In our previous article, Starting & Thriving in E-commerce in South Africa: The Customer, we looked at a few variables that affect the customer’s experience with a business; these include how you can build valuable information about and around your product/service, the value in focusing on the holistic customer journey, and how trust impacts the customer’s perception of the business. Today we will provide a view on payment options and their impact on the customer experience. Here are the tips that are essential for your business to set its payment methods up for success: 

Offer multiple (but popular) payment options

It is considered best business practice to offer customers various options for making payments. These can include payment plans, credit or debit cards, cash, automatic withdrawals and the likes of PayPal and Masterpass. While the cost of incorporating these various payment options is an obstacle to some start-ups, it could be more profitable to your business in the long run as it opens doors that some customers could close due to the perception of inconvenience.

Among the new era of payment solutions is buy now, pay later (BNPL), a 21st century reworking of what used to be known as layaway, designed for the omnichannel shopping era. While this is just one of many innovative payment solutions, it is a good example of how businesses can appeal more to their customer’s needs. In discussions with Portia Dhlamini, a Founding Partner and CEO of Native Nylon, we spoke to her about their target audience being women who may not have a lot of cash on hand. For her, a BNPL solution was very attractive, however, she did acknowledge that many people are not fully aware of this solution. She has, thus, taken the steps to educate her customers on this solution, urging them not to abandon their shopping carts if they cannot afford the desired dress just yet. She demonstrates that, no matter the innovative payment solution, the comfort of your customer should be at the heart of all business decisions.

When it comes to affordability, particularly in South Africa, payment channels such as physical Point-of-Sale (POS) devices, are generally perceived as expensive in the townships, especially by micro enterprises. For example, according to a Mastercard study titled “Insights into the Informal Economy“, although rural and township residents were found to use cards for 60% of their transactions at formal retailers, only 4% of transactions were card-based at informal retailers. Perhaps you could implement cash-on-delivery (COD) services to accommodate this customer segment or introduce other options to best suit your customer. Of course, the risks of COD services are higher than card payments, however, there are ways to make this service safer. For example, you can charge extra delivery costs if the customer chooses this service, and/or you could make it a requirement for the customer to detail relevant information, such as contact details, before this service is completed.

South African consumers are also still predominantly bound to cash sales, and although this is changing with the acceptance of card payments, first-time buyers have noted that trust issues do still exist with online systems. “We need to engage in an educational way to drive consumers and teach them about the safety mechanisms in place which makes online shopping and the payment functionality safe,” explains Lunique Theunissen, head of marketing at OneDayOnly. E-commerce platforms thereby need to educate their consumers on the strength and security of their payment systems to ensure they adopt the method with little resistance. There is a sense of tangibility and security that occurs with physical exchanges of cash which is hard to replicate through virtual means. The jump from cash to online payments is relatively steep and education plays a huge role in bridging this jump.

Have a generous returns and refund policy

Your returns policies and the return process also have a significant impact on customer satisfaction. A 2019 survey from UPS found that, for 73% of shoppers, the overall returns experience impacts how likely they are to purchase from a given retailer again, and 68% say the experience impacts their overall perceptions of the retailer.

Customers are not likely to trust an online retailer who does not offer an easy-to-follow returns journey. If customers are hesitant about a particular product you are selling – which they will be if you are fairly new-to-market – they want to be assured that you will not make returning that item a hassle. 55% of shoppers say they choose not to shop with retailers whose return policies are not flexible enough. In another report, 49% said they actively check a store’s return policy before buying, while a study that was featured in the Journal of Marketing found that customers who received free shipping on returns increased their purchases over the next 2 years by 357%.” A worthwhile cost to absorb given the long-term return. 

Recently, some retailers have recognised that offering variable means to return items is the new frontier in the world of online orders. As the options for deliveries seem so varied already, there are simply not many options left to get a competitive advantage as an e-commerce store, therefore returns seems like the next obvious option to start perfecting. If there are multiple options to move a product from the merchant to the customer, then it would be worthwhile considering offering multiple options in the reverse direction rather than bottlenecking returns to a single specific returns journey. Bathu, for example, offers its customers multiple return options, and, while the fee increases the more effort Bathu must exert to get their products back, the options available to the customer are key to making them feel at ease. 

Of course, one must consider the cost or insurance implications of free or low-cost returns on your business and only accept a policy that balances the risk of losing a customer with the risk of expenses levied by the seller. However, what is clear is that your business should work to provide customers with a premium experience, even if it means accepting a healthy degree of risk. 

We hope you have found this series as fun and informative as it was for us meeting the various entrepreneurs and drafting the articles for you. We believe the most important thing is to START, and if you have already started, then always be open to learning and taking your customers along with you on the journey.