Payment solutions

Trends suggest that to offer competitive payment solutions, you need to give your customers choice, flexibility and security. If your payment solutions are too complicated, potential customers will often abandon their purchase or choose another provider.

The market you sell to and your industry will help determine which payment solution is right for you. Read more below about the most common payment methods for e-commerce in Norway, the rest of Europe and selected other markets.

An invoice allows you to pay after your purchase. In some cases, you can pay part of the amount immediately when placing your order and the remainder later by invoice. Some online retailers also allow you to defer the full payment and pay the purchase price in instalments.

An invoice is therefore a form of credit that allows the customer to pay all or part of the amount at a later date, usually without interest. Invoicing is not the most secure form of payment, as there is less certainty that outstanding amounts will be paid. However, when selling by invoice, your company has several options for securing its receivables.

Although paying later by invoice is attractive to customers, you need to manage the credit risk associated with the customer, the market and the commercial value. For example, a small company with few employees may find it challenging to follow up on missed payments. If your company has limited liquidity, missed payments will make you particularly vulnerable. The more customers and markets you have, the more work it will take to manage the formalities involved in debt collection.

Traditionally, invoices have therefore often been recommended as a payment method for B2B e-commerce businesses and larger, established online shops selling B2C.

Given the two-week period for returning goods purchased remotely in the EU without having to provide a reason, invoices have become the preferred payment method in some countries. This allows customers to wait until they have received the goods and decided whether they meet their expectations before paying.

By offering payment by invoice, you can also avoid unnecessary back-and-forth transactions if the customer changes their mind and requests a refund to their account. On the other hand, advance payment may benefit your company's cash flow, despite the possibility of a refund if the customer makes a complaint. In many cases, returns may simply involve exchanging an item, with no refund required.

Another way to safeguard liquidity could be to require an upfront payment of at least 30% of the commercial value for all sales above a certain amount. You can then invoice the remaining balance if the customer does not pay the full amount upfront.

Many companies that want to offer payment by invoice use a factoring company. A third party (usually a bank or another financial institution, such as Klarna) buys the invoice and assumes the risk of non-payment.

Direct payment via online banking is both simple and secure. The customer is redirected to the bank's website, where the purchase is completed by transferring the amount directly from the customer's bank account. Direct payment is secure, with encrypted communication, and the card number is not exposed online. However, to offer direct payment via a bank, the seller must open a local bank account for transactions in the customer's market.

In some industries and markets, offering credit terms is more important for staying competitive than in others. Check the standard payment terms in the market and consider adjusting your terms to suit your cash flow. If you find it difficult to meet these terms, explore other payment options, such as credit card payments.

Card payment is a standard payment method for online purchases. You can pay by debit card (directly from your own account) or credit card. Your debit or credit card will be linked to a financial institution or bank that provides the credit and sends you an invoice afterwards, usually with interest.

Cash on Delivery is another good option, allowing customers to pay when they receive their goods, usually at a post office. Customers pay for the goods when they collect them, for example from the post office. This payment method is just as common in Europe as it is in Norway.

Digital payment processing services require you, as the seller, to enter into an agreement with a PSP (Payment Service Provider), such as PayPal, and usually also with a third party (card acquirer). Alternatively, the payment provider may act as an intermediary between your online shop and the card acquiring company. The advantage of this payment solution is that your customers do not need to provide you with any financial information.

This payment option is commonly offered, often alongside other payment methods such as invoicing or card payments.

If you sell to a country where you are VAT-registered, or if the value of the goods you sell exceeds the distance-selling threshold, the invoicing rules of the destination country will apply. The EU and EEA have some similar rules for distance selling.

Finding the right solution for your online store depends on several factors: the number of transactions over time, the value of each transaction, total turnover and the risks associated with your customers and market. The key is to meet your customers' needs while ensuring cost-effective payment settlement.

To keep up with trends and explore what will best support your business model, you can contact your bank and a range of payment service providers.