What are Payment Methods?
Payment methods are the foundation of revenue operations for subscription businesses. Credit cards, digital wallets, and bank transfers each offer different advantages for recurring billing, customer retention, and global expansion.
And under each method (say, credit cards), you have a host of options (Visa, Mastercard, and American Express, to name a few). In fact, there are more than 200 alternative payment methods worldwide. So how many payment options should you give your customers when they come to your checkout page?
Types of Payment Methods
Credit and Debit Cards
Cards are the most common online payment method globally, offering:
Global acceptance: Visa, Mastercard, and American Express work worldwide
Instant processing: Real-time authorization and settlement
Recurring billing support: Automatic retry logic for failed payments
Consider processing fees (2-3%) and chargeback risk when evaluating card programs.
Digital Wallets
Digital wallets like Apple Pay, Google Pay, and PayPal reduce checkout friction by:
Faster conversions: One-click checkout reduces abandonment
Mobile optimization: Superior experience on mobile devices
Security benefits: Tokenization protects customer data
Bank Transfers and Direct Debits
Direct bank transfers offer advantages for recurring revenue businesses:
Lower fees: Typically 0.5-1% vs 2-3% for cards
Higher success rates: Less likely to fail than card payments
Reduced churn: No expiration dates causing involuntary churn
Methods include ACH (US), SEPA (Europe), and Bacs (UK) for regional optimization.
Things to Consider While Shortlisting Payment Methods
According to Chargebee's 2025 Global Consumer Insights Report, 78% of consumers value flexibility when choosing subscriptions.
This makes offering multiple payment methods crucial for reducing checkout abandonment.
So fewer payment methods lead to higher bounce rates. However, providing too many choices can also lead to checkout abandonment.
The optimal payment method mix balances customer preferences with operational efficiency. Your selection should consider:
Location - Find out which methods complement both your company's country of incorporation and your customer base location. You may need to change payment methods for customers in different countries too. For instance, in Germany direct debit through SEPA, Giropay, and open invoices are all more popular than credit card payments.
Purchase mode - Do customers use your services online or offline? Choosing the most-used mix of omnichannel payment options in the customer location may be the best option if they do both. If they primarily checkout online, you can safely omit offline options like cash on delivery and focus on picking online payment methods for your demographic.
Business model - Do you have a recurring billing model or predominantly process one-time payments? Factor in an added layer of complexity if you have subscription customers.
The bottom line? Shortlisting payment methods that satisfy these basic parameters is the first step. Your next step should be to look up cost and risk assessment processes associated with these options.
For instance, PayPal is incredibly simple to sign up for and makes international transactions easy, but once you do their aggressive risk prevention processes may lead to payment holds with little explanation.
When planning for internationalization, remember that not all payment methods support multiple currencies. And it's always best to keep an eye on outliers—options that may not be popular widely but are used heavily within your customer base—to ensure minimum churn during checkout.
Multiple Payment Methods in Recurring Billing
Recurring billing uses the same payment methods as one-time transactions. These include credit cards, direct debits like ACH (US) or SEPA (Eurozone), PayPal, and Amazon Payments.
The difference is that when you use a billing system for recurring billing you can configure two kinds of payments— Automatic and Manual.
With automatic payment collection, your customers can choose a payment method that will be auto-charged on renewal of the billing cycle. With manual payments, you collect dues yourself and record them.
In automatic payment collection, some billing solutions go one step further by allowing your customer to choose and set up multiple payment methods at once. This provides revenue assurance in the event of failure of the primary payment method. The billing solution can then automatically try the backup payment options without customer intervention and further delays.
Ultimately, picking an optimal set of payment methods will ensure that your customers can pay you in a way that's easiest for them and have more flexibility to do it on time.
Pro Tip: Handling Failed Primary and Backup Payment Methods
Sometimes, customers forget to update their credit card information and may not have opted in for you to collect updated data directly through the account updater. Or their backup payment methods could have been improperly set up to begin with. Whatever the case, Chargebee makes sure that the dunning process kicks in if all payment methods fail after repeated retries, so you don't have to manually deal with involuntary churn.
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Global and Regional Payment Preferences
Payment preferences vary by region, which directly impacts conversion rates and customer acquisition costs.
Key regional preferences:
North America: Credit cards (85% preference), PayPal, and Apple Pay
Europe: SEPA direct debit, local cards, digital wallets
APAC: Regional wallets (Alipay, WeChat Pay), local banking
Latin America: Boleto, local installment options, cash-based methods
Revenue Operations teams should prioritize two to three local methods per target market rather than offering every available option.
Payment Method Performance and Analytics
Revenue Operations teams should track payment method performance across key metrics that impact recurring revenue growth:
Critical payment metrics:
Authorization rates: Percentage of successful payment attempts
Retry success rates: Recovery rate for initially failed payments
Customer lifetime value by method: Revenue impact of payment choice
Processing costs: Total cost including fees, chargebacks, and support
Choosing the Right Payment Mix for Your Business
Building the right payment method mix is a strategic decision. It requires balancing customer convenience, transaction costs, and operational complexity. Start by supporting the most common methods for your target audience and then expand based on data and regional needs.
A flexible billing platform lets you add and manage payment methods without extensive engineering work. This agility allows you to adapt to changing customer preferences and scale your revenue operations with confidence. See how Chargebee helps you monetize with confidence — book your personalized demo today.
Frequently Asked Questions About Payment Methods
Most Popular Payment Methods for Businesses
Credit cards (Visa, Mastercard), digital wallets (PayPal, Apple Pay), and bank transfers (ACH, SEPA) are the most widely accepted business payment methods.
How many payment methods should I offer my customers?
Offer three to five payment methods that align with your target market's preferences to balance choice with checkout simplicity.
What is the difference between a payment method and a payment processor?
A payment method is how customers pay (credit card, bank transfer), while a payment processor handles the technical transaction between banks.
Which payment methods work best for subscription businesses?
Subscription businesses benefit most from credit cards and direct debit (ACH/SEPA). These methods support automatic recurring charges, which helps reduce involuntary churn. They provide a reliable foundation for recurring revenue models.
How can multiple payment methods reduce failed payments?
Backup payment methods allow automatic retry on alternative payment sources when primary methods fail, reducing involuntary churn by up to 30%.
Additional Reads
Looking for a place to start before you set up different payment methods? Here are a few basic articles which lay out the basics of why this is important for your customers and your business:
Explore over 20 ways to handle failed payments. Failed Payments and Involuntary Churn — A Definitive Guide
Credit card processing is one of those tricky places in online business where a blind spot can cost you. Online Credit Card Processing Can't Be A Blind Spot
