Payment Options for New Markets: How does your Payment Provider Compare?
The rise of digital payment transactions has shrunk the global marketplace to the size of any single device.
As a merchant, you can sell your goods and services to billions of people all over the world, and all they need is the ability to access your site online.
Actually, that’s not quite true.
As well as being able to present your business to shoppers in every continent, you need to be able to offer them the fullest possible range of payment options.
According to a survey of over 1,000 US shoppers making big-ticket purchases online, 16% of shoppers will abandon a cart with the purchase still in it if their preferred payment option is not available.
It is easy to assume that global platforms such as Visa work in all territories, but the truth is much more complex. A combination of local customs, differing regulatory regimes and the varying penetration of digital payments systems has led to a situation in which many of the largest markets have popular payment solutions which are unique to them, or which only play a minor role in many other countries.
That’s why it’s so important to work with a payment provider partner like NOIRE.
Establishing a business at speed in a new market plays a vital role in ensuring longer term success, with the first tranche of customers creating the foundation for future sales. Merchants who work with NOIRE will be able to choose from more than 220 alternative payment options in addition to the widespread card options.
Simplicity is the key to seamless provision, and that’s why local currencies, fraud detection tools and alternative payment methods can all be deployed in a single step.
Putting payments at the heart of your strategy
If you’re selling into a European country which favours bank transfer options to credit or debit cards, then you need to make that option available to your online customers. If not, they won’t feel safe shopping with you and will look elsewhere, which is why the payment platform you use needs to form a major part of your strategic thinking, and not merely an afterthought.
Without the services of a payment partner such as NOIRE, the challenge of moving into new markets might seem too problematic. Sometimes, businesses take the ‘easy’ option of offering payment provisions that work in their home market and hoping that potential new customers will adapt.
The importance of emerging markets
Further, ignoring emerging markets is not advisable for businesses with ambitions to expand internationally.
According to a report published by PWC, emerging markets are driving a transformation of the payments landscape, and any business which doesn’t respond to this is likely, sooner or later, to find itself left behind at home as well as on a global basis.
In addition, emerging markets around the world are home to 85% of the global population and 90% of those under 30.
Failure to serve these markets reflects a lack of foresight, and the complexities of the payment landscape shouldn’t be used as a reason to justify it.
To help make sense of the sheer variety of payment systems in new international markets, it’s worth a look at four of the most important territories and the different payment options merchants need to offer if they are to gain a foothold in these markets.
The practice of paying for goods and services via a mobile phone is still pretty much in its infancy in the UK, probably due to the fact that a digital payment infrastructure using tools such as credit and debit cards was already well established before the smartphone revolution took place.
According to the latest figures, 19.1% of smartphone users made at least one proximity mobile payment in the past six months, a figure which is expected to rise to 25.5% by 2023.
By contrast, mobile payments in China are almost the norm.
A 2018 survey found that 92% of the population of the largest cities in China used apps such as WeChat Pay or Alipay to make the majority of payments and that this figure only dropped to 47% in rural areas.
In early 2020, the People’s Bank of China (PBOC) published statistics which showed that the number of electronic payments processed by banks in China had risen by 6.3% compared to 2018 and that of the 62.1 billion electronic payments registered, 30.7 billion were mobile transactions.
This is a year-on-year increase of 73.6%, representing 776.08 million people in China using mobile payments.
If your business uses a payment partner that does not handle payments through WeChat Pay and Alipay, then a huge potential market is going to remain completely out of reach. The same applies to China Union Pay, which is currently the world’s largest payment card issuer, accounting for 30% of cards worldwide. Union Pay cards are particularly suited to international merchants selling online in China thanks to the relatively liberal return policies offered on payments made in this way.
Figures gathered by Statista indicate that in 2018, the most popular online payment method in Germany was bank transfer, which accounted for 51% of online transactions, with E-wallets accounting for 23% and card payments just 12%.
A survey carried out in 2020 by the Institute for Banking Innovation (IBI) at the University of Regensburg questioned 1,011 regular online shoppers in Germany and found that 72% of them had a preferred payment method when shopping online. Of those who did, 57% opted for PayPal. This was followed by invoice at 22%, credit card at 11% and direct debit at 5%.
The survey also found that online retailers who only offer one payment method reached a maximum of six out of ten customers, and that by combining the six most popular payment methods – comprised of PayPal, invoicing, credit card, direct debit and instant transfer, plus prepayment – online merchants could achieve a dropout rate of just 3%.
Brazil is a growing marketplace which many international sales organisations are planning to target. It’s the largest economy in Latin America and the ninth largest globally.
Any business wishing to make inroads into the lucrative Brazilian online market will have to deal with a payment eco-system which is markedly different to that in Europe.
Although PayPal has been gaining in popularity there in recent years, the most popular method of paying for online purchases is the Brazilian Boleto Bancario.
This system allows people to pay for online purchases with cash, making it suitable for the 30% of the Brazilian population who don’t have access to banking facilities. Above and beyond this 30%, however, the Boleto Bancario is popular because it enables payment without the customer having to enter personal or payment details on the website where the purchase is being made.
Instead, users are provided with a prefilled payment slip which they can then print and pay physically at a bank branch or authorised processor such as a post office or supermarket. Alternatively, they can pay electronically at an ATM or via a banking app.
Currently, Boleto Bancario payments account for as much as 25% of all online purchases made in Brazil.
The e-commerce market in India is tipped to be worth as much as $200 billion by 2026, and any internationally oriented business wanting to take a slice of that market will have to be able to offer the full range of payment options in operation there.
These include Paytm, a digital payment solution which has more than 200 million users every day, a payment app called BHIM (Bharat Interface for Money), which utilises QR codes, and global solutions such as PayPal and Google Pay.
As with many emerging markets, a sizeable proportion of India’s proportion has no access to banking services – in this case 20% – and generating sales from these individuals means offering the full range of payment options.
Here at NOIRE we have the local knowledge to enable any of our clients to work seamlessly across a huge range of countries and territories.
We know what each market will expect in terms of payment options and can offer these options alongside established choices such as Apple Pay.
As the e-commerce payments systems and infrastructure in each country or territory evolve, we keep track of developments, ensuring that our clients will always be in the position to enable payments, wherever in the world they operate.