If you’re running an online store, you know how crucial it is to keep up with the ever-changing landscape of digital commerce. One trend that’s been gaining traction lately is split payment. But what exactly is it, and why should you care? In this guide, we’ll break down everything you need to know about split payment in eCommerce and why it could be a game-changer for your business.
What is Split Payment in eCommerce?
Split payment in eCommerce allows a customer to use multiple payment sources to complete a single transaction. This can mean using two different credit cards, combining a credit card with a gift card, or using a combination of other payment methods like PayPal and a debit card. According to reports, in France, Spain, Poland, and Portugal, 6 out of 10 consumers use Split Payment.
Imagine a customer shopping online who finds something he really wants but does not have enough balance on his primary card to cover the full amount. Instead of abandoning his cart, split payment lets him pay part of the amount with one card and the rest with another. This flexibility is especially useful during big sales or holiday seasons when people might want to manage their spending across different accounts.
From a retailer’s perspective, offering split payment options can increase sales and reduce cart abandonment rates. Customers who might not have the full amount available on one payment method are still able to complete their purchases, leading to higher conversion rates. It’s a win-win situation: customers get the products they want without hassle, and retailers capture more sales.
Enabling split payments can be a bit complex. The eCommerce platform must be equipped to handle multiple payment authorizations and ensure the total sum matches the order value. This often involves integrating advanced payment gateways and ensuring secure transactions to protect both the customer and the retailer.
Split Payment Vs Deferred Payment
| Split Payment | Deferred Payment | |
| Definition | Customers divide the total purchase amount into smaller installments, paid over a set period (e.g., weekly, bi-weekly, monthly). | Customers delay the entire payment for a specific period, usually interest-free for a set duration, after which the full amount is due. |
| Cash Flow | Steady cash flow from regular installments. | Immediate impact on cash flow is deferred. |
| Customer Attraction | Appeals to budget-conscious customers. | Attracts customers needing to delay payments due to financial constraints. |
| Risk Management | Minimal risk with third-party providers handling credit risk. | Risk of non-payment transferred to third-party providers. |
| Customer Experience | Enhances satisfaction by offering flexible payment options. | Improves purchasing power without immediate financial burden. |
Now let’s understand the difference between Split Payment and Deferred Payment with an example:
When choosing Split payment, a customer buys a $200 item using a $50 gift card and pays the remaining $150 with a credit card. This flexibility allows them to combine multiple payment sources to complete the purchase.
The customer purchases the same $200 item but chooses a “buy now, pay later” (Deferred Payment)option. They receive the item immediately and pay in four $50 installments over the next two months, easing the financial burden by spreading the cost over time.
Why Should You Add Split Payment To Your Checkout Process?
Simply offering credit card payment options for bills isn’t sufficient anymore. It’s crucial to broaden your range of payment methods to ensure that customers have easy access to purchasing the products and services they desire. So, what other options should you consider if credit cards alone aren’t cutting it? Well, you could incorporate cash payments, net banking, UPI transfers, and more. However, even that isn’t the final step.
To truly meet the needs of modern consumers, you must make your payment process more adaptable and efficient for a smooth checkout process. This is where split payments come into play. Split payments allow customers to divide the cost of their purchase among multiple payment methods, offering them greater flexibility and convenience. Whether it’s splitting the bill between cash and card or utilizing different digital payment platforms simultaneously, the goal is to cater to diverse preferences and circumstances. By embracing split payments, you not only enhance customer satisfaction but also stay ahead in the competitive business landscape, meeting the evolving demands of today’s market.
Reasons Your Business May Need Split Payment Option
- High-Value Products: If your store specializes in selling high-ticket items, such as electronics, furniture, or luxury goods, offering split payment options can make these products more accessible to a broader range of customers. It allows customers to manage their budgets effectively without compromising on their desired purchases.
- Seasonal Sales and Promotions: During peak shopping seasons or promotional events, customers may be more inclined to make multiple purchases but may have limited funds available on a single payment method. Split payment provides them with the flexibility to take advantage of sales and promotions without exceeding their budget constraints.
- Targeting Millennials and Gen Z: Younger demographics, particularly Millennials and Gen Z, prioritize flexibility and convenience when making online purchases. Integrating split payment aligns with their preferences and shopping habits, making your store more appealing to these demographic segments.
- Subscription-Based Services: For businesses offering subscription-based services or products with recurring payments, split payment can simplify the billing process for customers. It allows them to allocate different payment methods for subscription fees, ensuring seamless and hassle-free transactions.
- International Expansion: If your business operates globally or plans to expand internationally, incorporating split payment options can accommodate diverse payment preferences and currencies across various regions. This flexibility enhances the shopping experience for customers worldwide and facilitates cross-border transactions.
Benefits of Split Payment for your eCommerce Store
1. Enhanced Customer Flexibility:
Split payment empowers your customers by offering them greater flexibility in how they pay for their purchases. Whether they prefer to use multiple credit cards, a combination of credit and debit cards, or even gift cards or store credits, split payment accommodates their diverse payment preferences.
2. Reduced Cart Abandonment Rates:
One of the biggest hurdles in eCommerce is cart abandonment, often triggered by unexpected financial constraints at the checkout. With split payment, customers can proceed with their purchase even if they don’t have sufficient funds for a single payment method. This flexibility reduces the likelihood of abandoned carts and ensures more completed transactions for your store.
3. Increased Conversion Rates:
Offering split payment options can lead to higher conversion rates as it removes barriers to purchase. Customers who may have hesitated to buy due to limited funds or concerns about exceeding their budget now have the freedom to split the transaction amount across different payment sources, encouraging them to complete their purchase.
4. Catering to Diverse Customer Preferences:
Every customer has unique preferences regarding payment methods. Some may prefer to use credit cards for rewards points, while others may opt for PayPal for its convenience. By incorporating split payment, you cater to a diverse range of customer preferences, enhancing inclusivity and satisfaction.
5. Competitive Advantage:
Offering additional payment options sets your store apart from competitors in an eCommerce landscape. By providing split payment, you demonstrate your commitment to customer satisfaction and convenience, positioning your store as a more attractive and customer-friendly option compared to others that offer fewer payment choices.
6. Encourages Larger Purchases:
Split payment encourages customers to make larger purchases by allowing them to spread the cost over multiple payment methods. As a result, you’re likely to see an increase in your average order value as customers feel more comfortable buying higher-priced items without worrying about the immediate financial burden.
7. Builds Trust and Loyalty:
Providing flexible payment options like split payment builds trust and loyalty among your customer base. When customers feel supported and empowered to make purchases on their terms, they’re more likely to return to your store for future purchases and recommend your business to others.
8. Simplifies Budget Management:
Split payment simplifies budget management for your customers, enabling them to allocate funds from different sources for their purchases. Whether they’re managing multiple credit cards or balancing various accounts, split payment makes it easier for customers to stay within their budget while still enjoying the products or services they desire.
Conclusion
Split payment is more than just a buzzword; it’s a powerful tool that can help you boost sales, improve customer satisfaction, and stay ahead of the competition. By offering flexible payment options at checkout, you’re not only catering to your customers’ diverse needs but also setting yourself up for success in the fast-paced world of online retail. So why wait? Start exploring split payment solutions today!
