It is vital for merchants to provide a variety of payment methods such as credit cards and local direct debit complemented by mobile payments to cater the needs of each possible end-user.
Yet adding a new payment method always presents a risk to merchants. If the new payment method does not work or is unavailable to some users, it ruins the purchasing experience and they might switch to a competing service instead.
But the biggest concern for merchants is very often payment cannibalization. If a new payment method is added, it might happen that users who are already making purchases simply switch to the other payment method. This does not result in additional revenue for the merchant but can instead have a negative impact in case of a different fee structure. It also costs development time to set up a new billing method.
Cannibalization is a key aspect that merchants need to think about when adding new payment methods, whether it’s pre-paid vouchers, mobile wallets or direct carrier billing.
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