Pros and cons of bank transfer for your online shop

Pros and cons of bank transfer for your online shop

More people than ever are buying online, but in spite of this fears about credit card or identity theft are still high amongst consumers. In response to this, many retailers offer bank transfer options for their ecommerce website as well or instead of credit cards.

What are the pros and cons as a store owner of using Bank Transfer?

 

Pros of Bank Transfers

Bank transfers are a convenient and easy method of completing orders as it’s fast for customers to get through the checkout process and as a store owner you won’t have to pay any transaction fees on your account to receive the money from them.

There are a number of other advantages:

  • While not everyone has an available credit card, almost all Australians have a bank account or cash to walk into your own bank and make an over-the-counter transfer.
  • Customers don’t have to worry about security as they don’t need to disclose any financial details to you in order to make a payment. This makes them more likely to focus on what they are buying rather than the security of their credit card details.
  • There’s no risk of a chargeback (forced refund by the bank) on your merchant account because bank transfers are non-refundable.
  • If customers walk into your bank and make an over-the-counter transfer in cash, the funds clear immediately rather than the 2-3 working days it normally takes an Internet Banking transfer. If they order and pay early enough in the day and you offer same day dispatch, then that gives customers the possibility they can buy online today and have their products sent today.

 

Cons of Bank Transfers

Shopping carts in Australia do not integrate with Internet Banking systems like they can do in some other countries, so when the payment is made you need to manually set the order to paid in your store admin and send out the goods. There are a couple of challenges for accepting bank transfer payments that you need to be aware of:

  • Not everyone who places the order will then make the payment – they might change their mind and never make the payment.
  • If you have a lot of people paying the same amount and they don’t leave references on your bank account you can be left working out who has paid and who hasn’t.
  • If you have high moving stock you might have people put in “holding” orders by bank transfer on weekends to stop others buying them while they get their money situation together and then wait the whole following week to make the payment.

To address these situations, you need clear guidelines in your returns policies about how long you will “wait” for a bank transfer to be received and may need to follow up with those customers to ensure that they remember to make the payments.

Overall, bank transfers are a reliable payment method and, as long as you are aware of the cons, they can be a very effective way of increasing order completion rates in your shop.

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