I’ve written articles in the past about the importance of offering paypal as an alternative payment option.
Recent studies show that PayPal has a pretty good hold on the market and according to PayPal, 1 in 3 internet shoppers look for and even prefer to pay using PayPal payment method. Even with a variety of payment methods available today, Paypal has a 21% market share of all consumer internet payments (source: UK Payments Market 2008, Payments Council). This is a 5% increase over the previous year.
If you sell to the UK market, you should know that a whopping 30% of UK shoppers prefer to checkout using PayPal over any other method offered. If you aren’t offering PayPal as an option to this group, you most certainly are losing sales.
So, what’s the fascination with PayPal? Well, it might not necessarily be so much a fascination thing as it is a security issue. Shoppers are still concerned about identity theft and are hesitant at times of typing their credit card details into ecommerce sites. For those with that mindset, PayPal offers them peace of mind that their financial information is not shared.
On the flip side, I’ve often heard PayPal shoppers (those that pay using there PayPal account) say “It doesn’t feel like I am spending any money because I just take it out of my PayPal account (which acts like an escrow account to some degree — the funds sit in that account until asked to be withdrawn.) This attitude can often lead one to spend even more than they typically would because they are not as “conscience” of the amount of money actually leaving their pocket.
What has changed with PayPal?
In general, not a lot. Long ago, in order to use PayPal, one needed a PayPal account themselves. That is no longer the case and has not been the case for quite some time. PayPal still offers the buyer the option to quickly pay using their PayPal account and with just a few clicks they are on their way. However, they also offer the seller (with the right account) the option of allowing customers who do not have (or do not want to have) a PayPal account the ability to checkout.
From the sellers perspective, PayPal offers the ability to accept a wide variety of credit card types as well as echecks (if activated). From a buyers perspective PayPal offers an alternative to the traditional payment methods and the security they need to feel comfortable making an internet purchase.
I’m not saying that offering PayPal (IPN) as the only option is right. I am saying as I have in the past that it is wise to offer it in addition to other options. The statistics here only further bolster that thought.
I have seen a gradual shift in the amount of orders coming through PayPal (vs. traditional on site methods) from a number of clients I work with over the past 6 months or so. I attribute it to a combination of offering the option in the first place and making that option readily available during checkout.
If you have yet to setup a PayPal account you can do so for free in a few simple steps. I personally feel it is best to choose one of the “business” account types (not a personal PayPal account) so you can offer the credit card option to your customers as well.
Promote using PayPal as a checkout option as much as you do other methods and you too will likely see a difference reflected in sales.