Picture this: A customer visits your online clothing store, selects an item priced at ₹2000, and adds it to the cart. However, the customer abandons the cart during checkout with no offers or discounts.
Now, you email the customer an offer— ‘Get 20% off on payment via UPI.’
This small step can transform the scenario, resulting in the customer completing the transaction. Or better, if you give a ‘buy one, get one’ offer, it might result in an increased order value.
That’s the magic of payment offers.
This blog explores different types of payment offers (with examples) and gives you a detailed process for creating payment offers with Nimbbl.
Content Index
- What Are Payment Offers?
- Why Are Offers Used in Payments?
- What Are the Types of Payment Offers?
- What Are the Conditions Used for Providing Offers?
- Conclusion
What Are Payment Offers?
Payment offers are promotional incentives eCommerce merchants offer to encourage more purchases. For example, Buy One Get One (BOGO) is a payment offer that boosts sales, increasing the average order value.
Here’s Fabindia offering a B1G1 offer plus up to 50% off on select items to clear out stock and online sales.
Why Are Offers Used in Payments?
Payment offers provide lucrative benefits, encouraging customers to complete the transaction. A merchant, an issuer, or any other third party wanting to increase the cross-selling can offer them.
For instance, a credit card issuer like Axis or ICICI might run a promotional campaign offering a 10% discount on grocery purchases. This motivates cardholders to use their credit cards, increasing transaction volume and enhancing customer loyalty.
Here are a few reasons why Indian eCommerce businesses use payment offers:
Increase sales
One of the main reasons behind payment offers is to boost sales by making the products affordable. For example, a 20% discount on all purchased items during Diwali can motivate customers to shop more while saving money.
Attract and retain customers
Offering appealing deals such as discounts attracts new customers and helps retain existing ones.
Reduced cart abandonment
Customers are more likely to complete a transaction with a straightforward, immediate benefit: a discount or cashback. This reduces the number of abandoned carts and increases overall sales.
Reduce COD (Cash On Delivery) and RTOs (Return To Origin)
eCommerce businesses often aim to reduce COD as it increases operational costs and cancellation and return risks and impacts the cash flow due to delayed payments. On the other hand, RTOs double your costs of packaging, transport, quality checks, etc. In short, RTOs and CODs increase the overall costs, negatively affecting the bottom line. So, eCommerce companies like Meesho provide payment offers that reduce RTOs and CODs.
The images below show Meesho’s payment offers: Additional discounts on online payments and reduced product prices for only wrong/defective item returns.
🔖Learn more about RTOs and how to reduce them in this complete guide.
Increase the usage of specific payment mode
Sometimes, payment offers are used to increase the adoption of a new payment technology. For example, several eCommerce companies offer additional discounts and cashback when using UPI or wallets.
What Are the Types of Payment Offers?
Broadly, there are four types of payment offers:
Discounts
Discounts are generally provided to reduce the amount payable by the customer. They are always instant, and the customer pays less than the order amount.
Consider the above Fabindia example, where the brand highlights “50% off of select items.” This means that whatever the buyer chooses from the discounted catalogue, they get at half the price—a clothing item of ₹999 will be available for ₹499.
Cashback
Cashbacks are post-payment delight features and are provided after the transaction is completed. They are generally given as random amounts or a fixed percentage.
For instance, you often see cashback offers on Cred, Jio, and Amazon Pay platforms. You get scratch cards with random cashback, a “flat ₹25 cashback”, or “get flat 10% cashback.”
Loyalty/ Reward Points
As the name suggests, loyalty programs are built to increase repeat purchases and foster customer loyalty. These programs allow customers to earn points for making purchases, giving a review, or referring to the brand. These points can later be redeemed for discounts, rewards, or other exclusive offers.
Starbucks Rewards is a popular loyalty program where customers earn ‘stars’ for every purchase. These stars can later be redeemed for free drinks and offers. Similarly, Myntra’s Insider program gives customers SuperCoins on every purchase they can redeem for discounts on select items.
Vouchers/ Coupons
Sometimes, merchants may partner with other brands and platforms and issue vouchers or discount coupons that can be redeemed at different merchants. These are typically provided to the user after the purchase is completed. For instance, Amazon often offers digital coupons that customers can redeem on their next purchase from Amazon specifics (like Amazon Pharmacy or Amazon Daily Essentials) or partner brands.
What Are the Conditions Used for Providing Offers?
Offers, in general, can be created at the following levels –
Product-linked offers
Product-based offers form the foundation of many promotional strategies. These include catalogue-level promotions that apply to specific collections, like a seasonal discount on winter wear or SKU-specific offers targeting individual product variants.
Merchants can create sophisticated bundle offers such as BOGO deals or multi-product discounts. For instance, an electronics retailer might offer a 20% discount on accessories when purchased with a smartphone, or a fashion brand could run a buy-one-get-one promotion on selected apparel categories.
Payment Mode linked offers
The payment landscape offers numerous opportunities for targeted promotions. Nimbbl supports offers across all primary payment methods, including credit cards, debit cards, net banking, UPI, wallets, and pay-later options. Card-specific parameters enable precise targeting based on issuing banks, card networks (Visa, Mastercard, RuPay), and card tiers (Platinum, Gold, Standard).
Our platform supports sophisticated BIN-based offers with up to 10-digit precision, allowing for highly targeted promotions based on card type and geography. Merchants can also set transaction frequency limits per card to ensure optimal offer utilisation.
Customer linked offers
Personalisation drives customer loyalty, and our customer-centric offers enable exactly that. Merchants can create tailored promotions based on customer identifiers like email addresses, mobile numbers, or unique reference IDs.
This allows for sophisticated targeting, such as first-time user specials, loyalty rewards, or birthday offers. For example, a beauty retailer might offer exclusive birthday month discounts, while an e-commerce platform could provide special cashback offers to first-time shoppers.
Conclusion
Payment offers aren’t mere discounts. They are powerful tools that can trigger business growth. By strategically designing your payment offers, you can attract customers to increase their order values, make repeat purchases, and become brand advocates.
Simultaneously, specific types of payment offers, like payment mode-linked offers, can reduce your rate of return and cash on delivery. Thus, your business can save on operational costs and boost bottom-line ROI.
So, are you ready to experiment with payment offers? Try Nimbbl!
