Don’t lose customers for the simple reason they can’t pay you. We explain why local or alternative payment methods (APMs) are important and how to choose which ones to offer.
Here’s the challenge: You want to sell internationally and build a global brand online, but there’s no global way to pay.
Every country has its own payment methods. Its own banking rails. Its own regulations, requirements and licensing. It’s an unscalable business model. Even the biggest companies haven’t got the resources, never mind the budget, to engineer a global solution. Yet everyone wants to be international.
E-commerce as a proportion of general retail is increasing. The Covid-19 pandemic has turbo-charged growth further still. For example, e-commerce accounted for 30% of all UK sales in April 2020, up from 19% before the pandemic, says JP Morgan.
Most e-commerce growth is cross-border. This means customers want to buy from you. Having got them to the checkout, don’t lose customers for the simple reason that they can’t pay you. But that’s exactly what may happen if you don’t offer local payment methods.
Why accept local payment methods?
Not all customers use cards. Around one-third of adults worldwide don’t have a bank account. And many under 18s don’t have a card or a bank account. That’s significant for those in the video game, digital goods or clothing sectors, who are targeting younger customers.
Payment cards account for around half of all sales by value in the US and UK, the second and third largest e-commerce markets worldwide. But it’s not the same everywhere.
In Germany, for example, where the e-commerce market was worth €94 billion in 2019, Europe’s third largest, 28% of online sales were made via invoice. 25% were made via digital wallet and 20% by direct debit. Cards come a distant fourth with 10%, according to JP Morgan.
It makes sense to accept local payment methods online, simply because it’s how customers want to pay. That may be Apple Pay or PayPal. Or bank account-based methods, such as Bancontact in Belgium, giropay in Germany, Multibanco in Portugal or Przelewy 24 in Poland. Or even Moneta which is popular in Russia.
How to choose which local payments to offer
One size fits no-one in payments. Generalising for brevity, your optimum payment mix depends on knowing your business, industry, geography and customer.
Whether you sell B2C and/or B2B will influence the payment methods you offer. As will your industry sector. Customer payment preferences in the travel and hospitality sector differ from the gambling and general retail sectors.
Next, consider whether your sales are mostly one-off purchases initiated by customers or recurring sales, such as subscriptions, initiated by you? Buy-now-pay-later (BNPL) may be suitable for one whereas direct debit or card payments are better suited for another scenario.
Localising by business and industry is one thing, but also consider countries. Where do you currently trade, and where do you want to trade? Payment preferences are strongly national. It’s inconvenient for customers to pay in a different way just to buy from you. So, localise and personalise by customer.
Consider the number and order of payment types you offer. Less is more. A carefully curated selection is better than a plethora of payment types. Don’t overwhelm your customer and turn the convenience of choice into the inconvenience of choosing.
Local payment methods from PXP
We offer integrations to a range of local payment methods from major international card brands, local schemes and bank transfers to e-wallets and instalment options. That’s in addition to sector-specific payment methods for the gaming and other industries.
As we’ve done the integration at our end, there’s practically zero implementation risk to you. What’s more, if one payment option is not popular, we can switch it off. If a new option launches, we can usually turn it on in less than a fortnight.
We’ve pre-selected payment bundles based on industry sector, country and customer. Plus have automatic roll-overs, so that if your customer’s first payment choice doesn’t go through, we’ll immediately suggest an alternative, meaning you’re less likely to unnecessarily lose a sale.
Want to know more?
To request a free 30-minute consultation on improving local payment acceptance in your business complete your details on the contact form below.