It’s been a while since cash started packing its bags and giving way to plastic. But that doesn’t mean that credit cards are the only payment players. Nor does it spell the death of cash completely. Alternative Payment Methods (APMs) are rising in popularity around the globe and they’ll affect the way you do business.
So, if you haven’t considered localized payment methods as a way of increasing conversions, it’s about time you did. Why? Because the data is overwhelming.
According to the WorldPay Global Payment Report, 2017, by 2019, over half (55 percent) of all online transactions will be completed using APMs. While the 96 percent of Americans who shop online still have a preference for credit cards, in China, just 5 percent of consumers use this method to make a purchase.
While you still need to carry out local market research wherever you do business, these three payment trends are global, so be sure to keep them in mind.
Bank Transfers Are On The Rise
While Americans might think this payment method is dead, bank transfers are set to replace credit cards as the second most popular APM. In fact, by 2021, they will own an eCommerce market share of 16.5 percent. 13 of the 36 countries showcased in the report claimed that bank transfers were their preferred payment method. Interestingly, this spanned all continents, except for North America.
So, what is it about bank transfers that consumers seem to like? Convenience is the name of the game here, especially for Western Europeans. Consumers already have their bank details set up to make payments like direct debit and are comfortable remembering just one simple way to pay and one set of passwords.
Bank transfers are usually instant, as well, which means that there are no nasty surprises at the end of the banking period. Bruce Dragt, EVP/Product at YapStone adds that “no bill coming at the end of the month,” is a further key driver.
Moreover, bank transfers allow consumers to feel secure about their payments when it comes to fraud protection. Says Dragt, “they can feel more confident of making purchases without the risk of fraud.”
For online merchants, bank transfers are also a popular option, as they generally come with lower associated costs than credit and debit cards.
e-Wallets To Take The Lion’s Share
Of all APMs available globally, e-wallets (or wallet-based solutions) are set to take the lion’s share of APM popularity. This may either be through mobile purchases making a payment in-store, using an app like Apple Pay or Google Pay or through a virtual wallet online to make payments and transfers. e-Wallets are set to make up a massive 46 percent of all transactions by 2021.
Dragt explains, “e-Wallets can be funded in various ways, bringing rise to their popularity. From a bank account to emailing funds, they offer a fast and efficient checkout experience.” Currently, the most popular e-wallets globally include PayPal, Yandex.Money and Alipay, but there are hundreds of other alternatives, depending on your chosen market.
Don’t Forget About Cash-Based Solutions
Of course, cash is a rare commodity these days in the United States and most of the developed world. But, if you’re planning on doing business in key developing economies, such as India, the Philippines, and Indonesia, you’d better offer this alternative. This doesn’t just mean accepting cash on delivery (although, that might be a good idea), but it covers prepaid cards, as well.
Says Dragt, “Cash-in APM cards need to be loaded in advance of the purchase. The balance available on the card effectively acts as the spending limit, and are popular with people with bad credit, younger consumers, or those with limited resources.”
With customer experience the name of the game in 2018, you need to provide an online shopping environment in which your customers feel comfortable and secure. And that goes beyond translating your message or localizing your images. If you aren’t offering your consumers’ preferred payment method, no matter how much effort you put into marketing and customer service, you’ll fall at the final hurdle.