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Ecommerce enterprises that don’t offer diverse payment options, such as mobile wallets and Buy Now Pay Later (BNPL), could face increased rates of cart abandonment at checkout. 28% of consumer respondents in the US now expect flexible payment options from brands when they purchase or return a product.1
Cart abandonment is common in ecommerce – many are window shopping, saving items for later, or comparing prices. However, some cart abandonment is preventable. In a 2024 survey by Baymard Institute, 22% abandoned their purchase because the checkout process was too long and complicated, while 13% stopped shopping because they couldn’t use their preferred payment method.2
These cart abandonment solutions can help large ecommerce businesses understand customer payment preferences, and build a responsive, streamlined checkout that keeps converting.
Digital shopping trends have transformed consumer expectations in the digital age. Digital payment wallets are the fastest growing payment method globally.3 Customers value the ability to make fast payments with their phone’s secure, pre-populated wallet, and can bypass long checkouts without inputting their data.
In 2022 there were approximately 360 million BNPL users worldwide, a figure set to double in the next five years, according to Juniper Research.4 This payment method is particularly popular with younger demographics, particularly Gen Z and Millennials, who use BNPL for all kinds of everyday purchases of different values.10
Consumers are attracted to a personalized shopping experience. They want to use their preferred, localized payment method and/or spread the cost in a seamless checkout experience.
Customers want to complete their purchase with as little friction as possible. 55% of shoppers surveyed said they had experienced at least one ‘pain point’ when trying to pay online in the last 12 months.5 Younger consumers (Gen Z and Millennials) are more likely to notice friction at checkout and 80% of consumers across the generations choose to save their payment information for faster purchases.5
The impact of shifting consumer behaviors affects how ecommerce enterprises interact with their customers at checkout, and what they expect from them. Collecting marketing data from customer remains a priority for many, but some ecommerce businesses may choose to bypass this in favor of faster checkouts and higher conversion rates.
Customers are more likely to abandon a purchase if available payment options are limited. They are also increasingly likely to prioritize well-known payment methods they already trust. 67% of PayPal Pay Later users have abandoned a purchase because PayPal BNPL options were not available at checkout.6
33% of shoppers surveyed by RFI Global said they choose BNPL at checkout because it’s convenient and there are no interest charges if their balance is paid on schedule, while 31% say it helps them manage budgets.11
Payment preference psychology can also be segmented by demographic. Gen Z is particularly tied to its payment preferences and is twice as likely to abandon cart than pay with an alternative.7
Statista lists the most popular payment methods for online US shoppers in 2023 as digital mobile wallets (37%), credit cards (32%), debit cards (19%), Direct Debit (5%), and BNPL (5%).8 All these methods, except credit and debit cards, are predicted to increase in popularity by 2027.8
Gen Z and Millennials are driving alternative payment trends by embracing digital wallets and BNPL.9 These younger demographic’s payment preferences prioritize digital-first banks and wallet innovations.
There can be a misalignment between consumer payment preferences and the options available at checkout. The greater this misalignment, the higher cart abandonment could be.
Reasons for high abandon cart rates often focus on lack of convenience and personalization, and feelings of inconvenience and frustration can directly impact ecommerce revenue. Catering to diverse customer payment preferences meanwhile can lead to improved customer loyalty and repeat purchases.
It’s crucial for ecommerce enterprises to regularly review and optimize payment options available to their customers, as well as develop strategies for customer acquisition and retention. This can reduce cart abandonment and improve conversion rates across demographics.
For example, ecommerce sites need to consider if they should offer a guest checkout option to incentivize shoppers who are reluctant to share their personal data in a multi-stage process. Personalization can also optimize the payment options available, tailoring the checkout based on customer history or location.
The ‘Accept PayPal Pay Later’ feature can attract customers who prefer flexible payment options provided by a trusted payment service.
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