How local payments can unlock the door to global success


E-commerce merchants expanding into a new market must be able to accept local payments — or risk rejection by consumers

Global cross-border e-commerce is growing by 25% every year. That’s twice the rate of domestic e-commerce. Analysts expect this trend to continue until at least 2020 [1]. Barriers to cross-border trade are shrinking all the time and in many non-Western markets, demand is booming.

But as in every boom market, there are losers as well as winners. And the difference between the two, more often than not, is localisation. Ensuring that your site is properly localised can boost conversion rates by up to 70% [2]. What’s often missed, however, is the need to support locally preferred payment methods. In many cases, that’s an omission with serious consequences.

Why alternative payments are the new normal

Each market has its own mix of preferred payment products. E-commerce operators from Western Europe and North America often aren’t familiar with what are termed alternative payment methods (APMs).

APMs are, loosely speaking, any payment method that isn’t an internationally accepted payment card. Globally, around 50% of all online purchases are paid for with APMs. APMs around the world include realtime bank-transfers, e-wallets, local cards, payment apps, prepaid vouchers, cash-payments for online purchases and payments via ATM machines, SMS or phone calls — to name just some.

How did we get here?

Payments are this diverse mainly for historical reasons. E-commerce emerged in the mid-to-late 90s and really took off in the early 2000s. At that time, even within the European Union — much less the world as a whole — there was no effective single market in either e-commerce or payments. People wanted to shop online, businesses wanted to accept payments online.

In Anglo-Saxon markets, in which credit-card use was already widespread, the market took the path of least resistance, and adopted payment cards as the default means of online payment. In many other markets, in which cards didn’t enjoy the same degree of acceptance, the first service to effectively and securely allow people to pay and take payments became the market standard.

For example, in The Netherlands the realtime bank-transfer service iDEAL — which emerged in 2005 — now has a 56% market share. Along with other players, such as Germany’s SOFORT, this makes realtime bank-transfers the single most common alternative online payment type in most countries.

Local culture also plays a part in determining which payment methods a market will accept. In countries with a long-standing aversion to debt – for example Germany – , credit cards have struggled to find mass acceptance. Political considerations also play a part. For instance, in Italy the government has long encouraged the use of electronic payments and card payments — despite a cultural preference for cash — because it’s harder to use traceable electronic payments to launder money.

Nor should we assume that this process has now stopped, leaving established payment cultures static and merchants with plenty of time to work out strategies for cracking each individual market. Developments such as the establishment of the Single Euro Payments Area (SEPA) mean that payment cultures are constantly subject to new pressures, leading to further developments.

What this means for global commerce

No one entering a new market can afford to ignore how most of their potential customers in that market like to pay. According to recent research by PPRO, 47% of online shoppers have abandoned a purchase at checkout, with over 60% saying they did so either because their preferred payment type wasn’t available or the payment process was too complicated. Failure to offer locally preferred payment methods risks alienating large portions of your audience.

To expand successfully, merchants must support a range of locally preferred payment methods and should not expect this to be a static, one-off task. The payment industry is continually developing. Merchants must be able to keep up to date with what’s happening in each market, and to react quickly when a new payment method arrives on the scene or achieves critical mass.

For small-to-medium-sized operators, the best way to do this may well be to work with marketplaces such as AliExpress and Amazon. This provides the retailer with sales, fulfilment, and local-payment means in every market they expand in to. For larger merchants, wishing to set up their own localised sites, the answer is a trusted partner such as a payment service provider, able to aggregate and make available APMs in all major markets.

To help businesses expand cross-border, PPRO has prepared its Global Payments Almanac. The product of thousands of hours of research, the almanac covers payment methods worldwide and gives a unique insight into the payment culture and infrastructure in all major — and many minor — e-commerce markets worldwide.

The complete almanac is available only to PPRO partners. But you can download an excerpt here.


1. Hot growth predicted for cross-border e-commerce, Supply Chain Quarterly, 6 February 2017
2. Localisation Increases Conversion by an Average of 70%, Translate Media, 23 May 2013.