Grow your business globally with localised payments  

The payments landscape is going through radical changes. This is partially driven by the growing consumer appetite for digital payments and the high smartphone adoption, representing 4.96 million smartphone users worldwide as of 2022. The Covid-19 pandemic has also pivoted buyers towards eCommerce. This shift towards online shopping helps break down cross-border boundaries for businesses aspiring to enter markets beyond their home countries and reach new audiences.

In this article, we give actionable insights about local payment methods that may spur cross-border merchants into localising their payment offering and engaging new digital customers internationally (Infographics included below).

What are local payment methods?

Also known as alternative payment methods (APMs), local payment methods (LPMs) are payment solutions popular in a specific geographic location and involve any type of payment that isn’t cash or a major credit or debit card scheme. For example, P24 is a preferred payment method in the Poland and Bancontact is a local payment solution in Belgium.

With an eCommerce market size that's anticipated to hit 8.14 trillion by 202 worldwide, local payment solutions are catapulting payments years ahead of projections while boasting a growing number of digital payment natives.

Watch our video on local payment methods and find out all you need to know about the preferred ways your target consumers wish to pay.

Types of local payment methods and their popularity

APMs such as eWallets and Buy Now, Pay Later (BNPL) payments are becoming all the more mainstream around the world. According to Statista, mobile wallets held a global transaction volume of $5,798,077 million in 2021. This is predicted to double by 2025, with North America and APAC accounting for most of the traction.

It’s worth noting that BNPL transactions globally grew by 43% from 2020, hitting $125.09 billion in 2021 and paving the way for higher adoption across the board. This suggests that online merchants need to work with a payment service provider (PSP) that will help them adapt their cross-border sales strategies and meet varying local preferences to stay competitive.

Digital / mobile wallets

Smartphone applications and other online channels have shaped consumer demand around payment availability, ease, and speed that eCommerce businesses should deliver. emerchantpay’s Global Payments Outlook report reveals that mobile penetration is impacting cash-centric countries such as Italy (109.6%) and Germany (103.2%) which heavily relied on smartphones to buy online in 2021. Evidently, the rising mobile adoption has introduced consumers to additional ways to pay online, one of which is eWallets. This electronic payment method ensures a convenient and safe checkout journey. The virtual versions of credit or debit cards are securely stored in the eWallet, so the user doesn’t have to enter their card payment data or carry the physical card to complete a transaction.

Part of the hype around this payment option derives from the high global accessibility and the improved capabilities of smartphones. So it’s no wonder that eWallets are also forecast to represent the majority of online transactions (53%) internationally by 2025. According to our Global Payments Outlook report, APAC dominates the eWallets scene with a whopping 78.6% adoption, followed by North America (39.1%), Europe (34%) and Latin America (20.1%). The same report shows that most South African digital shoppers (20%) tapped into eWallets for their online purchases, suggesting the velocity of mobile money users is accelerating in the African sub-region.

The following two infographics show a breakdown of eWallet penetration in key markets and countries – from Europe and the US to APAC, LATAM and MENA.

Bank transfers

Bank transfers are used to move money to and from bank accounts either regionally or globally. Customers are given a unique reference number and bank account details where they can transfer their payment either by mail, phone, or online. Bank transfers are high in consumer preference for the speed and security they offer, as the two parties can be in different geographic locations and transmit funds without the need to exchange cash.

Our Global Payments Outlook report highlights that the use of this payment method was relatively high in LATAM as of 2021, with Chile (38%), Peru (34%) and Colombia (25%) prevailing.  Europe is also leading the game, as Sweden stands at 25%, while Norway (21%) and Denmark (20%) are tailing off. A striking factor about MENA, according to the same research, is that its fragmented market presents stark contrasts in payment preferences compared with other regions, as cash and/or cheques reign in Kenya (74%), Morocco (60%) and Egypt (40%).

Buy Now, Pay Later (BNPL)

With Buy Now, Pay Later (BNPL) payments, shoppers can pay for goods or services in instalments over an extended timeframe. During a BNPL transaction, the customer gets on a credit agreement with the merchant to pay for their purchase on a future date, split into interest-free instalments. Naturally, if the customer fails to make the payment timely, they will incur additional charges.

According to Statista, the global transaction value of BNPL is expected to be $481 billion by 2025. Widely used in the DACH region initially with an emphasis on Germany, the footprint of BNPL has extended across the globe. BNPL services are becoming commonplace in North America, as 81% of consumers used this payment option for their online and in-store shopping in 2021. Sweden is the country that held the reins of this payment option in Europe in 2021, representing 25% of BNPL’s market share; next comes Germany (20%) and Norway (18%).

Just as its BNPL’s usage varies by region and country so too it differs by age group. emerchantpay's New World, One Market report predicted that BNPL payments will build momentum among Gen Z and Millennials in the UK, while a total of 38% of consumers in 2021 admitted they would consider making a purchase via BNPL. PayPal is a prevalent payment method among Brits, as more than one in three (34%) have tapped into it to complete a transaction. PayPal’s Pay in 3 is a payment option that's part of its Pay Later offering. It stands as a great example of an interest-free payment method that encourages increased spending power. This is because it allows buyers to divide their purchase into three instalments, with the first due at checkout.

The infographics below show in detail how consumers across different demographics use BNPL, with simplicity, speed and security acting as the decisive factor in choosing this payment option.

Peer-to-peer (P2P) mobile payment apps

Peer-to-peer payment apps allow users to transfer funds or request payments from family and friends. Such apps allow for peer-to-peer transfers that could expand payment acceptance across different shopping channels. Over the years, however, the usage of P2P has expanded to eCommerce purchases. Statista Global Consumer Survey uncovers that the majority (67%) of UK consumers favoured traditional bank transfers as a P2P payment method (67%) in 2021.

In the context of P2P mobile payment apps worldwide as of 2021, the below infographic showcases that PayPal is king with 24% accompanied by online bank transfers (21%), the consumer's banking app (12%) and Western Union (10%).

Benefits of accepting local payment methods

Increase conversions

Research published in DHL reports that 70% of digital buyers are more likely to make a purchase when their preferred payment option is offered at online checkout. Brands must take heed of consumer sentiment and identify what urges shoppers to complete a transaction.

Convenience and speed are imperative for consumers when shopping online, so it’s integral to ensure that the last touchpoint of the user journey facilitates just that. Offering your customers' payment solutions of choice, including local payment methods, is critical and may incentivise them to make a payment.

Boost trust in your brand

Considering that 73% of cross-border consumers want to make payments in their local currency, familiarity is a key factor to consider as it reflects their need to feel they buy from a local brand. Of course, it also relates to the importance of offering your customers’ payment method of choice. PayU, for example, is a must-have and secure bank transfer among Polish and Czech online shoppers. To illustrate, in 2021, merchants from multiple industries accessed over one in two (48%) Polish consumers. Imagine how much easier it would be to attract and encourage your target customers to trust your brand if you allow them to their preferred way to pay.

Stay competitive

If other regional eCommerce businesses accept a variety of payment methods and you don't, you’ll likely miss sales over to the raging competition. So, it's about time that you diversified your available payment options by introducing local payment methods that are vastly adopted by the consumers in the regions you're selling to.

How to accept local payments globally with emerchantpay

Preferences and acceptance of local payments differ in every country and jurisdiction. Apart from this, managing integrations for each payment option and region is a time-consuming process. As a trusted payment service provider, emerchantpay is here to help you build an end-to-end payments solution through a simple integration and scale your local operations into new markets.

As consumers steer their spending habits toward online channels, merchants need to know the widely used and trusted payment solutions of their target market. This way, they’ll be better placed to create an optimal checkout experience, thereby enabling you to grow your revenue and conversions internationally. A dedicated payment service provider like emerchantpay, with deep knowledge of regional trends and ever-evolving regulatory standards, will enable you to increase your payment acceptance and profitability.