It is easy to assume that credit cards are the main way to accept payment for online purchases – but that is not always true. Globally, there are about 170 ways to pay online, with different countries and regions having clear preferences. Whilst some payment methods are well known and widely used, mostly it is a jigsaw puzzle of localised payment types – which presents a marketing challenge.
Payment methods are key to international ecommerce success. You need to cater to the payment preferences in your target market. If shoppers in your target markets do not see the local payment option they prefer on your site, you increase the risk of cart abandonment and lost sales. Similarly, if you rely on international customers, allowing them to pay using their preferred method when travelling or shopping across borders maximises your chance of a sale.
In this overview, we explore the main international payment methods and outline where in the world they are popular.
Bank transfers
Bank transfers allow customers to transfer money to a merchant’s bank account to complete a purchase. With the rise of online banking, several online bank transfer options are available. These allow the customer to start the transfer during the payment process in a merchant’s site, while automating the payment matching for a merchant. This means that orders are completed faster.
Examples around the world:
• iDEAL: By far the most popular online payment method in the Netherlands, iDEAL was formed by a group of Dutch banks to enable bank account-based payments for online transactions.
• SoFort: This allows fast and direct money transfers between banks in many European countries. This is one of the most popular ways of transferring money in Germany, and is also used in Austria, Belgium, France, Germany, Italy, and
• Giropay: Germany’s most-used payment method.
• eNets: A popular real-time bank transfer payment in Singapore.
Direct debits
Direct debits are often used for regular payments and allow merchants to collect payments directly from their customers’ bank accounts. There are no card networks involved in this form of payment as all communication happens between banks.
The advantage is that no input is required from the customer to make the payment so there are fewer missed payments and cheaper collection costs. It also suits businesses where the regular amount to be collected varies.
Examples around the world:
• SEPA: SEPA stands for Single European Payments Area and is a payment-integration initiative of the European Union. This is a Europe-wide direct debit system and as of 2020, there were 36 members in SEPA – all member states of the EU plus Iceland, Liechtenstein, Norway, Switzerland and the UK.
• Automated Clearing House (ACH): This is an electronic network for financial transactions in the US. ACH processes large volumes of credit and debit transactions in batches.
Local credit card schemes
Many countries have their own local credit card schemes, which are often an alternative to the main credit card brands.
Examples around the world:
• Elo: A domestic card brand in Brazil. The Elo brand supports credit, debit, and prepaid card transactions.
• CartaSi: The most frequently used credit card in Italy.
• Dankort: The national debit and credit card and preferred means of payment in Denmark.
• CB or Carte Bancaire (formerly known as Carte Bleue): The leading debit card payment system in France (also known as Visa Debit).
• Tarjeta Naranja, Nativa, Tarjeta Shopping, Cabal, Cencosud, Argencard: These are all payment cards local to Argentina.
• UnionPay: Also known as China UnionPay and headquartered in Shanghai. This is the largest card payment system in the world offering online and mobile payments. Some UnionPay credit cards are also affiliated with American Express, MasterCard, or Visa, and so can be used beyond China (as an American Express, MasterCard, or Visa).
eWallets
eWallets are a type of electronic card used for transactions made online through a computer or smartphone. An eWallet needs to be linked with the individual’s bank account to make payments.
Examples around the world:
• PayPal: One of the largest internet payment services in the world, PayPal currently operates in over 200 markets and has over 300 million active registered users.
• Google Pay: Formerly known as Android Pay, Google Pay lets people make payments via their mobile phone and works with hundreds of thousands of contactless payment points worldwide.
• Alipay: China’sversion of the eWallet.
• Apple Pay: Currently the leading eWallet in the US and Canada.
• WePay: US based eWallet providing an integrated and customisable payment solution through its APIs to platform businesses such as crowdfunding sites, marketplaces and small business software companies.
• Masterpass: Digital wallet by Mastercard.
• Web Money: Primarily used in Russia and Ukraine.
• Skrill: Formerly known as MoneyBookers, popular in Europe.
Integrated payment solutions
Integrated payment solutions are tools that your business can use to integrate accounting, CRM (customer relationship management), and other business applications with payment processing.
Examples around the world:
• Braintree: A division of PayPal which specialises in mobile and web payment systems for ecommerce companies. Provides clients with a merchant account and a payment gateway.
• Adyen: A Dutch payment company that allows businesses to accept e-commerce, mobile, and point-of-sale payments. Adyen has more than 3,500 customers and is listed on the stock exchange Euronext.
• Worldpay: US based payment and processing provider. The company’s financial products include credit cards, ATM processing, merchant services, rewards and fraud prevention. Additionally, Worldpay supports financial institutions with pre-paid and gift cards, card personalisation, debit PIN processing and cardholder eServices.
• 2checkout: Online payment platform catering to global payments, digital commerce, subscription billings, partner sales and risk management and compliance.
• Stripe: US based company which primarily offers payment processing software and application programming interfaces for e-commerce websites and mobile applications. Shopify Payments are partnered with Stripe.
• Paymill: European focused – the leading online payments provider in Germany, Austria and Switzerland
Postpay
Postpay payment options allows customers to pay for a product or service that they purchase online later at an affiliated outlet or store. Due to the delay between the initial transaction and the payment, this payment method is not suitable for all online purchases. However, it does have the benefit of offering a cash-based payment option for your online customers.
Examples around the world:
Konbini (“convenience store” in Japanese): Enables a customer to order goods and services online, and to pay for them over the counter in a convenience store. Konbini uses a unique reference number to identify the transaction. Customers use this reference to print a voucher which they then settle at the store.
Boleto Bancário: One of the most prominent payment methods in Brazil. The word ‘boleto’ means ‘ticket’. A customer can print a payment slip and pay at ATMs, branch facilities of any bank, post office, lottery agent and some supermarkets. Alternatively, a customer can pay using a bank transfer from their online bank.
Cash on delivery
Cash on delivery is where shoppers pay for a physical product in person when it is delivered. This is sometimes known as Collect on Delivery to reflect the fact that payments might not be by cash. If the COD buyer fails to make the payment, the product is returned to the seller.
• Cash on delivery still accounts for 60% of payments in India. In India, the system was designed to attract mainly rural consumers who do not have access to digital payment systems — such as online banking and credit cards.
• It is the most dominant payment method in Russia, though its share is declining.
• It is also popular in the Middle East, where it has played a significant role in fuelling ecommerce.
Pre-paid vouchers
Prepaid solutions allow customers to make purchases in relative anonymity. While it is like a cash payment for the merchant, the payment is real-time and guaranteed. Prepaid solutions come in the form of a card and/or paper voucher with a unique code. The customer purchases a prepaid card or voucher at a retail outlet or online.
• Boleto Bancario: A critical payment type to capture Brazilian shoppers because it accounts for 25% of all online transactions.
• Paysafe: A prepaid card used in several European
BNPL (Buy Now Pay Later)
Buy Now, Pay Later, is one of the fastest-growing online payment methods in the world. It allows customers to make online purchases and pay them off over time in instalments. Customers must pay off the principal amount of the purchase plus interest and some BNPL providers perform credit checks. The customer profile varies from market to market so make sure you know your local market profile. Currently, BNPL purchases are focused on cheaper retail items but there is growing appetite to buy expensive items using this payment method. Examples include:
• Klarna: The market leader in Europe, Klarna charges no interest or late fees.
• Laybuy: Launched in New Zealand in 2017.
• ClearPay: The UK name for Afterpay, a BNPL brand founded in Sydney in 2016.
• PayPal Credit: Formerly known as Bill Me Later, this is the BNPL service from PayPal.
• Hoolah: Singapore-based fintech which allows customers to pay for items in three equal instalments over 3 months with 0% interest.
• Atome: Singapore-based BNPL provider.
• Rely: Another Singapore-based brand.
• Tabby: Dubai-based start-up launched in 2019.
Card usage varies significantly from one country to the next, with lower usage in Germany, Japan, and Mexico and higher use in Australia, Korea, Saudi Arabia, and the UK.
• Union Pay: A Chinese bank card that dominates China’s card market and is the largest card payments system in the world.
• Visa: The largest card brand after Union Pay, Visa holds the primary market share of purchase volume in the Middle East and Africa, Europe, and Latin America.
• Mastercard: The second largest credit card network in the US, Mastercard processes transactions in more than 210 countries.
• American Express: One of the preferred methods of payment in the US, Mexico, Colombia and Chile. Amex is geared towards high-income cardholders and corporates and is active in more than 130 countries.
• Discover: Along with Diners Club, Discover is one of the most popular payment methods in Brazil.
• Diners Club International: It is accepted in more than 185 countries and is among the preferred methods of payment in Chile, Colombia, Brazil, and Argentina
• JCB: An international payment brand based in Japan. There are more than 105 million JCB consumers; the card is accepted in 190 countries.
As mobile commerce takes a greater share of ecommerce, online retailers need to ensure that their payment methods are also mobile-friendly. One way to do this can be to develop a custom mobile app, which can also serve as an extra distribution channel with a high reach potential. A successful mobile user experience involves a limited amount of scrolling, number of pages and steps while shopping, especially during the payment process.
Online retailers can use payment platforms like Stripe or integrate solutions like Apple Pay, Android Pay or Alipay, to offer one-click buying options and to simplify the process or reduce transaction fees for customers thereby increasing conversions.
Global online merchants should consider localising all the elements that go into their payment pages, including details such as auto fill forms, appropriate keyboards, branded URLs, the colour of the pages and buttons, including whether the payment button says “pay” or “checkout”.
Always make sure you know the regulations behind accepting payments and charging customers in your target markets. For example, if customers in Austria do not submit a physical copy of a printed and signed SEPA form authorising you to charge their bank account, then you are not legally allowed to charge them. On the other hand, only a digital SEPA form is required in the Netherlands.
• It is easy to assume that credit cards are the main way to accept payment for online purchases – but that is not true.
• There are numerous payment methods available around the world. It is estimated that globally, that there are about 170 ways to pay online, with different countries and regions having clear preferences.
• Whilst some payment methods are well known and widely used, mostly it is a jigsaw puzzle of localised payment types – which presents a challenge for marketers.
• Offering the right combination of payment options for customers can reduce cart abandonment and lead to higher conversion rates and sales.
• BNPL (Buy Now, Pay Later is booming globally with lots of new entrants recently launched or on their way.
• Online retailers should also stay up to date with the latest innovations in payment methods as these often provide an improved user experience while reducing costs for online retailers.
• As mobile commerce takes a greater share of ecommerce, online retailers need to ensure that their payment methods are also mobile-friendly.
• Attitudes to fraud vary around the world, with some markets more risk-averse than others. Sending trust signals like reviews, awards, accreditations etc. will help to reassure customers.
• The regulatory landscape governing payments varies around the world too – a local in-market expert can help you to navigate this.
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This is an edited extract from Oban’s book Going Global: How to improve digital marketing performance in any market on the planet. Stay tuned for further details.
To find out how Oban’s network of Local In-Market Experts can help you succeed internationally, please get in touch.
Oban International is the digital marketing agency specialising in international expansion. Our LIME (Local In-Market Expert) Network provides up to date cultural input and insights from over 80 markets around the world, helping clients realise the best marketing opportunities and avoid the costliest mistakes.
