Which Payment Methods Should Online Merchants Provide to US Payers?

Selecting the right payment methods for your business is crucial, especially when catering to US consumers. The payment preferences of US payers vary widely, influenced by factors like industry risk levels, merchant category, and customer demographics. This guide provides a comprehensive breakdown of payment methods suited for US merchants, with a focus on industries categorized as high-risk, medium-risk, and low-risk.

High-Risk Industries and Payment Solutions

High-risk industries like iGaming, Forex, Cryptocurrency Merchants, CFD trading, and online dating face unique challenges, including chargebacks and regulatory scrutiny. Payment solutions tailored for these industries need to mitigate risk while ensuring customer convenience.

Recommended Payment Methods for High-Risk Merchants

1. ACH (Automated Clearing House) (Learn more)
   • Market Share: 65% in the USA (Source).
   • Why Use It: ACH provides a reliable method for bank-to-bank transactions, reducing reliance on credit cards and minimizing chargebacks.
   • Ideal For: Subscription-based services, high-ticket transactions.
2. Cash App Pay (Learn more)
   • Market Share: Growing rapidly, especially among younger demographics (Source).
   • Why Use It: A popular peer-to-peer platform with low processing fees and high customer adoption.
   • Ideal For: iGaming and digital product platforms.
3. Venmo (Learn more)
   • Market Share: Widely used among millennials and Gen Z consumers (Source).
   • Why Use It: Offers quick peer-to-peer payments with an integrated social aspect.
   • Ideal For: Small and medium-sized transactions in industries like online dating and e-learning.
4. Trustly (Learn more)
   • Why Use It: Enables direct bank payments, reducing the risk of chargebacks.
   • Ideal For: Forex and CFD platforms requiring seamless international transactions.

Additional High-Risk Payment Methods

• Bitcoin and Other Cryptocurrencies: Widely accepted in high-risk industries due to anonymity and low transaction fees.
• eCheck Payments: Useful for recurring payments in industries like online dating and subscription services.
• PayNearMe: Allows cash payments at retail stores, ideal for customers who prefer offline options.

Medium-Risk Industries and Payment Solutions

Video Games: A Medium-Risk but High-Growth Industry

The video game industry, while considered medium-risk, has unique payment needs due to its diverse audience and high transaction volumes. Merchants in this space benefit from offering a range of flexible payment options to cater to younger demographics and tech-savvy customers.

Recommended Payment Methods for Video Game Merchants

1. Credit and Debit Cards (Visa, Mastercard)
   • Why Use It: The most commonly used method for purchasing games, subscriptions, and in-game items.
   • Ideal For: Digital marketplaces and console-based platforms.
2. Digital Wallets
   • Google Pay and Apple Pay: Perfect for mobile gamers who value quick and seamless transactions.
   • PayPal: A trusted option for international transactions and refunds.
3. Buy Now, Pay Later (BNPL)
   • Afterpay and Klarna: Allow players to purchase expensive gaming equipment or bundles in installments.
4. Cryptocurrencies
   • Why Use It: Increasingly accepted in platforms offering virtual goods or NFT-based games.
5. Gift Cards
   • Why Use It: Popular for gifting and for users without access to traditional payment methods.

By providing these payment options, video game merchants can enhance customer satisfaction and increase conversion rates.

Medium-risk industries like digital marketing, tourism, logistics, and eCommerce require payment solutions that balance security and customer convenience.

Recommended Payment Methods for Medium-Risk Merchants

1. Afterpay (Buy Now, Pay Later) (Learn more)
   • Market Share: 35% globally, with significant adoption in the USA (Source).
   • Why Use It: Increases conversion rates by offering installment plans.
   • Ideal For: E-commerce and digital product merchants.
2. Klarna (Learn more)
   • Why Use It: Provides flexible payment options with low upfront costs for customers.
   • Ideal For: High-ticket eCommerce items and travel bookings.
3. RTP (Real-Time Payments) (Learn more)
   • Why Use It: Provides instant bank-to-bank transfers, reducing payment delays.
   • Ideal For: Logistics and digital marketing platforms requiring immediate fund availability.
4. Credit and Debit Cards (Visa, Mastercard)
   • Why Use It: Ubiquitous and trusted by US consumers.
   • Ideal For: All medium-risk industries.

Emerging Medium-Risk Payment Methods

• Google Pay and Apple Pay: Mobile wallet solutions growing in popularity across the USA.
• PayPal: A trusted platform with robust fraud protection, ideal for eCommerce.

Low-Risk Industries and Payment Solutions

Low-risk industries, including education, subscription services, and healthcare, benefit from the stability of traditional payment methods.

Recommended Payment Methods for Low-Risk Merchants

1. ACH (Automated Clearing House) (Learn more)
   • Ideal for recurring billing and high-ticket services.
2. Credit Cards
   • Widely trusted and accepted across all industries.
3. Google Pay and Apple Pay
   • Streamlined checkout experience for low-friction transactions.

Other Popular Payment Methods

While we already covered many prominent payment methods, the following options are worth considering:

• Zelle: A peer-to-peer payment network gaining traction in the USA.
• Stripe and Square: Comprehensive payment platforms ideal for diverse industries.
• Paysafe: Tailored for high-risk industries, particularly iGaming and Forex.

Why US-Based Entities are Crucial for Payment Integration

To effectively work with US payment systems, merchants often need to establish a US-based entity. This ensures smoother onboarding with American payment providers, as many systems prefer or require merchants to operate under US regulations.

Benefits of a US-Based Entity

1. Easier Onboarding with Payment Providers
   • US-based companies are often prioritized for quicker and smoother approval processes.
   • Reduces the likelihood of application rejections from major payment gateways.
2. Regulatory Compliance
   • Operating under US jurisdiction ensures adherence to local laws and standards, building trust with payment providers.
3. Enhanced Customer Trust
   • Customers are more likely to trust merchants with a US presence, increasing conversions.
4. Access to Banking Infrastructure
   • A US-based bank account simplifies transactions and reduces cross-border payment fees.

Why You Need Substantial Presence (Substance)

Merchants may also need to demonstrate substance, such as a physical office or operational presence in the US. This adds credibility and aligns with compliance requirements.

Conclusion

Providing the right mix of payment methods is essential for online merchants targeting US consumers. High-risk industries should prioritize secure and flexible solutions like ACH, Venmo, and Bitcoin. Medium-risk industries can benefit from installment options like Afterpay and Klarna, while low-risk merchants thrive with traditional methods like ACH and credit cards. By understanding your industry’s risk level and customer preferences, you can optimize your payment offerings for maximum conversions and customer satisfaction.

How We Can Help

Businesses often struggle to navigate the complexities of integrating the right payment solutions for their needs. We provide consulting services:

• Tailored Recommendations: Based on industry risk levels and customer demographics.
• Integration Support: Streamlined implementation of payment methods with minimal disruptions.
• Performance Optimization: Ongoing adjustments to maximize payment success rates and minimize chargebacks.

We can also assist with the below:

• Establish a US-based entity, including company registration and compliance.
• Open US-based bank accounts tailored to your business needs.
• Set up a physical office or virtual presence to meet substance requirements.
• Handle ongoing reporting and tax compliance, ensuring smooth operations.

By partnering with us, merchants can ensure their payment strategy aligns with their operational goals and customer expectations.

Ready to optimize your payment solutions? Contact us today for a free consultation and start reducing chargebacks, improving approval rates, and enhancing customer trust.