While the credit card is the most popular online payment method in the United States, that’s not the case in such important markets as the United Kingdom, Germany and China. E-retailers need to know local preferences before they go abroad, an Adobe executive advises.
From Bitcoin to novel ways to pay with your phone, there is a large diversity of startups inventing new online and offline payment methods. But when it comes to driving e-commerce globally, it is what's in people’s wallet that counts, and it's not necessarily a credit card or some fancy new payment method.
Although the credit card is by far the most popular payment method for consumers in the United States and some parts of Europe, people in other countries are accustomed to using the local payment method most familiar and trustworthy to them, as the graphic below illustrates. (Source: “Market Overview: Global Payment Service Providers 2013”, Forrester Research, Inc., November 21, 2013).
To maximize international sales, the key is to support currencies and payment methods of the countries that you want to grow in. We’ve seen significant results from investing in the capability to accept a local payment method for a given market. And ensuring that pricing is shown and charged in the local currency, versus USD—a tendency of U.S. centric e-commerce teams—can make a huge difference in the number of orders you’ll receive.
In Africa, where there are many different ways to pay, each region or country should be treated as a different market. For example, Kenyans typically use their mobile money accounts, M-Pesa, over bank accounts. In Nigeria, however, M-Pesa has barely made a ripple in the pond. The most common payment method there is the Interswitch Verve card, which is issued through 16 of the country’s major banks.
Alipay, a popular payment method in places like China, has overtaken PayPal as the largest mobile payments platform globally, with more than 300 million registered mobile accounts.
Many e-commerce teams initially approach the payment method challenge from a cost standpoint. It’s not easy (or cheap) to design your system and user experience to support a new payment method. For U.S. companies with large international markets, the easiest initial roll-out uses USD with support for international credit card payment methods. The reality, however, is that the number of orders goes up significantly when you invest in making the additional connection to support a new payment method. These changes take time, but consider that, according to Visa’s CEO, Charlie Scharf, it is going to take five to 10 years for people in China to embrace foreign credit cards, which must be issued through the China UnionPay card network.
For European companies, providing customer support with local payment methods makes a major difference in closing sales with international customers. For instance, Russians are often keen to pay with cash, and Germans tend to invoice one another and pay via wire transfers. Yes, that means you now also have a fulfillment challenge if you’re going to accept cash on delivery, which, by the way, is also popular in China and India. Furthermore, even though credit cards are still the most popular online payment method in some regions in Europe, each country typically has its own distinct local card network that can’t be overlooked.
Vistaprint, which has an international customer base, leverages Digital River’s global payment processing system. At Merchant Risk Council 2014, Ryan Maher, manager of e-commerce payments at Vistaprint, and Souheil Badran, executive vice president and general manager of Digital River World Payments, gave a great presentation on the trends and best practices for e-commerce, reinforcing the contribution of localized payment methods to international sales. As an example, the Vistaprint graphs below illustrate payment methods in Japan are very different from those in Sweden.
Supporting local payment methods is a tremendous asset in improving sales. At the final checkout page, instead of losing customers who bounce from the process, you can close the sale with a streamlined, culturally appropriate payment option.