Payment method
What is a Payment Method?
A payment method is the means by which a customer pays for goods or services. In a physical retail environment, this could include cash, gift vouchers, debit or credit cards, prepaid cards, or mobile payment apps.
In the context of ecommerce, payment methods extend to online card payments, bank transfers, direct debits, digital wallets like PayPal, Apple Pay, or Google Pay, and third-party payment gateways such as Stripe, Braintree, or Shopify Payments. Each type of payment method may include several providers or schemes: for example, credit card options may include Visa, Mastercard, and American Express.
Choosing the Right Payment Methods for Your Business
Offering a good selection of payment methods gives customers the flexibility to pay in the way that suits them best. This is especially important in the UK, where consumer expectations around convenience and security continue to rise.
However, too many options at checkout can lead to confusion or decision fatigue, negatively impacting conversion rates. To find the right balance, consider:
- Your audience’s location – certain methods are more popular in different regions (e.g. direct debit in the UK, Sofort in Germany).
- The nature of your sales – whether purchases are one-off or recurring (as in subscriptions or memberships).
- The devices your customers use – mobile-first shoppers may prefer options like Apple Pay or Google Pay.
Managing Recurring Payments and Failed Transactions
If your business relies on recurring billing, such as with a subscription model, it's important to plan for involuntary churn caused by expired or declined cards. Best practices include:
- Offering customers the ability to update their payment method or billing details via a self-service portal.
- Allowing multiple payment methods per customer as backups.
- Using automated reminders (dunning emails or in-app alerts) to prompt updates when a card is about to expire or a payment fails.
Smart payment method management helps reduce friction, improve retention, and deliver a more reliable checkout experience across every channel: online, mobile, and in-store.
