The 5 Best Local Payment Methods for Global Ecommerce
While many of us don’t cross borders yet, we certainly shop across them. The global e-commerce market is projected to reach $ 6.07 trillion in 2024, with a compound annual growth rate (CAGR) of 11.34%.
As e-commerce records are broken, the big question is: how can merchants maximize their share of consumer spending? It’s easier than you might think; merchants can increase their sales by adapting to consumers’ preferred payment methods.
Here are the top five local payment methods that merchants can’t afford to ignore if they want to go global.
It’s hard to overstate how important Alipay is to global e-commerce. Just look at the numbers: Alipay has over 1.3 billion active users. According to Alipay, in a statement made in June 2020, the company processed $ 17 trillion in mainland China transactions in one year.
So what exactly is Alipay? It is the most popular mobile payment platform in China. It started in 2004 as a service allowing buyers and sellers to trade with confidence in a new e-commerce environment. Today, Alipay provides domestic and cross-border payment services through partnerships with more than 200 financial institutions. Alipay’s most popular product is an electronic wallet and mobile application that allows customers to make purchases directly from their mobile… at over 3 million merchants worldwide.
Asian consumers, and the Chinese in particular, largely prefer to pay with digital wallets. Counterfeit money, coupled with the social perception that cash is unhygienic, has helped accelerate the adoption of e-wallets in Asia. This has enabled the region to switch to digital payments and become one of the least cash companies in the world.
GrabPay is one of the fastest growing e-wallets popular in Southeast Asian countries like Singapore, Malaysia, Philippines, Thailand, Indonesia, etc. Consumers can use GrabPay at retail stores, food stalls, and e-commerce stores and earn money. transfers and payments in physical stores via QR code. Grab, the super app that supports GrabPay, offers a wide range of virtual products and services, including transportation, food delivery, and payments.
Online merchants have an incredible opportunity to increase their reach in South East Asia with GrabPay. Over 4 million Grab users in Singapore alone, and 75% of Singaporeans use GrabPay daily.
According to PPRO data, the top 5 e-commerce markets in Southeast Asia (Indonesia, Malaysia, Philippines, Singapore and Vietnam) have experienced an average growth of over 27% year-over-year. However, the region is underbanked and credit card penetration varies widely. Take Indonesia, for example. The e-commerce market is growing faster than India’s, but only 3-5% of the population has a credit card.
For this reason, GrabPay is one of the best ways to reach consumers and increase sales in this region.
3. SEPA direct debit
Let’s take a look at another corner of the globe. The use of digital payments is expected to increase by 70% in Europe between 2020 and 2025. Payment methods such as SEPA Direct Debit are firmly established for online purchases in the region, offering innovative and secure payment and verification solutions based on online banking.
SEPA refers to a bank transfer method for euro payments in the 36 countries of the Single Euro Payments Area, an initiative of the European Union aimed at simplifying payments within and between member countries.
When paying with SEPA Direct Debit, consumers pay directly from their bank account and enjoy a simple and secure payment experience, wherever the merchant is located. Bank transfers are extremely important for Europeans who, as a rule, are reluctant to take on debt and are concerned about their security.
Now in Brazil. A young consumer base and a rapidly growing middle class – combined with the world’s highest internet penetration – make Brazil one of the most attractive e-commerce regions for businesses looking to tap into new markets.
PIX is the first instant payment system available to Brazilian consumers with the potential to reshape the Brazilian payments landscape. Introduced by the Central Bank of Brazil in November 2020, PIX has seen incredible growth with over 254 million keys registered and over 93 million users in its first six months of existence.
Why did PIX take off so quickly? Let’s take a look at the other defending Brazilian payments champion, Boleto Bancário. At checkout, a consumer using Boleto Bancário generates a boleto, then pay by bank online or in person at an ATM or participating store. Funds are available for up to three days (excluding holidays and weekends).
On the other hand, PIX enables real-time money transfers and payments 24/7, an entirely new proposition for Brazilian consumers and businesses. It only requires a PIX key and the funds are available in real time. It is widely seen as the future of payments in Brazil.
It shouldn’t come as a surprise to see PayPal on this list. The PayPal Wallet gives merchants access to PayPal’s user base of more than 403 million active accounts in 200 markets around the world.
The UK – one of the most popular consumer markets for US merchants – has 32 million PayPal users. Although it is a card-centric marketplace, PayPal wallet is gaining popularity as one of the preferred payment methods.
And no other country in or around Europe has embraced e-commerce more enthusiastically than the UK. The UK e-commerce market, currently the third largest in the world, is expected to reach £ 264 billion by 2024, a 37% increase since 2020.
The global opportunity for traders
Although they cater to the unique preferences of local consumers, the payment methods on this list are shaping a future of borderless e-commerce.
For traders with their eyes on growth, accepting the right local payment methods at checkout is key to unlocking the opportunities that cross-border markets have to offer.