The Evolution of Payment Options for E-commerce

The evolution of payment options for e-commerce

When’s the last time you paid for something in cash? 

Today, there are so many ways to make a purchase. Forgot your wallet at home? That’s okay, your debit or credit card is accessible from your smartphone — just one tap away! 

Data from the Federal Reserve Bank found that in 2023, cash remained the third-most-popular payment method, with 18% of consumers listing it as their top choice. 

Over the past few years, there’s been a clear shift in consumer preference from in-person to online shopping, especially among younger generations. 67% of millennials and 56% of Gen X prefer shopping online to in-store. 

This shift has been accompanied by an increase in digital payment options. Debit and credit card use has continued to grow, and new payment options have gained popularity, including cryptocurrency, buy now/pay later (BNPL), mobile payments, and bank transfers. 

In a whole new world of payment methods, how can you ensure you’re providing the options that work best for your customers?

We’ve got you covered. Keep reading for a breakdown of all things payment-related to maximize efficiency for both you and your customers. 

Why does it matter? 

After all, regardless of the methods you offer to customers, the money is coming from the same place, right?

As it turns out, there are a few advantages to customizing payment options to your customer’s unique needs and preferences:

  • Drive more conversions

Let’s be honest. Many of us have felt a twinge of annoyance when we get to the front of the line only to learn a business is cash-only.

Offering diverse payment options to your customers is one way to show that you’re putting their needs and preferences first, which can improve their connection to your brand and boost sales. 

  • Reduce cart abandonment

For example, if customers lose their PayPal login but can still pay online with Venmo, Klarna, or one of a variety of options, they are more likely to complete the purchase. But if they can only pay with debit or credit and don’t have their card handy, they are likely to close the browser and forget about their cart. 

The more payment options you can offer, the more flexibility you offer customers (and the more incentive you give them to make their purchases sooner). 

  • Increase website visibility & traffic

Did you know offering multiple payment gateway options could have a positive impact on SEO? By providing diverse payment options, you enhance user satisfaction, potentially leading to lower bounce rates and higher conversion rates, which directly affect SEO.

“What’s In Your Wallet?”

Cash, debit, and credit are not the only options for consumers anymore. Over the years, a few alternative payment methods have arisen. Here are a few of the main ones — what they are, and their pros and cons.


Unlike traditional currencies, cryptocurrency isn’t controlled by a central authority like a government or bank. Instead, it operates on decentralized networks called blockchains. 

One of the more well-known cryptocurrencies is Bitcoin, though there are thousands of other cryptocurrencies today. Created in 2009, Bitcoin offers the advantage of lower fees, faster transactions, and increased privacy as compared to traditional online banking. 

Crypto has its perks. Since crypto isn’t government-regulated, it offers a “borderless” transaction system that can be appealing to global customers. 

Shopify is one example of an e-commerce platform that accepts crypto, and even NFTs, as a payment option. Merchants need to enable additional payment methods like Solana Pay, BitPay, Open Node, or one of a list of others to support their crypto and settlement goals. 

According to 2023 data from Nerdwallet, about 2,300 U.S. businesses accept Bitcoin, including a number of major e-commerce companies — AT&T offers a bitcoin payment plan through Bitpay, as does Twitch. Sports companies like the Miami Dolphins even allow fans to buy tickets with a cryptocurrency called Litecoin. 

The low fees make bitcoin increasingly popular among e-commerce merchants.

Those low fees don’t come without risks, though. The value of cryptocurrency is ever-changing and dependent on a variety of factors, including the value of other crypto competitors. 

Buy Now, Pay Later (BNPL)

The concept of “Buy Now, Pay Later” (BNPL) is like if buying something on layaway got a makeover. 

Both are methods of purchase without paying the full item price upfront. But with BNPL, you actually get the item before you’ve finished paying for it. 

NPR reports that one in five consumers have used a BNPL service like Klarna, Afterpay, and even Shopify to make a purchase. Often, BNPL payments carry no interest — they’re basically a micro-loan to your customers where they get to enjoy your product now and pay over time.

Klarna found that BNPL is a good way to boost Average Order Value (AOV), with merchants seeing around a 45% increase in AOV after offering BNPL as a payment method. While BNPL options can boost sales and customer satisfaction for e-commerce companies, they also carry an increased risk of default, higher transaction fees, potential cash flow disruptions and dependency on BNPL providers. 

Mobile Payments

Did you know that today, roughly half of all e-commerce transactions take place on a mobile device

Technologies like Apple Pay, Samsung Pay, and Amazon Pay make it possible to leave your credit card at home, upping the convenience factor of making a purchase. You can use them both in a brick-and-mortar context (tap to pay) and to make a purchase directly from your phone (e-commerce), and biometric technology like Face ID makes these purchases secure with limited room for user error. 

Despite all the convenience, technology isn’t 100% fail-safe — phones die and screens break, and networks aren’t always reliable. Therefore, complete reliance on mobile device purchases isn’t currently possible. 

Bank transfers

Bank transfers are one of the most secure methods of payment for e-commerce businesses. Fortified with encryption protocols and authentication measures, bank-to-bank transactions are typically protected from unauthorized access and fraud. 

While a bank transfer is still considered the safest way to transfer funds, it’s gone out of vogue due to the slow process of making the connection from one bank to another. 

Today, the bank transfer’s primary use would be in business to business (B2B) transactions, where high-value transfers are being made with less value on immediacy as with the e-commerce experience.

Three questions to ask when determining which payment gateways to offer

There are a lot of options out there, and it can be hard to discern which ones are truly right for your audience. Here are a few guiding questions to get you started:

  1. “What are the preferred payment methods of our target audience?”

If your target customers fall in a lower income bracket or are largely Gen-Z, you’ll want to offer BNPL. Or if you have a global, tech-forward customer segment, accepting cryptocurrency might set you apart from your competitors. 

When your customers feel like you “get” them, there’s an increased likelihood that they’ll complete their transactions.

  1. “What are the associated fees and costs for each payment method?”

Evaluate the cost versus reward of different payment options and determine if the impact on your business is justified by the potential profits.

  1. “How secure and reliable are the payment providers?”

Despite technological advances in cybersecurity, there’s always the threat of a data breach that could compromise not only the data of you and your customers, but also the future reputation of your brand. 

We can all think of a few big brands that had a data leak in recent years that makes us a little more wary of entering our credit card information for purchases. 

As you prioritize convenience and customer preference, don’t forget about the importance of security in the customer-brand relationship. 

Nogin: Here to help

Balancing security with convenience for your customers can make it hard to choose which payment options are best for both you and your brand. 

Nogin is here to help you sort through the alternatives. Our enterprise e-commerce solutions will keep you on the cutting edge of digital payment technologies, ensuring you and your customers are satisfied for years to come.

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