Local and global payment solutions are indispensable for every eCommerce business looking to cater to the payment preferences of their target audience across markets and regions. Merchants with a localised payment offering are better set to boost their conversions and revenue, as they provide more choice to customers at checkout with payment types they know and trust.
In this article, we define what local and global payment methods are and the key options global consumers use for their online transactions. We also explore what's in store for local payment options in the future and how to integrate the ones that best meet your business needs.
What are local and global payment methods and why do they matter?
Also referred to as alternative payment methods, local and global payment methods involve any means of payment which isn’t completed via cash or a major and international credit and debit card scheme (e.g., Mastercard, Visa, etc.). Among the most frequently used local and global payment solutions are bank transfers, invoice payments, direct debit, QR codes, prepaid cards, and eWallets.
If you want to get familiar with the specifics of local and global payment solutions, take a look at our video.
But why are local and global payment options so important for an online business or brand?
A report from McKinsey unveils that eCommerce is becoming the mainstream way to shop around the world in a post-pandemic era. In light of this, digital payment methods also surged exponentially among online shoppers. Therefore, an optimised checkout experience with preferred payment methods can help make your brand stand out from the crowd and facilitate the shopper's buying decision. It’s not surprising that seven in ten (70%) online shoppers globally, as research from DHL demonstrates, are willing to click ‘Pay’ when their payment method of choice is offered at checkout.
Therefore, by revising your payment strategy and including locally preferred payment options, you prove that you took the time to understand your target audience and prioritise their convenience. In turn, an offering that’s tailored to the unique needs of your sought-after markets can help convert more customers and increase your profit margins.
Key local and global payment methods consumers use
Payment preferences vary from one country to the next and below we list some of the most trusted and trending payment types across regions.
Digital wallets or eWallets
In Asia, eWallets are the payment method of choice for the majority (78.6%) of digital consumers. In fact, mobile wallets such as Alipay faced widespread acceptance by most (47%) digital shoppers in China.
Digital wallets are also building momentum among North American online buyers. Data from Statista reveals that 44% of US and Canadian consumers used a digital wallet such as PayPal to complete an online transaction in 2022.
As eWallets are becoming a widespread option internationally, some regions like Latin America have started building their own local digital wallets. For example, Mercado Pago was leveraged by nearly 80% of Argentinian consumers in 2021 according to emerchantpay's Global Payments Outlook report.
Buy Now Pay Later (BNPL)
BNPL, where consumers can pay for products or services in instalments over an extended period of time, is another popular payment solution. An example of this is PayPal Pay in 3, where customers can spread out the cost of their purchase into three payments. Remarkably, eight out of ten top global BNPL markets were in north-western Europe as of 2021, with Sweden recording the highest share of eCommerce transactions made via such services with 25%.
Local card schemes
A local (or domestic) card scheme includes any credit, debit or prepaid card that operates within the country in which they're issued, providing an alternative to major card schemes such as Mastercard and Visa among others.
For example, for Belgian consumers, Bancontact is a must-have local payment method. This payment option dominates 85% of the country's transaction volume with high levels of penetration in sectors such as travel, gambling, and online retail. Elo is another major local payment card brand in Brazil. This payment option supports credit, debit and prepaid transactions and boasts the third largest market share in the country after Visa and Mastercard. When it comes to Asia, RuPay is a renowned local payment card in India. Research by Reuters shows that RuPay is winning ground over global giants – Visa and Mastercard. In fact, RuPay has a 20% share of India’s payment card market which is led by Visa at 44% and Mastercard at 36%.
Direct debit and prepaid cards
Direct debit payments, where users instruct their bank to authorise someone to collect payments from their account when they’re due, are a go-to option for German consumers, totalling a market share of 51% in 2022.
Prepaid cards (vouchers) are also a regional favourite in Europe, with more than one in three (34%) Italian buyers using them to pay for their online purchases. Such cards have a balance loaded which acts as the user's spending limit. Once the balance is spent, the card becomes unusable until money is added to it. Neosurf is a well-known voucher which is available in over 100,000 stores worldwide. With NeoSurf, users can redeem the ten-digit voucher online and pay for their purchases, while any remaining funds will be retained for future use. Paysafecard is another widely used voucher where shoppers can make online transactions using a 16-digit PIN purchased in over 650,000 points of sale across more than 50 countries. It should be noted that both Paysafecard Neosurf offer a wallet account to their users which they can top up with the voucher or other payment solutions and use to pay like with any other wallet.
Peer to peer payments/bank transfers
Bank transfers describe the process where users send money from one bank account to another, usually electronically. Data from our Global Payments Outlook research identifies that bank transfers are a standard choice in Thailand (44.3%), Indonesia (30%) and Vietnam (28.4%). Our research also shows that Europe is another market where bank transfers are flourishing. Precisely, Nordic countries recorded a high use of bank transfers, including Sweden (25.5%), Finland (25.5%), Norway (20.8%) and Denmark (20%).
Peer to peer payments such as bank transfers are likewise highly desirable among Middle Eastern and North African consumers. This includes nations such as Lebanon (53%), Bahrain (52%), Jordan (50%), Kuwait (44%), Qatar (43%), and Egypt (41%) among others.
The future of local and global payment methods
Payments is anything but a static sector; innovation is omnipresent. How people transact today isn't necessarily how they'll transact tomorrow. Below we delve into some of the trends that are predicted to transform local and global payment solutions.
The surge of digital wallets
The digitalisation of shopping as well as the penetration of smartphone devices and other online channels have shaped consumer demand around payment availability, ease, and speed. The emergence of payment technologies such as digital wallets seems to fulfil these needs. A recent study from Juniper Research testifies to this, as it projects that this payment solution will witness growth in users by 53% — reaching 5.2 billion users globally in 2026.
Therefore, digital wallets are a payment method that merchants need to keep their eye on.
Heightened security for digital payments
The payment solutions consumers globally prefer are evolving fast and so too are the ways they authenticate their transactions. New models of authentication aim to maximise security and, by extension, enable merchants to design safer and more seamless checkout experiences for their customers.
Biometrics — such as face and eye scans or fingerprint analysis among others — is one such example (Read more about biometric authentication here). Biometric approval of transactions is common practice for anybody using a digital wallet such as Apple Pay or Google Pay™.
Estimates from Research Nester want the biometric payments market worldwide to hit a CAGR of 49% by 2027. Biometrics is also aligned with Strong Customer Authentication’s (SCA) mandate for two-factor authentication (2FA) as part of the revised Payment Service Directive (PSD2). The aim is to speed up purchasing processes for consumers while increasing security against online fraud. Using a smartphone’s biometric authentication when asked to authorise a payment is easier and faster than having to remember and input a password or search text messages for a PIN. To address the security concerns around this form of authentication, behavioural biometrics are introduced to find out how users handle their smartphones and use this data to validate users.
Integrate local and global payment methods with emerchantpay
Consumers find the concept of choice in payment types appealing because they feel they have more control and power over their purchasing. This suggests that they're more likely to buy from a business that offers them this opportunity.
For online merchants wishing to expand their customer base, it’s wise to optimise their payment offering and include local and global payment methods. Working with a trusted and knowledgeable payment partner can facilitate this. At emerchantpay, we pride ourselves on operating local teams of payment experts in sought-after markets. With extensive knowledge of regional trends and ever-evolving regulatory standards, we will provide you with strategic advisory and payment technology to design an optimised payment journey. This way you can be better positioned to maximise your payment acceptance and profitability.
Want to tap into emerchantpay’s 60+ local and global payment methods that best suit your business? Contact us and find out how to succeed today.
Google Pay is a trademark of Google LLC