U.S. and U.K, firms looking global need to learn 'local payment methods'
As commerce goes global, payment preferences, such as using cards, e-wallets or cash, are becoming more local.
That can be a surprise for people in the U.K. and U.S.; PPRO’s recent research highlights that 91% of U.K. consumers use debit and credit card payments. But there are over 450 significant local payment methods (LPMs) across the globe, accounting for over 75% of global e-commerce transactions.
In the U.K., PayPal is the most widely used method for invisible payments. However, the Dutch opt for iDEAL as their payment method of choice, which is less suited to invisible payments. In Latin American markets, cash-based payment methods like Boleto Bancário in Brazil and OXXO in Mexico take up a significant share of e-commerce. Those are certainly not invisible either, as the customer has to visit a brick-and-mortar store to pay.
If customers are forced to use a payment method they don’t trust, over 65% are likely to go to another retailer that accepts their preferred payment method. For U.K.-based retailers who want to do business across borders, it’s important to recognize that the key to increasing conversion is accepting your customer’s preferred payment method.
Unsuccessful implementation of invisible payments — where locally preferred payment methods are overlooked — could lead to the loss of loyal customers to a competitor. But with so many LPMs, it’s extremely difficult to establish a single unifying, invisible payment journey to achieve global adoption.
There is no doubt: Invisible payments will continue to revolutionize the customer experience for casual or everyday purchases. However, it’s my opinion that we won’t see invisible payment journeys across the board for quite a while. Consumer trust, cash-dependent shoppers, regulatory requirements and the explosion of local payment methods are significant hurdles to be jumped in order for that to happen.
Here’s what I recommend for getting on the road to success: Get to know your customer. Learn how they like to pay for each purchase they make. Offer the right payment methods. Don’t force adoption of invisible payments, but incentivize it through exclusive discounts or bonus loyalty points.
This all boils down to providing the customer with options because, ultimately, we live in a society that expects choice. Retailers that provide customers with their preferred way to pay — visible or invisible — will be the ones who prosper in today’s competitive marketplace.