Digital Payment: Recurring payments and installment payments for e-commerce

Digital Payment: recurring payments and installment payments for e-commerce

Digital Paymentare payments made using electronic tools such as payment or debit cards, wallets, direct debit or other innovative payment methods, for the purchase of products or services. 

The most used Digital Payments are recurring payments and installment payments. This possibility is increasingly increasing the business of e-commerce but also of physical stores.

Recurring payments are generally used to propose the sale of a subscription service or to be renewed for example every month or once a year.

Installment payments, on the other hand, are payments that concern the purchase of products or services with a high or low cost. With this method the customer can enjoy the purchase as if he had already paid the entire sum, but which instead he will gradually pay in several installments. 

In this article we discover what Digital Payments are, the main types of digital payments, why it is important to use them and finally, an in-depth look at recurring payments and installment payments for e-commerce. 

Digital Payment: what are they?

By Digital Payment or digital payments we mean all those payments that are made digitally with payment cards, wallets, direct debit or through innovative payment methods, such as:

Contactless, e-commerce, mobile commerce and Innovative Payment, which in turn include methods such as Wearable Payment, Device-free Payment and Smart Objects Payment.

All these payment methods have a common goal: to optimize the customer experience to guarantee the user a simple and fast purchasing service.

Pos and Contactless are now more than valid and ideal solutions for physical stores, the possibility, however, of digital transactions is the preferred method of users who purchase in e-commerce, because it guarantees security, speed and intuitive services.
Buying a good or service has many advantages for the customer because it is a fast, convenient, safe and easy to use method. It improves payment management and the customer purchasing experience.

Main types of digital payments

The main types of digital payments are: contactless, ecommerce, mobile pos, innovative payment. Let’s look at them in detail.

• Contactless: is an easy, fast and safe method. Payments are made using a credit, debit or prepaid card and there is no need to insert it into the pos but the payment is made with a simple contact.
• E-commerce: for online purchases, payment is made with payment cards or wallets. If, however, the smartphone is used for the transaction, it is called Mobile Commerce.
• Mobile pos: this is a payment that occurs by pairing a card reading device with the smartphone. This method accepts card payments without the traditional POS.
• Innovative payment: These include Mobile Payment (payments via smartphone), Smart Objects Payment (payments with connected objects), Device-Free Payments (payments with biometrics or fingerprint), Wearable Payments
  (payments with wearable devices). These are all innovative payment types that are set to establish themselves in the future of digital payments.

Why is it important to use Digital Payments?

First of all, for a merchant, accepting to use digital payments is important because:

• To comply with the POS obligation introduced by the legislative decree of 30 April 2022 n.36 which requires accepting electronic payments by debit or credit card.
• Facilitating customer payments and meeting their needs.
• Monitor collections in a simpler and more precise.

And it is clear that digital payments consequently have benefits for customers too:

• Insurance offered by digital payments for products purchased online.
• Respect for privacy and guarantee thanks to security systems.
• Fast, convenient and simple procedure for online purchases.
• Internationalized payments and therefore no exchange problems.

The future is certainly digital and also the change towards payments, there must be the adequate desire on the part of companies and customers to use digital and technological solutions.
After this introduction on Digital Payments, we can delve into a reality that is increasingly present in the e-commerce business. We are talking about recurring payments and installment payments.

Recurring payments for e-commerce

Recurring payments for e-commerce are solutions that allow platforms that sell subscription services to have many advantages.

In this sense, a “subscription model” marketing strategy is useful, which allows a constant flow of revenue, customer loyalty, reduction of customer acquisition costs and brand strengthening. This strategy is divided into two modes:

• Replenishment model: customers can order purchases in advance without repeating the operation when they need them.
• Discovery model: these are additional services that are free when you purchase a service.

As far as e-commerce is concerned, there are a number of advantages given by recurring payment, such as: more scalable services, customer loyalty incentive, avoid a missed payment, estimate of future revenue and simplicity in transactions.

The providers that offer this payment method are MoonClerk and Braintree.

The first one does not require any special configurations or a commercial account to be used. It can work both from PC and mobile.
The second one, instead, is used by platforms such as Airbnb and Uber. Braintree accepts numerous credit cards, for example PayPal, Bitcoin, Apple Pay, Android Pay, Union Pay and others. In addition, it offers efficient reporting tools and multi-currency options.

Lastly, we can say that recurring payments give users the possibility to recover the cart even if abandoned many times, which allows you to not have to repeat all the steps to complete an online purchase.

Payments by installments for e-commerce

Payments by installments for e-commerce offer a series of benefits both in terms of the economic part and the technical and management part.

Thanks to installment payments, the security and ease that it guarantees, an online store, such as Starboy, has the possibility of always intercepting new customers and retaining those already acquired.
Payment by installments offers the possibility of buying a product and/or service now and paying for it later. This service is offered by specialized companies that handle payment by installments on behalf of merchants.

Buy Now, Pay Later is a type of payment that is fast and free for buyers and very flexible because they can choose the amount of installments for their payment. Consequently, there is no risk for the owner of the online store, because the company that offers the service protects them by allowing them to receive the full amount due to them.

How do installment payments work for e-commerce?

Providers that provide installment payment systems are Scalapay, Clearpay, Klarna, which can be used in platforms such as Magento2, Shopify, WooCommerce, PrestaShop, Opencart, Salesforce.

The buy now, pay later method is not only a strategy to increase conversions for e-commerce, but it is also a way to increase brand awareness, brand reputation and to combine the digital experience with the physical one, thanks to the adoption of a multi-channel approach.

Brands that have the ability to offer this payment method both online and in a physical store may have a greater chance of being chosen by customers because it is clear that compared to a competitor they offer a better and new shopping experience.

Payments by installments: who uses them?

payments by installments for e-commerce are used, above all, by generations Y and Z. This type of target prefers, in addition to the Virtual Try On, to make purchases online but does not always have immediate financial availability or that can cover the entire payment.

In fact, precisely for this reason in recent times they have been interested in purchasing products or services in small installments.

This type of target prefers to shop online but does not always have immediate financial availability or that can cover the entire payment.

In fact, this is precisely why they have recently become interested in purchasing products and services in small installments.

Paying in installments increases the conversion rate and the value of an e-commerce cart. The purchasing experience of paying in installments is also better because at the time of purchase, the customer does not need to enter the data each time but they are already stored starting from the first transaction of the first installment.