How to Optimise Payment Processing for Ecommerce

Optimising payment processing for your ecommerce business is a key part of delivering a customer experience that boosts your conversion rates and keeps customers coming back. 

With the right tools and strategies, you can make it easier for customers to complete their purchases, reduce costs, and offer the most flexible, secure experience for your customers.

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Don’t ignore alternative payment methods: BNPL and more

Alternative payment methods, such as Buy Now, Pay Later (BNPL) and digital wallets, are rapidly becoming essential for ecommerce businesses. B2B businesses expect flexibility, with many looking for digital trade credit options. BNPL for trade providers now allow B2B customers to split payments into manageable chunks, making larger purchases more accessible.

Benefits of offering alternative payment methods:

• Higher conversion rates: BNPL has been shown to improve conversion by up to 78% and reduce cart abandonment to 10%.
• Broader customer appeal: Digital wallets like Apple Pay and Google Pay provide secure, one-click payment options that cater to mobile users.

Integrating these options into your checkout process provides more options for your business customers to get the materials and services they need while managing their cash flow.

Payment processing for subscription billing

Subscription billing models are transforming industries ranging from SaaS to subscription boxes. By implementing a robust recurring payment system, businesses can secure predictable revenue while maintaining customer loyalty. 

Tools like Stripe Billing and ReCharge automate this process, making it easier to set up ongoing payments and reinforce relationships.

• Transparent terms: Clearly communicate policies around cancellations and renewals to avoid confusion.
• Customisable plans: Allow customers to pause, upgrade, or downgrade subscriptions easily, giving them greater control.

Subscription billing can be a powerful tool to foster recurring relationships with your customers while minimising manual workload for your team.

Protecting your business from chargebacks in payment processing 

Chargebacks – when customers dispute card charges – can pose a significant threat to your revenue, impacting cash flow and potentially damaging your reputation. The average merchant reported a 19% increase in chargeback fraud from 2022 to 2023.

To reduce their impact:

• Implement clear refund policies: Display refund terms prominently to set customer expectations.
• Use fraud detection tools: Solutions like Stripe Radar and Adyen help detect and block suspicious transactions before they lead to disputes.
• Maintain detailed records: Keep thorough documentation of transactions and communications to defend against unwarranted chargebacks.

By addressing these challenges proactively, you can safeguard your revenue and maintain trust with your customers.

Data analytics for payment processing

Payment data offers invaluable insights that can drive strategic business decisions, helping you understand your customers better and adapt to their behaviour. Platforms like Shopify Analytics and Stripe Insights provide user-friendly dashboards that allow businesses to track:

• Sales trends: Understanding seasonal patterns and high-demand products to make sure you’re holding the right products.
• Customer payment preferences: Identify which methods are most popular among your customers and offer the best experience possible.
• Fraud patterns: Detect irregularities early to minimise risk to your business.

How to avoid vendor lock-in for payment processing

Vendor lock-in occurs when switching payment processors becomes overly complex or costly. Getting stuck with one payment processor can lead to higher fees or a poor experience with your customers, so it’s crucial to maintain your flexibility.

• Choose versatile solutions: Select processors like Stripe or PayPal, which integrate with a wide range of platforms.
• Review contract terms carefully: Avoid long-term exclusivity agreements without fully understanding their implications.

Some processors offer free trials, which can help you understand their capabilities and make a better decision before you commit.

Maximise value from customer data ownership

Data privacy is more important than ever in ecommerce. When working with payment processors, ensure that agreements clearly define:

• Data ownership rights: Establish who controls the customer data collected during transactions.
• GDPR compliance: Adhere to local regulations governing data storage and usage – only holding the minimum data required.
• Secure storage: Use PCI-compliant systems to protect sensitive information.

It’s also important to signal visibility on your site that you’re protecting customer data, for example with an update to date SSI certificate and a page displaying your data policy.

How to handle taxes on payment processing for ecommerce

Navigating tax regulations can be challenging for ecommerce businesses, especially those operating across borders. Tools like TaxJar and Avalara simplify tax calculations by automating the application of region-specific rates.

• Regularly update tax rates to ensure accuracy.
• Include all legally required details on invoices, such as VAT numbers and itemised taxes.

Many payment systems will update automatically as legislation changes, but it’s important to keep an eye on your records to ensure that you’re capturing the right data and setting money aside as you scale.

Most cost-effective payment processors available in the UK

The UK offers several budget-friendly payment processors designed to meet the needs of ecommerce businesses:

• GoCardless: Specialises in recurring payments with competitive transaction fees.
• Stripe: Offers flexible pricing plans for businesses of all sizes.
• Square: Provides straightforward pricing with no hidden costs.

The right choice will depend on your business model, customer type and products.

Can I get ecommerce zero-fee payment processing?

While eliminating payment processing fees entirely may not be feasible, there are ways to reduce costs:

• Negotiate lower rates: High-volume businesses can often secure discounts from processors.
• Promote low-cost methods: Encourage customers to use direct bank transfers for high-value transactions to minimise fees, via Open Banking, rather than, say credit cards, which have higher fees..

How can I ensure my e-commerce site complies with UK payment regulations?

There are a few key regulations and rules you need to keep in mind when it comes to staying compliant.

1. Consumer protection laws: Follow the Consumer Rights Act 2015 to ensure your products meet quality standards and provide refund policies. Include clear cancellation terms as required by the Consumer Contracts Regulations.
2. No payment surcharges: Avoid charging extra fees for credit or debit card payments, as prohibited by the Payment Surcharges Regulations.
3. Data security: Comply with UK GDPR by using PCI-compliant payment gateways and SSL encryption. Protect customer data and report breaches quickly.
4. Business Transparency: Display your business details, including name, address, and VAT number, as required by the Electronic Commerce Regulations.
5. Electronic Contracts: Ensure checkout processes are clear, include terms and conditions, and allow order reviews before payment.

Find more information on the relevant rules here.

Protecting your business and customers from payment fraud

Ecommerce fraud is a major issue, with the value of ecommerce fraud predicted to rise from $44.3 billion in 2024 to $107 billion in 2029, a rise of 141%.

• Implementing multi-factor authentication: Adds an extra layer of security to online transactions.
• Using fraud detection tools: Platforms like Stripe Radar flag suspicious transactions in real-time..
• Enabling AVS checks: Address Verification Systems verify billing addresses against cardholder details to minimise fraud risk.

How can I optimise the checkout process to reduce cart abandonment rates?

A smooth checkout process is essential for minimising cart abandonment. Optimisation strategies include:

• Simplifying forms: Only ask for necessary information to streamline the process.
• Enabling guest checkout: Avoid requiring account creation to reduce friction and remove excess steps for customers.
• Showcasing trust signals: Display secure payment icons and SSL certificates to reassure customers that your site is legitimate.

How do settlement times affect my cash flow, and can they be improved?

Settlement times—the delay between a transaction and funds being available—have a direct impact on your business’s cash flow. Longer settlement periods can restrict liquidity, making it harder to cover operational expenses like inventory restocking, payroll, or marketing initiatives. 

Here’s how to mitigate these effects and improve settlement times:

1. Choose processors with faster payouts: Payment providers like Stripe offer instant payout options for a fee, enabling you to access funds within hours instead of days.
2. Plan around standard timelines: Most processors operate on a schedule, with settlement times ranging from 1 to 7 business days depending on the payment method and provider. 
3. Opt for real-time payments: Explore systems that offer real-time or same-day settlements, such as those integrated with Faster Payments in the UK. These solutions are increasingly available from modern payment processors.
4. Streamline internal processes: Ensure your business operations, such as order fulfillment and invoicing, are aligned with your settlement timelines. Efficient processes reduce delays in accessing funds.
5. Monitor transaction types: Credit card payments often have longer settlement times than direct bank transfers or digital wallets. Offering low-delay payment methods can help speed up access to funds.
6. Use a digital trade credit solution: For instant settlement while offering customers flexibility, iwocaPay offers BNPL for B2B that pays your business instantly while managing all the payment terms and admin for your customers.

Optimise your payment processing with iwocaPay

The right payment processing system can make or break your business. That’s why iwocaPay makes it easy to offer your customers tailored payment terms, while making sure you get paid.

• Get paid upfront: Receive full payment immediately while offering buyers flexible terms.
• Flexible payment options: Help trade customers to spread costs, with limits up to £30,000.
• No hidden fees: Accept payments online or in person without extra charges.
• Outsource credit risk: Let iwocaPay handle credit management and invoicing.

Secure transactions: Build trust with robust security for every payment.