Payment Acceptance Rate (PAR) vs Conversion Rate (CR) Explained
Payment Acceptance Rate versus Conversion Rate – confused? You’re not alone, and you shouldn’t be. These two metrics are crucial for any business handling online transactions, but their definitions and how they apply can sometimes seem blurred.
Therefore, let me clear up the confusion and explain what exactly Payment Acceptance Rate and Conversion Rate mean. Read on, as I detail their distinct differences within online payment and what you need to know to understand and improve your payment performance.
What is Payment Acceptance Rate or PAR?
Firstly, Payment Acceptance Rate, or PAR, refers to the percentage of attempted payments that are successfully processed, focusing solely on the final stage of the payment process.
Conversion Rate (CR) is a broader metric that measures the percentage of website visitors or leads that complete a desired action, like making a purchase, which includes steps before the payment, like adding items to a cart and entering shipping details.
This is clear… isn’t it?
Without context, the above explanations are clearly different and easy to understand. Yet problems arise when used across different industries. The problem with payments is that they are everywhere, from everyday spending to once-in-a-lifetime purchases.
Because of this, payment terms often need to be simplified and made universal wherever possible so that they can be understood across sectors. Unfortunately, conversion rate has fallen into this trap.
Why is Conversion Rate Different?
Put simply, merchants want consumers to buy, and consumers want simple payment journeys that allow them to pay easily. Within this, merchants need to understand how easy consumers find the payment experience and, more importantly, the effort required to complete a payment. This need is universal and industry agnostic.
But some industries are more payment savvy than others. Large e-commerce merchants, for example, understand consumer journeys from the very first moment a consumer lands on their website. They track, analyse and target specific touchpoints to influence every aspect of the buying journey. For e-commerce merchants, the definition of conversion rate above can be very broad and start at any point the merchant deems important to track.
Because e-commerce journeys are so varied, conversion rate becomes an important metric. Yet here, context is key. Some merchants require account sign-up, others need to calculate shipping before the payment journey starts, and some require consumers to make a reservation. The list goes on.
Less payment-savvy industries may not have such diverse consumer journeys. Consider paying your water bill. The amount is presented on the screen, and you pay it. There is no shipping, no voucher codes, just a simple payment. For these merchants, there is less need for the broader usage and, more importantly, understanding of conversion rate. They care about when the consumer starts the payment journey because there isn’t much else the consumer can do.
The vast difference in consumer experience has created a problem. Human beings crave simplicity and look for ways to make this happen. At some point in time, someone somewhere decided, “If conversion rate is well understood as an industry term, let’s just apply it to every payment journey!”. Payment companies can now talk to ANY merchant in ANY industry using the same language. Amazing!
However, this oversimplification has created more ambiguity, not less.
So what can we do?
It’s essential to know your own position and definition of conversion rate.
For merchants, if your key metric is measuring conversion from when a consumer lands on your website, so be it. But be clear and intentional with your definition. Especially when discussing your payment strategy with a payment provider.
When discussing conversion rate, specify when the payment acceptance rate journey starts and ends for you. This can be from when a consumer clicks the ‘Complete Purchase’ button or lands on the checkout page. The latter is sometimes crucial to merchants who are design/brand-focused and want to understand the effect of a provider’s brand on conversion, compared to other payment methods. This then influences where payment methods are placed in the checkout and the consumer segments they should be available to. Clever stuff. And it’s all tied back to our golden conversion metric.
How does Brite solve the conversion rate definition problem for businesses?
At Brite, we’ve divided our definitions of conversion rate into two buckets: Brite conversion and bank conversion.
We are acutely aware of the nuances and considerations outlined above. We have many experienced payments people in the building who’ve seen almost everything across multiple industries and regions.
When engaging with prospects, we are both pragmatic and consultative. We want to know what’s important to you and how you measure success. However, we also understand the nuances of different industries and how they influence the performance of a payment method.
Introducing User Session Conversion
Here at Brite, we’ve added another conversion tool to our arsenal: user session conversion.
This metric complements Brite and bank conversion metrics that merchants and other providers are accustomed to considering. But this metric signals more intent.
Imagine buying a last-minute gift for a loved one. You’re stressed, but you also aren’t sure what to get. In this situation, many of us are juggling multiple browser pages and apps, searching for inspiration on one and almost checking out on another. Sound familiar? It’s messy and a reminder that technology can’t solve human forgetfulness (for now, at least).
In the midst of this buying madness, you start the payment journey with Brite. You then remember your loved one hates the colour you’re buying, and you must look for another colour. But other colours are out of stock. Damn. You drop out of the buying process and exit the Brite experience.
If we were to use our Brite conversion as intended, this consumer would have dropped out and not converted. We have very little information about why. Instead, merchants hold Brite accountable and assume that a problem with the experience forced the consumer to drop out. But this is clearly wrong. Brite had nothing to do with the choice to drop out, and this shouldn’t be reflected in the only metric the merchant uses to judge their performance.
Enter user session conversion
Back to our scenario: After dropping out of the Brite checkout, you search online for another minute or so, looking for that elusive ‘black version’ of the gift. Black works and is safe, but it’s also sold out everywhere. So now you’ve realised the original colour may have been the best choice after all, and back to the merchant’s website and Brite checkout we go.
All of this happens within a few minutes. It’s all pretty natural, and humans have become adept at managing the highs and lows of online shopping.
This time, you complete the Brite checkout as initially intended. Job done. Disaster averted.
With user session conversion, we now have a metric that shows the user’s intent to convert. We look at a window of time from when the Brite checkout was started and whether a consumer has completed the action of purchasing via Brite within that window. This allows us to provide merchants with a different picture: that the consumer could do exactly what they intended to do with Brite initially and within an acceptable timeframe, regardless of any issues outside our control that arose.
Other ways Brite helps Merchants: Avoiding the broadness trap
Adoption is only one way to measure performance and is too broad to be useful in isolation. Too many variables influence whether a consumer even uses a payment method.
We split the payment journey into pre, during, and post sections.
Pre-payment journey
We look at things such as the adoption rate. Within this, we analyse user comprehension, comfort, trust, and safety – all key human traits determining the decision to adopt a payment method.
To increase the adoption rate, we advise key touchpoint messaging via co-marketing (home page, product page, checkout page) to prime the consumer. This helps address the human traits that influence the payment selection process. Here we lean in heavily on emotion and motivation. Research shows that consumers are more likely to choose something if they see merchants put trust and value in it as a business.
During the payment journey
A branded payment experience is often overlooked as an essential aspect of the experience. With many players allowing merchants to white-label their solution, merchants usually believe this should be an option. In our experience, this isn’t always beneficial. Who provides the consumers with support in case of a problem? The white-labelled payment provider that consumers have no awareness of? The merchant? Then there’s the operational burden, and neither party may see this as a core part of their business model.
A few years ago, I worked with one of the largest fast fashion retailers in the UK. They were insistent on the payment journey bearing no mention of the provider. This worked for them until customer support calls increased by 20%. Many consumers didn’t recognise the name on their bank statement and contacted the merchant to query the payment. It turns out that the payment provider couldn’t pass through the merchant’s name, only their own, which led to mass confusion for consumers who saw no mention of the payment provider during the checkout process.
This merchant was large enough to handle the upsurge in consumer calls. Imagine if they weren’t. White-label solutions can often introduce confusion for consumers.
With Brite, it’s always clear who the consumer is transacting with. The merchant name is clear, and Brite is a constant throughout the user journey. Consumer support is also much simpler for all parties and, crucially, an important part of our business model. We care about both parties involved in a transaction equally.
We also measure consumer interactions at each stage of the purchase journey within our Brite client. From payment initiation to bank selection to consumer consent, we track what consumers do to optimise the experience.
Post-payment journey
Once the consumer confirms a payment, everything should be done, right? Well, not quite.
Not all payments are equal, sadly. Some will settle into the receiver’s account instantly, without a hitch. Others will take anywhere from a few seconds to days longer before arriving. For merchants, this uncertainty is problematic. But why are we talking about settlement? Isn’t this article about conversion rates?!
The key point here is – at what point can the payment be considered done by all parties? This should be where conversion ends. The payment was confirmed, accepted and sent.
However, providers measure this endpoint differently. Some will use settlement as the final status, while others will use payment capture (mostly cards) as the endpoint.
Merchants expect confirmation that a payment is complete AND will settle. They can then release goods or services faster. A payment confirmation is a mythical creature that nobody is brave enough to say they’ve seen.
**Payment nerd warning**
Here at Brite, we use a number of tools to give merchants the conviction payments are confirmed and will settle. Bridging the gap between payment confirmation and settlement of funds is tricky, but we believe Brite’s capabilities help plug the gap extremely well.
Our Instant Payment Network (IPN) is one of these tools. It gives greater clarity on payment statuses, which can be passed on to merchants for more accurate decision-making. We supplement the IPN with various other features and capabilities that limit uncertainty and help merchants give consumers access to their goods and services with confidence. You can read more about our IPN on our business pages.
Final Thoughts on Payment Acceptance Rate vs Conversion Rate
As a merchant, whether new to account-to-account payments or more familiar with them, it’s important to understand the different factors influencing conversion. Each payment provider will have its own point of view, usually tied to the capabilities of its product and ability to measure.
The A2A payment landscape continues to be shaped by real-world use cases. With merchants displaying a clear appetite for payment methods with less complexity/operational overheads, conversion remains an important measure of effectiveness.
But payments are complex. With so many payment providers, how can merchants use conversion to indicate success?
Indeed, as the industry develops, the means to measure payment method success will follow suit. Context will become even more important. iGaming, e-commerce, and financial services share checkout similarities but vastly different customer experiences.
Therefore, working with payment providers who understand this nuance is crucial when selecting a long-term partner. Understanding user intent, the actions preceding a payment, and expectations following a payment can help merchants optimise for long-term success.
At Brite, metrics such as user session conversion do just that.
Finally, if you want to know more about payment acceptance rate versus conversion rate, don’t hesitate to contact me directly on LinkedIn or my fellow payment experts at Brite in the link below.
