Authorize payment first - Conversion benefits?

#1

Paypal has two options:

  1. Paypal express - user authorizes the payment first and then fills shipping details and then places order.

  2. Paypal standard - Conventional flow. User fills shipping details and then goes to paypal to place order.

Is there any conversion improvement, that has been observed?

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#2

Between the two approaches (mimicking traditional brick-and-mortar payment experience online vs optimizing/creating a new online experience),

  • Are you saving the #of steps to check-out?

In my experience, arriving at the exact logistics quote is an extremely complex flow. I am curious to see if Paypal Express is limited to specific logistics scenarios only where it is able to use some standard shipping rates with confidence. I am giving an over-simplified example of more-often-than-not cross-border shipping: To ship a product from the US to China w/o no constraint on shipping time, the system needs to decide between 1. Ship-by-Air, Ship-by-Sea based on product category, quantity, optimal pricing, the ship/flight schedules, availability, etc. 2. Decide the best local (typically land) transport options (pick-up, drop-off to local center, drop-off to port), etc. 3. Product reaches China & goes through China customs (paperwork, etc needs to be filled), 4. Checks into a local warehouse and is registered into the warehouse tracking systems, 5. First-mile, middle-mile and last-mile delivery is then decided. The SLAs are loosely defined for some of these systems.

One scenario where I would see higher conversion for Paypal Express-like solution is where security is a concern. Example, authorizing a fixed amount for purchase (creating temp credentials for your transaction) and returning the unused amount back into your account after the transaction window. I have seen some folks do this in India when they they were uncomfortable entering their (debit) card info on some websites. Banks give you this option. IMO, this scenario is specific to certain markets only given security and trust concerns. In India, I could see segments older than millennials, mostly genX and above going through this extra step to make online transactions. This could user behavior could slowly phase out as trust in online systems increase with maturing growth markets.

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