When it comes to making a purchase, who doesn’t use a credit or debit card?
Most of the world is who.
Although paying with a credit card is the norm in the United States and much of the Western world, it is certainly not the global norm. It is estimated that less than 18% of the world’s population can pay in plastic.
Before the explosion of e-commerce, payment options were mostly limited to cash, check or credit. But shoppers today are finding new ways to pay for their goods, and their digital payment methods vary widely from region to region.
According to industry estimates, alternative payments (those made without a credit or debit card) account for around half of all online transactions. In the US, this includes Apple Pay, PayPal, and other mobile payment and digital wallet services. Hundreds of other local payment methods are gaining traction around the world. For merchants who only accept credit cards online, this represents a huge loss of potential revenue, especially for those who sell internationally.
Local payment types are often country-specific and cater to those who don’t have a credit card and/or bank account. In China, for example, Alipay and WeChat Pay allow people to use a single app to pay for everything from electricity to street food. And Brazil’s Boleto cash and voucher system allows cash payments.
As trade borders disappear and merchants become increasingly dependent on international sales, businesses that do not accept payment methods in an increasingly global market will feel the effects on their bottom line.
Customers want seamless online transactions, and creating that seamless experience is key to an online retailer’s success. After just one negative shopping experience, 57% of consumers will stop buying from an online merchant or cancel a digital service entirely. And almost half (47%) will leave a negative review or tell a friend about the bad experience.
Enabling local payments is one way to invoke an easy shopping experience in your digital landscape. The benefits of doing so include:
• Allow customers around the world to know how much the item they are buying costs in their home currency, and not in the currency of the merchant’s country;
• Connecting people without bank accounts to e-commerce via mobile devices or cash payments, allowing them to make payments online using digital wallets or vouchers;
• Let customers know that their preferred payment method will be accepted by a merchant, no matter where.
Several organizations offer merchants the ability to accept local payments, but this is just a starting point. To take full advantage of accepting alternative payment methods, merchants must also be able to display prices in buyers’ local currencies and consolidate all payments, regardless of their country of origin, into one. single daily deposit to facilitate reconciliation.
Merchants need to know where their customers are and which countries have the highest cart abandonment rates. This provides the information needed to modify product offerings, pricing, and placement to better reflect how different cultures shop. When businesses are ready to add new currencies and countries, they need a simple application programming interface that can keep payment capabilities relevant and up-to-date.
Whether your target customers reside in neighboring regions or on opposite sides of the earth, leveraging alternative payments can boost your digital commerce presence and improve your business. This will help you grow your customer base, improve your bottom line, and position your business for global success.
—Jean Harvey Johnson is Vice President, Global Alternative Payments, at Fiserv Inc., Brookfield, Wis. This article appears in a slightly different form on the Fiserv website.