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Use cases

Payment Redirection

Companies have increasingly turned their focus to the customer experience. This requires a comprehensive assessment of every sales process step: from attracting customers to completing payments. Sales experts have now named payment friction as a top factor affecting conversion rates. Payment redirection is one method that introduces friction by taking customers to another website to pay. Is it time for a change?

What Is Payment Redirection?

When companies use the redirect method, customers get forwarded to another website or app to process the payment. Companies partner with the processor to handle payments on their behalf. This allows companies to work with trusted payment platforms, so customers feel safer entering their payment information. For example, several companies that could not get merchant accounts with big payment processors used PayPal as their payment method API.

While this process may seem straightforward, there are several types of payment redirects, each with different implications:

  1. On-site Redirect: The customer enters their payment information on the company’s website but gets redirected to the payment processor’s site to complete the transaction.
  2. In-App Redirect: The customer is using the company’s app to make a purchase. When they enter their payment information, they get redirected to the payment processor’s site or app to complete the transaction.
  3. Off-site Redirect: The customer goes to the payment processor’s website or app to make a purchase. They may or may not have an account with the payment processor.

Advantages of Redirecting Payments

If payment forwarding causes problems for customers, why do so many companies use it? Consider the following advantages.

  • It’s a simple way to outsource payments: Companies that use the payment redirect method don’t have to worry about building an internal payment infrastructure. They can outsource the task to a trusted business partner.
  • The payment processor can offer a better user experience: Payment processors have the resources and expertise to provide a smooth and seamless payment experience for customers. By redirecting payments to a trusted processor, companies can also reduce other types of payment friction, such as not accepting cards.

Disadvantages of Redirecting Payments

Despite the benefits, there are also some disadvantages to using the payment redirect method. These are the main ones companies should keep in mind:

  • It adds unnecessary steps to the purchasing experience. Customers may dislike leaving the company’s website or app and going to another site or app to complete their purchase. This extra step can confuse and frustrate customers, leading to abandoned carts and lost sales.
  • It can increase security risks. When customers are redirected to another site or app to make a payment, there’s always a risk that malicious actors could intercept their payment information. Companies should only work with trusted and reputable payment processors to mitigate this risk.
  • Redirecting payments can also affect companies’ relationships with their payment processors. In some cases, forwarding payments can lead to higher costs for companies. For example, if a company uses PayPal as their payment method API, they may be charged more per transaction than if they used another processor.
  • If the payment processor goes down, the company can’t accept payments. When companies outsource payment processing, they rely on the uptime of the company they choose. However, this is true of several other payment processing models. That’s why it’s crucial to choose a reliable provider.

Some Alternative Global Payment Methods

Thankfully, there are several other choices for processing payments. Consider the following options:

  • Payment gateway: A payment gateway is a service that allows businesses to accept online payments. Payment gateways typically integrate with e-commerce platforms and shopping carts. They encrypt sensitive information, such as credit card numbers, to reduce the risk of fraud.
  • Payment facilitator: A payment facilitator is a third-party processor that enables businesses to accept payments and process them through a single account. Payment facilitators typically work with smaller companies that may not be able to obtain a merchant account on their own.
  • Direct debit: Direct debit is a type of bank transfer where funds are taken directly from a customer’s account and deposited into the merchant’s account. This payment method is popular in Europe and other regions.
  • ACH transfer: An ACH transfer is an electronic bank transfer typically used for larger transactions, such as invoices or bill payments.
  • Cryptocurrency: Cryptocurrency is a digital or virtual currency facilitating secure transactions. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. However, the volatile crypto market can experience extreme highs and lows.

Gaviti Payment Processing

Payment friction can create extra work for your accounts receivable team. That’s why payment processing plays such a crucial role in our A/R automation solution. Our software also adds analytics to the mix by tracking how your clients prefer to pay. You can use this data to improve the A/R process. Book your Gaviti demo to get started.

See what our clients say about us:
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