Payment methods

The most important payment methods for online shops

The online shopping cart is packed, the shipping details are already typed in, but shortly before the check-out it comes to a purchase abort: For 50% of German consumers was the lack of the right payment already the reason, but still against an online order to decide. [1]

How important the right mix of payment methods offered and what the most relevant payment methods for online shops are, is therefore the subject of our blog post today.

Payment methods are crucial to the success of your online store

As mentioned earlier, the conversion from the page visitor to the customer stands or falls with the right range of payment types. Already the purely quantitative increase in the payment methods in the shop increases sales and purchases. In this market, companies have a variety of payment methods available, each with different advantages and disadvantages. A particularly important factor here is the customer acceptance: A payment method that seems to the shop owner at first glance particularly low-risk and low, is in the case of non-acceptance of the customers quickly to expensive bad investment through purchase cancellations. For German consumers, for example, the following 6 types of payment enjoy the greatest popularity:

  1. PayPal or similar 34%
  2. Invoice purchase 27%
  3. Debit or credit card 18%
  4. Direct payment via bank account 16%
  5. Cash on delivery 2%
  6. Installment 2%

Most popular payment methods Germany. | Source: Statista, as of 2017

At the same time, financial opportunities and needs of the company can not be ignored. When selecting the right solution, it is therefore important to find the balance between safety and convenience for the consumer and risk and cost minimization on the dealer side. In order to decide which payment options you should offer in your online shop, we therefore present below the most important online payment methods in detail.


From a consumer perspective, buying on account is one of the most popular payment options on the Internet. The customer has time to check the goods at home first, before the money is transferred to the dealer. Another advantage for many customers: There is no need to enter sensitive bank details on the Internet. The invoice payment is also of particular importance for trading with business customers. If your customers come primarily from the B2B sector, you should not give up this method of payment. This, coupled with the preference for a purchase on account of a high shopping cart value, also explains the fact that purchases on account account for the largest share of total sales in German e-commerce sales. [3]

From a merchant’s point of view, purchasing a bill is in principle the greatest risk. Businesses need to trust the payment practices of their customers. In the event of default, high costs are threatened by reminders or even debt collection procedures. The return quota is highest when buying on account. Therefore, some online stores limit the possibility of buying a bill from the outset on a specific basket size or turn it only for regular customers. The risk of a default through the intermediary of a service provider is completely outsourced. Payment service providers take credit check and payment processing and guarantee a payment to the dealer – even if the customer does not pay.This hedge is reflected in the respective fees. Examples of individual providers are about Klarna (29 € / month and 3.25% + 1.69 € per transaction) or PayPal PLUS (1.49% -2.49% and 0.35 € per transaction).

Payment in advance

In contrast to the bill purchase, the dealer risk is minimal when paying via prepayment. After placing the order, the customer transfers the purchase price directly to the business account of the company and the goods are sent only after receiving the money. From a technical point of view, only the account information needs to be made available to the customer, and account maintenance fees are the only cost. Both risk and cost are low for merchants when paying in advance. This makes this payment method especially popular with small shops.

For customers, on the other hand, advance payment is often not very attractive – especially if they do not have any experience with the online shop yet. The customer must make an advance payment and grant the company an advance of confidence in the receipt of the goods. In addition, the transaction duration of the transfer of mostly 2-3 days extends the delivery. Therefore, companies sometimes set incentives to buy in advance with small discounts and show that the customer can rely on the receipt of the goods through the integration of reviews .

cash on delivery

When paying by cash on delivery, the dealer goes through the delivery of the goods in advance: The customer pays only when receiving the order directly from the courier. This way, consumers can be sure that they only pay when the goods arrive, and no bank details need to be transmitted electronically.

Also for the dealer, the risk is manageable, because in reverse, the goods are handed over only on payment.However, the transfer of the payment amount from parcel service to company can take between 10 to 14 business days. In addition, service fees are incurred by the logistics company. For example, DHL charges a COD charge of € 5.60 to be paid in advance by the merchant, regardless of whether the customer accepts the delivery. Usually these costs are charged to the customer plus the price of the goods.


PayPal is probably the best-known provider of electronic, cashless payment services. If customers have opened an account with the e-payment service, a payment is completed with a few clicks. With the payment service either the credit card data or for direct debit and transfer the bank account can be deposited. For example, PayPal allows the buyer to make a preference selection in advance. Likewise, the PayPal Buyer Protection provides more security on the part of the customer: If an item is never shipped or deviates greatly from the product description, customers will receive their money back up to 200 days after purchase. Not surprisingly, that PayPal lists the lists of the most popular payment methods in Germany.

Also for merchants PayPal is a straightforward payment method. The money goes to the company’s PayPal account without delay, and transaction processing is completely outsourced. The only drawback: For each incoming payment to the merchant is a fee. In the euro area, depending on the monthly transaction volume via the PayPal account [5] , this amounts to between 1.49% and 2.49% and € 0.35 basic amount per transaction. Transactions abroad can also incur extra costs.

SEPA direct debit

Another alternative that is particularly convenient for customers is the direct debit – especially for frequent purchases in the same shop. The customer once states his IBAN and BIC and authorizes the merchant to collect the amounts due from his account. In the case of the SEPA Core Direct Debit, it is possible for private customers 8 weeks after payment to subsequently object to the direct debit, so that the amount is reversed [6] . Thus, the direct debit procedure involves less risk compared to prepayment and is associated with less effort than the bill purchase.However, bank details (IBAN and BIC) must be quoted on the Internet – for some consumers this is a no-go for fear of phishing and data theft.

For traders alone, there is a risk that the account is not covered or the data given is wrong. Clear advantage, however, are the comparatively low fees. In order to be able to offer the direct debit procedure in the online shop, an interface must be created either in consultation with the house bank, or an external provider such as Billsafe be used.

Payment Online Shop

Credit card

If German consumers prefer to buy a bill or PayPal, the international credit card is clearly the preferred method of payment for online purchases. By entering name, credit card number, expiration date and check number, purchasing with a credit card is quick and easy. In Germany and Europe in particular VISA and Mastercard are widespread, while for customers from the USA American Express is indispensable.

The first requirement for being able to offer payment by credit card in your own shop is a credit card acceptance contract. Such a contract is concluded with a so-called acquirer bank. The acquirer bank collects the customer’s money for the online merchant via his credit card and assumes the responsibility for the secure processing of the payments. Before an acceptance contract is concluded, an online store is therefore subjected to a rigorous review.Although this is expensive, but at the same time already affects the admission of a shop for credit card payment as a feature of integrity.

If the check is successful, an external payment service provider as the interface between the merchant, the customer and the acquirer bank is still missing. This service provider provides the necessary software and here the discount fee per transaction is then due. In addition, monthly fees can come. While the risk of paying via credit card for merchants is quite low, it is usually these incurring fees that prevent particularly small online shops from offering credit card payments. For larger shops, however, the credit card is a must-have for both merchants and customers convenient and secure payment.

Important note: Since January 13, 2018, the Surcharging ban has been in force throughout the EU. For the use of credit cards , bank transfers as well as direct debit no extra charges may be demanded of customers. [7]


Especially in German-speaking countries, direct transfer via external services is another important payment method in online shops. The most popular provider is here as the market leader the Sofort GmbH. Customers enter their bank details on the website of the provider and this transfers the amount due to the online retailer. For consumers, the cost of an instant transfer is therefore no greater than a regular online transfer. However, very sensitive data such as PIN and TAN are transmitted to an external body. This creates concerns for some consumers.

From a merchant’s point of view, instant bank transfer can score particularly through the low fees: only 0.9% of the transaction amount and 0.25 € basic fee are due.

Payment Online Shop


Buying on installments is a rather rare option in e-commerce, but can be particularly worthwhile for providers of higher-priced products, such as electrical goods, furniture or even travel. In studies [8] on the introduction of online installment buying, the majority of online retailers report increased shopping cart values ​​and higher conversion rates. Financing through partial payments and interest rates can also address customers who can not afford the necessary funds at once. The fact that the customer saves the borrowing from his bank as an intermediate step, the shop wins on consumer friendliness.

In order to protect against the risk of payment defaults and to minimize the processing costs for the customers, the use of an external payment service makes sense, even when buying installments. The dealer receives the full amount, while the customer pays off the goods at the respective provider. Well-known providers are, for example, BillPay (€ 29 / month and per transaction € 1.69 + 3.0%), RatePay (by loan amount and duration, compared to more expensive) or PayPal Plus.

There is no model solution for the right payment methods

The preceding list shows that there are a variety of payment methods that have different strengths and weaknesses. The right choice of payment methods ultimately depends on the target group, the products and the resources of your online shop:

While for an older target group, for example, due to greater concerns about data protection, cash on delivery, and credit cards are very popular, providers such as PayPal or direct transfer are more attractive for young consumers because of their speed. The prices of the offered products are another influencing factor. If the shopping cart value is high, consumers prefer classic payment methods, such as invoice purchase, credit card or installment payment.Which types of payment can be offered purely technically, also depends on the shop software used . Depending on the shop system, the implementation of a payment variant, such as direct debit or installment purchase, can mean increased integration effort. Of particular note is also the origin of the customers: If in Germany PayPal is still the frontrunner of the popularity scale, this is the billing payment when looking at Austria and Switzerland [9] . Outside of the German-speaking area, the credit card has outstanding importance.


Payment methods in the online shop are decisive in the decision for or against shopping on a website. Even as a small shop, you should therefore offer your customers at least 3 to 4 of the above-mentioned payment systems.Compare the terms of each provider and weigh the costs and benefits with the payment preferences of your customers. This ensures that you do not lose any sales potential due to a missing alternative.



[3] bei-online-handel/



[6] This option does not exist for B2B transactions via the SEPA B2B Direct Debit.