Best Payment Methods for Selling Online: Guide for Merchants

The way we pay for things has evolved significantly over time. From bartering goods to using shells and coins, the payment methods we use have continuously improved.

Today, customers benefit from numerous ways to pay online: from open banking and digital wallets, offering greater convenience and security. But what are the best online payment methods for e-commerce merchants?

In this guide we’ll discuss different payment options, integration methods, and why some of them offer more benefits for merchants and customers.

Importance of Payment Methods for Merchants

Choosing efficient online shopping payment methods is crucial for merchants to reduce cart abandonment rates. Just like being ghosted in dating, merchants can experience cart abandonment, which is a common issue in e-commerce.

According to Baymard Institute research, about 70% of online shopping carts are left incomplete. In simple terms, for every 10 customers who add items to their shopping cart, 7 leave without making a purchase. Research indicates that this results in approximately $260bn worth of potential orders being lost.

This highlights the importance of having convenient and preferred payment methods to encourage customers to complete their purchases. Some of the lost revenues can be avoided by offering a wide list of payment options for online shoppers.

How to Choose the Best Payment Method

Firstly, it is essential to understand your customers' preferences. Consider their age, location, and profession, and conduct thorough research. Shopping habits differ across various demographics, so knowing your audience is crucial.

For example, digital wallets are particularly popular in Asia, whereas open banking payments are gaining momentum in Europe. Younger customers often favour alternative retail payment methods such as Buy Now Pay Later (BNPL) and cryptocurrencies.

Integration capabilities are crucial. Partnering with a reliable payment service provider, such as Noda, is advisable. They can offer a variety of payment options for online orders through a single integration.

Top Five Payment Methods for Selling Online

Digital Wallets

Digital wallets are now the most popular e-commerce payment method globally. Merchants can integrate wallets as a payment option through a payment provider.

Digital wallets can store various payment cards in one interface, allowing users to make payments without manually entering their details. Mobile wallets, like Apple Pay and Google Pay, are a type of digital wallet designed specifically for use on smartphones and tablets.

Digital wallets are extremely popular in Asia, with China leading the trend. Alipay and Tenpay are the top digital wallets in China, established well before the introduction of Apple Pay and Google Pay.

Although adoption is growing, digital wallets are still linked to card networks–and hence there are drawbacks for merchants such as high processing fees and chargebacks.

Credit & Debit Cards

Card payments are cashless transactions using either a credit or debit card. Card payment processing involves multiple steps and parties–merchants can add an online card payment gateway via a provider like Noda. We offer seamless Card Payments APIs.

Although card payments are highly popular and widely adopted, they have a few drawbacks. For example, online card transactions are more susceptible to fraud as sensitive payment details are shared on the website. In 2022, over 70% of global card fraud came from online card transactions. Plus, they are more expensive as card networks charge interchange and scheme fees.

Read: How to Reduce Card Processing Fees as a Merchant

Open Banking Payments

Pay-by-bank, also called account-to-account (A2A) or open banking transactions, enables customers to make online payments directly from their bank accounts. This method bypasses card intermediaries. Customers authorise payments using their online banking credentials and bank’s authentication such as biometrics.

In 2018, the EU's PSD2 regulation took effect, requiring banks to share customer data with authorised fintech companies via application programming interfaces (APIs). These APIs serve as connectors, enabling secure communication between different systems. Open banking has improved the speed, cost-efficiency, and security of A2A.

Pay-by-bank is also getting adopted quickly, especially among digitally native customers such as Millenials and GenZs. They might not have the deepest pockets yet, but they expect speed, simplicity, and security, which pay-by-bank offers. According to Mastercard’s Rise of Open Banking study, Gen Z leads the way in adopting this new payment method.

Why Switch to Open Banking

Here is why you should add open banking as one of your e-commerce store payment options:

• More secure – open banking uses regulated APIs and bank-grade security like Face ID or fingerprint login – biometrics authentication that’s more secure than standard multi-factor authentication. 
• Built for mobile – It’s mobile friendly and directs users to their banking app, which is perfect for Gen Z and Millennials who shop from their phones.
• Lower costs – No card network or chargeback fees. Great for your revenue.
• Instant settlement – Payments are processed and transferred to your account in real time. No delays or long settlement times like with card networks.
• Smoother UX – No long forms or card numbers. Just a few taps to pay via bank. This means higher revenues and less shopping cart abandonment due to complicated checkout.

Cards or Open Banking? Noda Gives You Both

Whether you want to keep card payments or move to open banking, Noda makes it easy.

Accept credit and debit cards with our Card Payments API, offering smooth UX, smart routing, and fast setup.Or switch to pay-by-bank with our Open Banking API—secure, instant, and lower cost. Noda connects you to 2,000+ banks across 28 countries and supports multiple currencies.

Other integration options: e-commerce plugins (Magento, WooCommerce, OpenCart, PrestaShop), or use our instant payment links and branded checkout pages. Run your e-commerce store the modern way—with payment tools that grow with you.