Popular Global Payment Options for Better Conversions and Customer Loyalty

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Globalization and the pandemic are driving forces for change in retail. Merchants have the choice to meet customers where they are and how they want to shop or be left behind as the e-commerce market continues to grow rapidly.

Technology has made it easier than ever for e-commerce businesses to sell to global markets, and shoppers are growing more accustomed to making purchases regardless of geographical borders. What customers still demand, however, is a shopping experience that is localized and relevant to their own cultural preferences, including method of payment. 

Offering the online payment options shoppers prefer, depending on their geographic location, is not just a courtesy: 70% are more likely to finalize a purchase if their preferred payment method is displayed.

Depending on your audience, credit cards and PayPal may be the obvious preference, but assuming those options are a one-size-fits-all solution is unwise. In order to know that you are effectively reaching customers in all corners of the globe, it’s important to understand their individual wants and needs, which can vary dramatically by region and country, and to then be equipped to support those payment preferences.

First, make sure your business is offering the best payment options and see if there are any you need to add. Following are some of the options your shopping cart should definitely include:

  • Credit and Debit Cards are still widely used by shoppers to make many of their online purchases. Their popularity is due in part to their perceived security. Western markets seem to favor credit cards over debit cards, as they often offer reward programs and affect a user’s credit rating.
  • eWallets, like PayPal, AliPay, ApplePay, GooglePay, WeChat, or Venmo, are proving to be a serious challenge to the popularity of credit and debit cards, and are the fastest-growing method worldwide. It is projected that 50% of global e-commerce sales by 2022 will be conducted via eWallet, and in Asia-Pacific markets, almost 60% of 2019 purchases were made this way. eWallets can also coordinate with mobile wallets via customer’s smartphones, making the process even more efficient.
  • Bank transfers are also very popular and have different flavors like SEPA, EFT/ACH, BACS, etc. Their popularity is likely due to their perceived security strength, as the customer’s bank has to authenticate the transaction before the payment goes through. In 2019, 9% of worldwide e-commerce transaction volumes were made via bank transfer, most commonly in European countries.
  • Buy Now, Pay Later methods, like Klarna, AfterPay, and Bread, have increased in popularity recently, with a 162% growth rate over the past two years. With this payment option, shoppers can pay over time without opening a credit card, and young shoppers who may not have cards are flocking to this option. It’s been reported that offering the buy now, pay later alternative to traditional payment methods can draw up to 30% more buyers who wouldn’t otherwise have made a purchase. Although still a new option, with just over 1.5% of global e-commerce transactions in 2019, it is likely to rise in popularity.
  • Prepaid cards, primarily used by customers who have no bank affiliation and/or are minors, account for just about 1% of global purchases, and the most popular cards are Paysafecard and Mint. 
  • Electronic checks, or eChecks, are a type of electronic funds transfer that relies on the ACH network to process payments. The amount is withdrawn from the payer’s checking account, transferred over the ACH network, and deposited into the recipient’s checking account. It’s like a paper check, but faster. eChecks are popular with US e-commerce businesses that have high sales and whose transactions have high average payment amounts.

Once you have your payment methods in place, tailored to each of the key regions or geos to which your business is gearing up to sell, it’s time to target each region’s preferences within those options. Local payment methods can range anywhere between 10% to more than 50% in adoption in a country, so this is a crucial step to success for your eCommerce business.

  • Europe. Shoppers in Europe most commonly use credit cards or eWallets to make online payments, regardless of the market.
    • Germany. German customers favor PayPal, used in 57% of all German online transactions. Paying with an open invoice comes next, followed by cards. SEPA direct debit is also popular in Germany. 
    • France. Only 16% of French shoppers use PayPal, a country where shoppers favor Carte Bancaire, a local payment method available only in France. 
    • Netherlands. The most popular payment method in the Netherlands is by far iDEAL, a standardized online banking-based payment method. 
    • Russia. Online shoppers in Russia favor eWallets, such as Qiwi wallet, Yandex, and WebMoney.
    • Turkey. Turkish customers prefer making installment payments, and 80% of card transactions are made this way. As local cards like Maximum or Bonus Card come with the installment option, 17% of shoppers prefer them for payment
  • North American and Latin America. More than 50% of payments in this region are made via credit or debit cards, but additional payment preferences differ by country. 
    • United States. After cards, shoppers in the US generally prefer PayPal or other digital wallets but also use ACH transfers or eChecks.
    • South America. Online shoppers in this region are more likely to use local credit cards with installment options. Local credit cards with installments are a top choice for almost a third of online shoppers in Brazil, and businesses who don’t offer the preferred Boleto Bancario or other local cards may struggle (12% of Brazilian shoppers pay with their Boleto Bancario and 28% others prefer other local cards with installments). 
  • Asia Pacific. More than 50% of this region’s online purchases are made using eWallet payments.
    • China. AliPay and WeChat Pay are most popular with Chinese online shoppers. Credit cards are also preferred, including UnionPay, followed by bank transfers. 
    • Japan. Japanese online shoppers prefer cards — Visa and Mastercard are most widely preferred – as well as the local brand JCB, which is also popular; it was recently reported that 55 million JCB cards are being used in Japan. Next comes Konbini, a local cash-based payment method where buyers can shop online and then pay in a convenience store. 
  • Africa. There is a great deal of diversity in shoppers’ payment preferences in Africa. Here are a couple of examples:
    • South Africa. Most South African shoppers pay online using credit or debit cards. 
    • Egypt. In this country, digital wallets are popular, as well as cash on delivery and prepaid cards.

As global e-commerce continues to explode, payment localization is an important matter for businesses to incorporate among their priorities. Providing payment options that meet the preferences of shoppers around the world can be a key determining factor in their decision to buy. It’s also a way to build trust and a level of comfort, so they will come back time and time again.  

Of course, payments are just one piece of the puzzle. For full localization, you need to look at content localization, currencies (not just display, also billing currencies and to manage currency exchange rates), pricing formats, sales tax display, cart flows, design, colors, trust elements, support channels, and so on.

Making cultural preferences a priority when designing your shopping cart will lead to higher conversions and better customer loyalty in the long run.

Stefan Cenusa is Senior Product Manager of 2Checkout (now owned by Verifone).