Providing alternative payment options can be a useful tactic for online retailers to appeal to as many buyers as possible, and many now offer PayPal along with credit and debit card payments.
For some retailers looking to cater for as many shoppers as possible, there is also the option of cash payments. Is this a tactic worth pursuing for online retailers?
Cash payment options
There are a number of options around, but these are the three I have seen in use on several e-commerce sites:
Offered by PayPoint, the PayCash option allows customers to order items from the site and go through checkout. After checkout, customers need to print out a voucher to pay for the order via one of the numerous PayPoint outlets which can be found in local shops and petrol stations:
Once the payment has been made, this is sent to the retailer, and the order is processed and dispatched.
The Cash Ticket option works the other way, but also uses the PayPoint network of more than 21,000 outlets.
Customers need to first purchase a cash ticket for the required amount from one of these outlets before entering the pin number during checkout to pay for items.
Cash on delivery
This is less common, and perhaps more applicable to food delivery websites like Pizza Hut and Dominos than online retailers with higher basket values, though I have seen it offered on the Yoox.com mobile commerce site.
Why offer cash payments?
Cash payment methods offer retailers the opportunity to reach as many customers as possible, and to reach the 11% of the UK population that has no bank account.
This may be people with debt issues, teenagers, people with concerns about online fraud, or this who may simply find it more convenient to use cash.
A number of surveys have shown the value of alternatives to credit and debit cards, so it makes sense to extent these options to cash buyers.
According to PayPoint.net's MD Michael Norton:
if you had a high street store, you wouldn't put a sign up saying you don't accept cash. The same principle should apply for online retailers to allow everyone to shop on their websites, From the merchant's perspective, it's completely safe since cash clears instantly. We estimate that the potential size of the market for online cash payment could be up to £2bn.
Do cash payments work for retailers?
A number of retailers are now offering this option, including Kiddicare, Quiz Clothing, Firebox, and Urban Industry. While the arguments for offering cash payments are persuasive, the results from retailers I have spoken to are modest so far.
We identified that a number of one of our client's final audience were below the permitted age to own a credit card so felt a cash card solution might provide a good alternative for them.
We have to say that resulting sales have been disappointingly low via the Cash Ticket solution, due in part, we feel, to a lack of marketing of their product by them. We may look into an alternative card, but again, it seems the majority of their marketing is aimed at paying utility bills and the like, and not wider retail.
Daniel King from Brighton-based retailer Urban Industry is more upbeat about cash payments:
We put the cash payment on last year when we launched. There hasn't been a massive take up so far, and the numbers are small compared to credit cards and PayPal payments, but there have been enough sales to justify it.
Our market is the teen to late twenties age group who may not have credit cards or might have cash they want to use. It's about ticking all the boxes on payment methods. We have cards, PayPal, Google Checkout, so cash is the final piece in the puzzle.
Problems with cash payments
There are a number of factors which may be holding up the adoption of cash payments, one of which is the lack of promotion and information on websites.
For example, on the Urban Industry site, you need to register and go all the way through to the payment stage of the checkout before the cash payment option is shown.
This is something this retailer will be addressing with a new site design soon, though they have promoted the option via their blog and Facebook page, and the checkout does contain a useful explanation of how the process works:
Firebox, Kiddicare and Quiz all display the cash option at the shopping basket stage, which should do more to promote the option to shoppers.
Perhaps sites are trying to promote this cash option to shoppers should display it more prominently, on the homepage or product pages.
Another potential drawback is the amount of explanation that is required for customers unfamiliar with the payment options. For example, there is a lot of information to read on this Cash Ticket page:
While I can see the potential value of offering the cash payments option, especially in the case of sites that appeal to a younger market, it seems there are a few obstacles to overcome before it can really work for retailers.
It could be that once customers become more accustomed to the availability of cash payments, they will start to look for the option when they are shopping online, and use it more often. Or perhaps it will only ever appeal to a very small percentage of customers, but if there are enough sales to justify it, then why not provide the option?
If any other retailers are offering cash payment options, I'd love to whether it has worked for you, please let me know in the comments below...