One of the stumbling blocks with the global expansion of digital wallets is the resistance to payment cards in many countries, including India, China and Brazil, notes Forrester Research in a recent report.
"Local payment types are critical. In both China and Brazil, the addition of local payment types remains key. In Brazil, many e-commerce players support boletos as well as local credit cards and digital wallets they also offer shoppers the option to pay via installments," wrote Zia Daniell Wigder, a Forrester vice president and research director. "In China, Alipay dominates but others like Tenpay and China UnionPay are popular options. In short, an international credit card-centric approach is generally a poor bet in either country."
But mobile wallets are either using a payment cardthe preference for credit versus debit changes based on regionor direct bank access. Although direct bank access sidesteps the plastic resistance issue, it also brings with it security risks that credit cards do not have. In some geographies, consumers are scared to give any business direct access to their bank account, especially if that is all the money they have to live on.
"That's one of the challenges," Wigder said in an interview. Some mobile wallets "offer to pay by a credit card exclusively and that's not going to work for a lot of markets around the world." In Brazil, for example, she said that some local credit cards simply won't work outside the country, which is another blow for global wallet acceptance.
Wigder noted that cash-on-delivery (COD) is huge in markets including India and Russia. "COD is challenging, but it's an essential part to get them to buy online," she said. "There is a huge percentage of deliveries being refused on COD orders. But as much of a challenge that may be for retailers, it is a key factor in getting consumers to buy online."
Pramod Saxena, chairman of Oxigen Wallet in India, has also made the case that COD is both essential for his customers but is still problematic. "Cash on delivery is a serious problem" because sometimes the customer will change his mind and refuse the shipment, he said in an earlier interview. "Or the customer is not there when the goods are delivered. This is a serious viability challenge." He estimated that almost a third of all COD deliveries in India are returned.