pay later” payment system is increased by 215% compared with the same period in 2020, especially among millennials (the generation born between 1981 and 1996 according to the Pew Research Center) and the generation Z, composed of people born after ’96. These segments market are very attractive to merchants, but they do not always have a stable income, the liquidity to cross certain spending thresholds, and the ease to take on debt. For these reasons, millennials and Generation Z prefer to pay in installments and without interest.
In addition, the phenomenon of installment payments began to spread among online shoppers thanks to the European Psd2 directive, which quickly broke down the limitations posed by banking boundaries and bureaucratic barriers that limited the spread of digital payments on e-commerce platforms.
Installment payments = Increase in average cart value
Users of e-commerce platforms often abandon a purchase during the check out phase because they do not want to-or cannot-spend a certain amount right away. To limit this behavior, enabling the installment payment option can significantly affect the merchant’sincrease in conversion rate and average shopping cart value .
Payment in installments is made possible by a technological payment system, which allows online shoppers to choose whether to pay in multiple installments (usually three or four) without interest, adopting the “buy now and pay later” formula. After making the purchase, the user will receive the first charge on his or her credit or debit card (Visa, Mastercard, Amex, Nexi, etc.) and the other installments automatically at predetermined intervals (usually at 30 days).
How do these payment systems work?
To enable an e-commerce to “buy now and pay later” and allow users to accrue the amount when they place an order, system integration is required. This means. make a technical intervention to connect and have their e-commerce platform “talk” with one or more external information systems (and related vendors providing these services), thus enabling installment payment functionality, in addition to ordinary payment options, to enhance their e-commerce with a new online sales tool.
Such payment systems integrate well with major Open Source CMSs and in SaaS (Software as a service) mode: Magento 2, Shopify, WooCommerce, Prestashop, Opencart and Salesforce. In addition, providers, through the constant research and development work done by their teams, release guides, API (application programming interface) documentation and technical support to refine the integration and synchronization processes between platforms.
Main providers and benefits of installment
Several providers providing innovative payment services are currently on the market, including Swedish start-up Klarna, with more than 90 million users on a global scale and 2 million daily transactions, and Italian Scalapay chosen by well-known sports and fashion brands. Recently in Italy, Afterpay, known as Clearpay, is also making a positive move; it is the Australian fintech that in the first two quarters of 2021 recorded more than 10 billion in online sales.
So here are what are main benefits enabled by installment payment systems to enhance online shopping on your e-commerce:
- Increased conversion rate;
- Increase in the value of the average cart;
- Secure payments (the provider usually advances the amount spent by the customer to the merchant’s account);
- Improved customer experience and customer satisfaction level;
- Opportunity to offer “buy now and pay later” option in B2C and B2B markets to enable payment of small, medium and large amounts;
- Acquisition and retention of millennials and Generation Z segments .
We have had concrete evidence of these benefits, having observed the benefits on online sales of some e-commerce sites operated by the Tun2U Group. An example? The e-commerce of one of our clients active in the fashion industry on an international scale (for privacy reasons we cannot reveal its name), after integrating Scalapay into its Magento2-based platform, has quickly increased the medium trolley By about 10 percent. In addition, on our client’s e-commerce, Scalapay has become the most popular payment method used by enabled users.
