Written by Araminta Robertson.
In 2020, online sales grew by an astounding 46%, the largest increase since 2008. And there are no surprises as to why we have seen such significant online growth. National lockdowns caused by the pandemic meant that everyone had to take their shopping habits online and according to several industry leaders, this is a trend that won’t be disappearing any time soon.
However, with eCommerce on the rise, so are concerns for security. Customers are protective about their personal data and are on alert when it comes to financial scams – which saw a rise of 4% in the first half of 2020. Successfully selling products and services online cannot be done without ensuring secure online payments – which is why it should be a priority for any merchant that wants to start selling online. In this post, we’ll be looking at:
- Why it’s important to take secure online payments
- Three of the most secure online payment methods
- How Mode enables secure online payments
Why is it important to take secure online payments?
As we’ve mentioned above, making online payments secure is essential to successfully sell online. Not only does it help with fraud prevention, but it also increases eCommerce conversion rates. Let’s look at the first case in point: In the UK and Ireland, 69% of users are concerned about the security of their personal data online. Every time there is an online payment, customers run the risk of falling victim to fraud. There are fraudsters who can use payment information to make fraudulent payments or purchase items with customers’ money. Having a secure payment gateway ensures your customers are safe.
Secondly, a secure payment gateway helps increase customer trust and therefore decreases cart abandonment rates. If a customer feels a website is not secure, it’s highly likely they won’t go ahead with the purchase. A secure payment system helps increase your online sales. Now that we’ve established why it’s important, let’s look at three of the most secure online payment methods.
Three of the most secure online payment methods
Debit and credit cards
With 98% of the UK population owning a debit card, it’s easy to see why in today’s landscape, 53% of online shoppers prefer to pay with cards. Compared to other payment methods, they are a much safer way to pay. The main reason is because customers have the added security of the card network whenever they make an online purchase. This means they can rely on the card network to cancel the card in case it gets stolen or they fall victim to fraud. In the case of credit cards, customers have the added protection of not being connected directly to their bank account, providing zero liability for fraudulent charges.
For merchants, credit and debit cards are convenient because they are the most popular payment method and most people know how to use them online. Although card payments are secure, they are also the most expensive payment method. According to a BRC payments survey, debit cards are four times more expensive than cash, while credit cards are three times more expensive than debit cards. In 2019, retailers spent more than £1.1 billion in 2019 on accepting payments from customers (0.28% of turnover).
Online debit and credit card purchases are secure, but they are very expensive for merchants – not to mention the resources spent on managing chargebacks.
Bank transfers are most commonly used for payments between businesses, but are slowly becoming a more popular payment method for consumers. This type of payment method is incredibly secure because payment can only be processed by actively filling in details from a banking provider. Thanks to the rigid security features banks put in place, it’s very difficult for fraudsters to hack into a customer’s bank account or steal financial information.
Although completing a bank transfer is traditionally a time-consuming process, the development of online payment providers means we can have fast and easy bank transfers. Instead of having to log into a banking app in order to complete a payment, customers can pay from one app that is linked to all their bank accounts through Open Banking.
Here’s a video with an example.
This makes online shopping stress free, as shoppers don’t have to enter sensitive financial information and all information can be found in one single app. For merchants, payments powered by Open Banking are a game changer: they are a lot cheaper than debit or credit card payments, there aren’t any chargebacks and payments can be deposited in less than 24 hours.
Alternative Payment Methods
Mobile payments, e-wallets, and cryptocurrencies are the rising stars in the alternative payments scene. Apple and Google Pay enable mobile payments that are incredibly secure because they require a biometric verification in order to complete a payment. Each transaction is tokenised, making it difficult to intercept and steal information.
PayPal is a highly secure e-wallet since it encrypts users’ financial data and transactions are monitored to prevent payment gateway fraud and identity theft. In the event of any unauthorised transactions or fraud, Paypal offers Buyer’s Protection and refunds the amount spent to users – up to $20,000.
Other payment methods such as cryptocurrencies offer a whole new layer of security since all transactions are published on a decentralised ledger. Unlike other payment methods, it’s impossible to fake and transactions cannot be reversed.
How Mode enables secure online payments
At Mode, we enable secure direct payments powered by Open Banking technology. We allow customers to manage finances, make instant payments, earn rewards in Bitcoin and receive personalised offers from merchants – all in one single platform.
At mode, we skip the intermediaries which means that customers are able to pay directly into the merchants’ bank account bypassing the need for acquirers, card networks and issuing banks to get involved and minimising the risk of fraud. Not only is this system a lot more straightforward, but merchants pay less in processing fees, receive deposits in 24 hours and don’t have to deal with costly chargebacks.
How does a customer pay with Mode? Here are the steps:
Your customer initiates payment through their Mode app
- The payment is verified and authenticated
- The user confirms payments and the merchant completes the purchase
- The funds are settled within 24 hours
Mode uses biometric identification and multi-factor authentication to validate payments. This offers an extra layer of security, which means that merchants can accept payments directly from trusted consumers, and eliminate costly chargeback fees.
E-commerce and online payments are only going to increase in the years to come. Any retailer that wants to accept online payments will need to ensure they have a secure payment gateway to protect customers as well as build trust. With the development of Open Banking, merchants finally have an affordable way to take secure online payments.
Want to start accepting safe and secure payments directly into your business bank account? Get in touch with Mode.