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APMs vs Cards – what can you expect?

11 July 2016
With  alternatives set to claim 55% of eCommerce turnover by 2019, what does this shift mean for retailers?

Though credit and debit cards have long been the go-to choice for online payments, with alternative payment methods (APMs) gaining market share, it looks like the golden age of credit might be nearing an end.

Because card-based and APM processing can differ, let’s look at some top tips and best practices to apply:

  • Tip 1 – Avoid making direct comparisons between card and APM traffic. 

The two concepts are so different, so it’s all about managing expectations and benchmarking appropriately. Importantly, when looking at conversion, card traffic will have higher acceptance. This can be due to a number of reasons – for example, when a shopper uses a post-pay method, the retailer will see that an order has been placed. But until that shopper physically provides the money to the retailer (via bank transfer, kiosk or local convenience store) the transaction will never complete. This behaviour typically results in lower conversion rates but is completely normal for that payment type. 

  • Tip 2 – Give APMs time for volume ramp up.  

APMs can sometimes take time to bed down. Initial volumes are typically low when a retailer puts an APM live; however, as volumes increase over time, they will generally see an improvement in conversion rates – and these improvements can be significant. Retailers just need to base revenue plans on the appropriate benchmark, not card-based traffic.

  • Tip 3 – Understand processing challenges from the beginning

Adapting to new processes is important. Not all APMs support an auto-refund path (like cards) where the refund goes back on the original payment instrument for example. Retailers need to consider how to manage the process prior to implementation.  

The broader lesson here is that retailer will reap more benefits by adapting to new processes, rather than trying to de-scope payment options or retrofit to existing systems – it’s just a question of getting to know processing trends.