Brands that are continually seeking ways to grow their business and enhance revenue growth now recognize the strategic importance of payment optimization. In our latest research, Accelerating revenue growth: How incremental payment optimization can drive up to 30% revenue gains, we explore the intricate landscape of payment processes, demonstrating how even minor adjustments can significantly impact a business's bottom line.
These micro-adjustments can be broken down into five strategies across the three stages of the payment process—pre-purchase, during purchase, and post-purchase. Here, we dive deeper into the first two strategies of the paper, the importance of optimizing customer experiences before the point of payment.
From localization to embedded finance, we discuss how merchants must adapt to their customers' payment preferences in all regions they do business in. That includes how they pay, what currency they’re paying in, when they’re paying, and other experience points.
Adapt to local preferences
Firstly, it is critical to localize payment experiences to cater to the varied preferences across different geographies.
By offering region-specific payment options and currencies, merchants can significantly enhance customer satisfaction, leading to increased conversion rates and revenue growth. The key to success here is to understand your specific audience and ensure that your payment narrative resonates clearly with them.
Our research outlines that the benefits of localization aren't just theoretical. Real-world experiences of various industry operators suggest revenue gains of up to 20% by enhancing the payment experience through localization strategies.
How can businesses do this successfully? Over 40% of merchants agree it’s a challenge. To solve localization complexity, half reportedly use local payments providers or online payment processing companies with boots on the ground in the regions where they sell, or even managed merchant of record solutions to clear payments locally without creating a local legal entity or physical presence.
Embrace Alternative Payment Methods (APMs)
With 94% of merchants now accepting at least one APM, it's clear that diversifying payment options is also key to unlocking revenue potential. Digital wallets like Apple Pay and Google Pay, Account to Account (A2A) payments, and Buy Now, Pay Later (BNPL) options like Klarna are particularly noted for their positive impact on sales growth and customer engagement.
According to the research, online businesses that accepted over five payment methods saw a 4% revenue growth bump compared to those with fewer options. Interestingly, a third of the merchants surveyed identified the use of digital wallets as the primary driver for sales growth.
Explore embedded finance options like Buy Now, Pay Later (BNPL)
The most revenue-accelerating embedded finance options include BNPL products and merchant-managed installment plans. BNPL is most noteworthy for driving both conversion and basket value. One clothing and décor website, for example, reported in our research that customers who used BNPL often spent 80% more than customers who did not use BNPL and returned to the shop more frequently.
Meanwhile Zalando, an eCommerce retailer in Germany, lead the pack with embedded finance. By entirely detaching the payment process from the transaction flow by offering “Try First Pay Later,” letting approved customers select and execute any payment method, not just credit card, after trying on their items.
By catering to consumers’ financial needs and local preferences, merchants can boost purchase conversion rates, increase average order sizes, and foster greater customer loyalty—all before their customer has even initiated a payment. Read the full whitepaper to explore the specific revenue uplift potential for the various strategies outlined in this article and read real merchant case studies and revenue acceleration tactics.
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