Introduction
After an exciting day of browsing in a physical or online fashion store and ultimately deciding the merchandise you want to purchase, the next step is payment. I personally enjoy having various payment options to choose from while shopping, especially when I am buying a product in-person. There have been many times when I have forgotten to take my credit and debit cards with me, but cash was another form of payment accepted. Not only did this bring a smile to my face because I was able to make my purchase right away, but it also saved me time from having to go back another day.
With recent technological advancements, payment types are no longer restricted to cash or credit and debit cards. There are now additional forms of payment available. It is advantageous to accept different types of payment because not every customer has the same preferences. Customers will have a better experience with your fashion business if you provide them with flexibility and they will be eager to come back to your store.
Here is a list of 6 different payment methods you should consider accepting at your fashion business:
- Cash
- Credit and Debit Cards
- Gift Cards and Store Credit
- Cash-On-Delivery
- Digital Wallets
- Buy Now, Pay Later
- Conclusions
1. Cash
Cash payments have been around for a long time. If you have your own physical location for your fashion company, they are a simple way for you to collect money from your buyers. A perk of cash is that it does not require any complex processes. People also like paying with cash because it is quick to use if they are in a rush. Tons of companies take cash payments, so a lot of individuals have cash on hand on a daily basis. In addition, there are no fees to worry about with cash, which is beneficial for you and your customers.
In some countries like Japan, shoppers have less trust in card transactions so cash is the preferable form of payment. They tend to worry about their privacy and the potential for identity theft. Therefore, when determining the payment methods you will accept, consider the culture linked to the area of your retail store.
2. Credit and Debit Cards
Another form of payment your fashion business should contemplate accepting is credit and debit cards. It is very common for companies to offer credit and debit card payments as an option. They can be used for both in-person and online transactions. If a customer is not carrying any cash and your retail startup does not take credit and debit cards, you may miss out on a sale.
Many people end up purchasing more when they utilize a credit card instead of cash. With cash, there is a limited amount in your wallet that you have to spend. Meanwhile, a credit card gives you the impression that you have more money available at a specific time, which leads you to put extra clothing items in your shopping cart. In addition, payments with credit cards are usually deposited into your account right away, which improves your cash flow.
Keep in mind there can be processing fees associated with card transactions. On average, these fees are 1.5 to 3.5 percent of each purchase depending on the payment network, the kind of card, and the merchant service provider. Debit cards typically have lower fees than credit cards. It is not difficult to find a reasonable deal for your retail business, though. You will also need to buy a credit and debit card reader if you have an in-person fashion store. These added costs may initially seem unfavorable, but depending on your company’s needs it can be worth it for you to include credit and debit cards as a payment method.
3. Gift Cards and Store Credit
Gift cards are an effective payment type that your retail business should consider accepting. There are multiple holidays and celebrations throughout the year that gift cards can be used for. Customers then have the ability to introduce your fashion store to their family members and friends by purchasing a gift card and giving it as a birthday present for instance. Through this method of payment your startup has the potential to gain new customers or form a stronger relationship with existing buyers.
Store credit is a way you can collect money even if a customer gives your product back. A store credit return policy is when a customer returns your product and in exchange receives a credit for the amount it cost that must be utilized in your store. This payment option can increase customer retention for your fashion store. Shoppers will come back to buy a different clothing item in order to get their money’s worth from their return. If they want to purchase a product with their store credit that costs more than the original item they returned, you will make a profit.
4. Cash-On-Delivery
Cash-on-delivery or COD is a different type of payment prevalent in online shopping that you can offer for your fashion business. Cash-on-delivery is when the customer pays for their product by giving money to the delivery person after receiving their product. Countries all over the world use cash-on-delivery. India specifically prefers this form of payment because there are a lot of rural areas where people do not have access to credit and debit cards. It is also a straightforward process with a short payment period. Retail companies can incorporate extra delivery fees in order to balance out the costs of transportation services as well.
Customers choose this payment method because they have more time to come up with the money for their product. Moreover, a person is able to check the quality of the product and make sure there is no damage before paying. As a result, this form of payment can increase customer satisfaction and is worthy of consideration for your fashion store.
5. Digital Wallets
Mobile wallet payments are a new form of payment that your fashion business may want to accept. Nowadays you cannot go outside without seeing an individual holding a smartphone. People take their smartphones with them everywhere they go. The rise in smartphone use has resulted in an increase in the growth of contactless payments. Some mobile payment options include Apple Pay, Google Wallet, Samsung Pay, and Android Pay. These digital wallets are easy to understand and allow the purchasing process to go fast, which will make customers’ time in your retail store more enjoyable.
Examples of items you can store in your mobile wallet are coupons, credit card numbers, debit card numbers, and loyalty card numbers. This payment method is convenient for customers because they do not have to hold a physical copy of either their coupon or card.
Furthermore, digital wallets might give your fashion company access to your customers’ data. You can then learn their spending habits at your store and send them notifications if new products are arriving or if a sale is occurring soon. Contactless payments are becoming popular and it is important for your retail company to be aware of mobile wallets and consider incorporating them into the forms of payment you offer.
6. Buy Now, Pay Later
Buy now, pay later or BNPL is a payment method that allows customers to receive their product immediately and pay for it at a later time. It is more flexible than a lot of types of payment. This process works by having customers pay in four equal installments every two weeks with no interest or fees. Buy now, pay later is not new to the global fashion industry. This alternative payment has been popular in Latin American countries such as Mexico, Argentina, and Brazil for quite a while. But, Europe and the United States have only recently explored implementing a series of installments.
Buy now, pay later has become well liked by Millennials and members of Generation Z in particular. These young shoppers have lower incomes and student debt weighing them down. Therefore, they are attracted to the idea of delaying their payment so they have the time to decide if they truly love the product or try on different sizes before spending any money upfront.
Your fashion store must consider the fees that come with these systems. Buy now, pay later companies will charge you a merchant transaction fee. Look for services like Sunbit that are catered to startups who want to bring this new payment technology to their business. Even with these additional costs, buy now, pay later is very appealing for your retail company.
By providing the option to pay in installments, your fashion startup can assist customers in avoiding debt and sticking to their budget. People will not abandon their shopping carts as often and they are likely to make a larger purchase if they believe they can afford it by spreading out their payments. I advise you to be careful when accepting this form of payment because you need to be clear with your customers that the price of one installment is not the total price.
7. Conclusions
Every fashion business is different and has needs unique to its individual store. Therefore, when determining which payment methods for your fashion startup to accept, your plan will not be the same as other retail companies. Today we discussed 6 different forms of payment for your store to contemplate offering. Don’t worry because you do not need to accept all 6 types. However, it is beneficial to have more than one payment option available at your in-person or online store, so you avoid losing sales.
The first type of payment is cash. Cash payments are a common way to exchange money in retail and are easy for both buyers and sellers. Second, credit and debit cards are another payment method your fashion business can accept. Card transactions have additional costs, but their benefits can be advantageous to your company. Next, the third option is for customers to pay for products through gift cards and store credit at your fashion store. Gift cards and store credit have the potential to bring new customers to your startup and nurture customer loyalty.
Fourth, cash-on-delivery is an alternative payment form for you to consider. It opens up your retail business to more customers and offers them extra time to pay as well as the ability to inspect the product before paying. The fifth payment option is a digital wallet payment, which is new to the fashion industry. Mobile wallets are quick and convenient to use. Plus your retail business might gain access to customer information and be able to communicate any significant announcements to them. Sixth, buy now, pay later is an appealing method of payment that centers around installments. It is beneficial for your retail store because customers will enjoy the flexibility and will be more likely to purchase expensive items. At the end of the day, customers have their own preferences and the more forms of payment you accept, the higher chance a customer will conduct a transaction and be happy with how it was handled.
