If I could offer one piece of advice on expanding your ecommerce business into new geographies, it would be this: One size does not fit all. Today’s online consumers are global. But that does not mean they all think and act the same when shopping. If you want to optimize your site for the global consumer, you need to tailor their online shopping experiences to meet their local purchase preferences – and localizing your payment process along with your payment methods are a great place to start.
Pick the Payment Methods that Matter Most
One of the ways to reach global shoppers is by offering them alternative payment methods that are familiar and preferred. Alternative payment methods – more commonly referred to as everything except credit or debit cards – are a critical to driving conversions and online sales not only in many European countries, but also in emerging markets like Brazil, India, China and Russia. While different methods are popular in different countries and usage rates may vary, they all have the power to influence buyers in targeted geographies. It’s important to know which alternative payment methods are popular in the countries where you do business. For example:
- Sweden: Approximately 24 percent of consumers in Sweden prefer to pay by Internet Bank Payments and 34 percent select the invoice option.
- Netherlands: The local Internet Bank Payment scheme iDEAL dominates the Netherlands with approximately 50 percent market share.
- Brazil: Up to 30 percent of Brazilian online shoppers pay by Boleto Bancario – a cash-like payment option initiated online but paid at a bank branch or via a bank transfer after the online purchase.
- China: The e-wallet is the preferred payment method of Chinese consumers. The local wallet Alipay, which is leading the market, is currently being used in almost a third of all ecommerce transactions in China.
There are a number of factors to consider before adding alternative payment methods to your checkout. It all starts with knowing your customers and understanding their preferred way of paying. For example, if you are selling into a country where shoppers show an interest in different payment methods, or if you are targeting a younger or un-banked segment, then you should definitely consider payment alternatives.
Keep in mind that payment alternatives also require different transaction and reporting flows than standard card processing. Some payment types offer immediate fund transfers from the consumer to the merchant, others may take a few days to be fully executed and transferred. Make sure that your business model and internal back-office processes can support these unique requirements. In some cases, you might need to set up a local legal entity or sign an additional agreement with the local bank or payment scheme. Make sure to discuss these and other considerations with your payment service provider before spending time and money on implementing a new payment method.
Drive Conversions that Count
In markets like Germany, Russia, India and Sweden, alternative payment methods represent more than 50 percent of the total ecommerce transaction volume. By limiting your payments program to traditional credit and debit cards, you lose out on important sales and revenue volumes. Our experience shows that merchants can gain as much as a 30 percent revenue lift when adding alternatives to their existing payments program. The proof is in the numbers. Here are some real-word results generated by merchants we work with:
- Finland: The addition of Internet Bank Payments produced a 30 percent lift in revenue.
- The Netherlands: The addition of iDEAL increased revenue 17 percent.
- Brazil: The addition of Boleto Bancario drove up revenue 10 percent.
To get similar gains across your global payments program and ensure that adding alternative methods is the right move for your business and your customers, work with your payment service provider to walk through the implications.
Has your business benefited from adding alternative payment methods to your payments mix? Share your thoughts below.
This blog post is based on a presentation given at the Merchant Risk Council European Congress. Contact us at email@example.com to receive a copy of the full presentation. If you’re interested in learning more about this topic, check out our global markets resources, including infographics, value briefs and white papers.