If you sell products or services online, offering multiple payment options is key to ensuring a better user experience and increasing your profits. Research shows that allowing customers to choose their preferred online payment method is increasingly important: 86% of European customers in 2022 said they would probably abandon their online shopping cart if the desired payment method was not available.

But what are the most popular ecommerce payment methods and which ones should you choose? Whether you want to start a new business or expand your existing one, it can be difficult to navigate today’s complex payment environment. In this article, you will learn about the most popular online payment methods, the options for paying with a card or using a cardless method, and how you can protect yourself against payment card data breaches and fraud.

What’s in this article?

• The most popular online payment methods
  
• The preferred online payment methods among Italians
  
• Cardless online payments: Other alternatives
  
• Possible problems related to online payments using cards
  

The most popular online payment methods

Let’s look at the main payment methods available for ecommerce activities:

• Credit and debit cards
  Credit and debit cards are the most popular payment method for making online purchases. With credit cards, the amount is debited from the user’s current account at a later date, allowing them to spend more than their account balance. With a debit card, the money is withdrawn from the account immediately. This allows users to better keep track of their spending.

• Prepaid cards
  To make a purchase with a prepaid card, a sufficient amount must first be transferred to it. It is a payment method that is considered very safe as, in the event of fraud, the maximum amount that can be spent is only the balance that the user has transferred to the card.

• Cash on delivery
  Cash on delivery refers to payment for a product upon delivery and not at the time of purchase. The balance is usually paid in cash or by check, but some couriers also accept point-of-sale (POS) payments. It is a payment option considered very safe for the buyer, but inconvenient for the business; if the recipient of the goods is not at home at the time of delivery, the business will have to wait to receive payment.

• PayPal
  PayPal allows customers in over 200 markets to pay online. On the PayPal portal, users can register their credit or debit cards or link their checking account. To complete a purchase, once the user has selected PayPal as their payment method, there’s no need to enter the payment details. Because of this, PayPal is considered a safe, practical, and fast online payment method.

• Digital wallets
  A digital wallet is an electronic wallet in which the user can register their credit cards, debit cards, or bank accounts. People like digital wallets because they are secure, fast, and easy to use, since purchasers can avoid entering their payment information to make a purchase.

• Bank transfers
  Although bank transfer is not a very popular payment method for online purchases and the debit times are generally longer than when using credit cards, it can be a very useful option when paying large amounts and offers a certain level of security, particularly in markets where cards are less commonly used. The purchaser transfers the funds directly to the business’s account once the payment has been confirmed, although the timing may vary from bank to bank and may be longer for international transactions.

• Direct debit
  With this payment method, customers enter their bank details and must give you the consent (or “mandate”) to debit a specific amount from their account. This allows you to automatically withdraw funds from your customers’ accounts. Direct debit payments are practical for both businesses and customers, particularly when it comes to recurring payments—such as those for subscription services—since with just one mandate, they can also authorize future payments, which will then be made automatically.

• Buy now, pay later
  Deferred payment services—also known as “buy now, pay later”—are a type of payment service that allows users to pay in installments, in most cases interest-free. The service is typically provided by an external company (e.g., Klarna) and customers find it among the online payment options available on the ecommerce website. This payment option is well-suited to businesses that offer high-value products and services (for example, luxury items or travel), and that are looking to increase their average order value—or that want to reach new customers who may not have a payment card available. As the business, you immediately receive the full amount, minus any fees (similar to credit cards), while the customer can pay in several interest-free installments (usually four to six). The deferred payment service provider handles the financing and assesses the customer risk, allowing you to focus on growing your business.

The preferred online payment methods among Italians

According to a 2022 Bank of Italy report, cards are still the payment method most commonly used by Italians to make online purchases. These account for 50% of total payments, followed by alternative payment methods—such as PayPal and digital wallets—making up 27% of the total. But let’s take a closer look at which payment methods are the best known and most popular in Italy for online purchases:

• Debit cards
  Debit cards are payment cards linked to a current account that can be used to make purchases in stores, withdraw cash at ATMs, and—more and more often—to pay online. They are called “debit” cards because the amount to be paid is immediately debited from the user’s bank account. In Italy, a debit card is historically and mistakenly called a “bancomat,” which is actually the name of the first national debit circuit. This was joined by others over the years: Maestro, managed by Mastercard, and V Pay, managed by Visa.

• Credit cards
  Credit cards, on the other hand, do not necessarily require the opening of a current account. Credit cards are issued by banks based on a financing contract, allowing customers to receive money on loan, with the promise to repay it within a predetermined period of time to avoid having to pay additional fees. With credit cards, the amount is therefore not debited immediately, but generally at the end of the month. The most popular credit card circuits in Italy are Visa, Mastercard, and American Express.

• Prepaid cards
  Prepaid cards are a very popular payment method in Italy, a country historically not inclined to rely on digital payment methods. Since only the amount transferred in advance to the card can be spent, it is perceived as a safe payment method by users. In the event of theft or cloning, the stolen amount cannot actually exceed the balance on the card.
  The most commonly used prepaid card in Italy is Postepay, with 29 million cards issued and over two billion transactions made by 2022. You should therefore make sure that it is one of the payment methods available on your ecommerce website.

• Digital wallets
  According to a 2023 Netcomm Consortium report, over a third (35.5%) of online purchases in Italy are made through digital wallets, which are the most commonly used payment method for online purchases after cards. The most popular digital wallets in Italy are PayPal, Google Pay, Apple Pay, and Amazon Pay.

Cardless online payments: Other alternatives

Debit and prepaid cards are the most popular cards among Italian customers, who tend to prefer card types that make it easier to keep track of their expenses or that allow them to load only a certain amount onto the card to ensure greater security. However, many Italian users prefer not to enter their payment card information online. Although online payments today are generally safe—thanks to the European Union’s revised Payment Services Directive (PSD2) regulation and the implementation of advanced anti-fraud systems—many Italians are still hesitant to enter their card details online, preferring to pay in cash or use other payment methods that they perceive to be less risky. In other cases, they don’t have a card to be able to shop online, or they simply don’t have one on hand.

Together with payment cards, a series of payment options exist that businesses should make available to users for online payments, as their use is growing rapidly. They are known as “alternative payment methods,” as they do not involve the use of cards or cash.

One option is paying with cryptocurrencies, though their use as a payment method is still limited, including in Italy. A cryptocurrency is a digital or virtual currency that uses cryptography to protect transactions and is generated and redistributed through a decentralized network. This means people can make payments without banks or central authorities, which, by not printing the money, cannot influence its value. Instead, the cryptocurrency value is entirely determined by the law of supply and demand. In addition to being complex, cryptocurrency transfers can also incur high fees. Consequently, it is not a payment method that has gained a great deal of popularity.

However, other online payment methods exist and are gaining popularity in Italy that do not involve the use of debit or prepaid cards. Let’s take a look at them:

• Satispay
  Satispay is a payment system independent of traditional circuits, launched in 2015 in Italy by the fintech company with the same name. Today, it is one of the most popular payment apps in the country, with over four million users. It allows users to make purchases in store and online, and to carry out other types of transactions such as exchanging money between private individuals and paying bills, topping up phones, paying car and motorbike taxes, and settling public administration payment notices. This payment method is currently accepted by thousands of websites in Italy. With Satispay, the user sets a minimum budget that they wish to have on their account on a weekly basis and, at the end of the week—depending on how much the user has spent—Satispay automatically withdraws the difference from the current account to restore the minimum budget. For example, if the weekly budget is €100 and €80 has been spent, the system will withdraw €80 from the user’s bank account and credit it back to their Satispay account.

• QR code payments
  Another type of payment that can be used both in person and online is payment through a QR code. The payment is made using a dedicated app provided by the user’s credit institution (bank or post office) or by the payment service provider (e.g., PayPal or Satispay). The user can pay by simply scanning the QR code provided with their smartphone—without having to manually enter their payment information.

Possible problems related to online payments using cards

Anyone who accepts card payments, whether in person or online, must comply with a series of requirements to counteract the potential risks associated with this type of payment. As far as online card payments go, the main risks are linked to data breaches and fraud. Let’s take a closer look at what this involves and how you can mitigate the risks for your business.

Payment card data breaches

A credit or debit card data breach occurs when the company that stores or processes your card data is hacked and the data is stolen. This can happen in various ways—for example, through phishing, malware, or social engineering attacks. Once stolen, the data can be used to commit credit card fraud. To prevent this type of security risk, companies that accept cards as online payment methods must comply with the Payment Card Industry Data Security Standard (PCI DSS). This includes a series of security standards aimed at ensuring that all companies that process credit card data operate in a secure environment. It is also a good idea for ecommerce businesses to use a Secure Sockets Layer (SSL) certificate for their website. This ensures that all information sent to your online store is encrypted, making it more difficult for malicious users to access the data. Another tool available to protect online transactions is tokenization. This method replaces sensitive information—such as the card number or CVV—with a unique, random code, thus securing the actual card information.

Online card payment fraud

Credit card fraud can involve the theft of card-related data or the creation of counterfeit cards. With credit card fraud, in addition to making purchases in person or withdrawing money from an ATM, the fraudulent actor can also use the stolen card to make online payments. Debit card fraud is similar to credit card fraud, but it involves the unauthorized use of a debit card. The fraudulent actor may use a stolen debit card or the card information to make purchases or withdraw cash from an ATM. Debit card fraud can also occur if someone obtains access to the PIN associated with the card.

Ecommerce businesses are particularly vulnerable to this type of fraud, due to the ease with which credit card information can be accessed and the frequency of card-not-present (CNP) transactions (a purchase made remotely without a physical card being processed).

If a fraudulent transaction occurs, the customer can request to cancel the transaction and be refunded through a chargeback. In this case, the customer’s bank or credit card provider cancels the debit transaction and withdraws the funds from the company. Chargebacks are costly for businesses: in addition to the loss of revenue, canceling the transaction also means wasted time and resources to process the cancellation, inventory losses, and the payment of fees to processing providers.

Thankfully, several tools and services are available to ecommerce businesses to prevent online payment fraud. To maximize anti-fraud protection, ecommerce websites can adopt advanced solutions such as Stripe Radar, a tool that relies on machine learning to help detect and prevent fraud before it affects your business. Learn more about how Stripe can help your business fight fraud and increase revenues.