Why the right online payment methods are critical

Recent research by Worldpay shows a continuing upward trend for cashless transactions and the use of alternative payment methods.

With demand for online transactions growing around the world, the number and variety of online payment method options continues to increase. 

 

According to Worldpay’s 2021 Global Payments Report, local payment methods such as bank transfers, e-wallets, cash-based payments, and other alternatives to conventional payments are projected to grow from 65% to over 72% of global payments by 2023. 

 

Data indicates that the Asia-Pacific region will be the fastest to grow, with cashless transactions growing by 109% until 2025 with a further 76% increase from 2025 to 2030. Africa, Europe, Latin America, and the United States and Canada will follow in their footsteps, with the latter predicted to have the lowest growth rate (43%) by 2030. 

 

 

The changing online payment methods space

The shift in global and local payment preferences is pushing both sides of the e-commerce world – consumers as well as online merchants – to adjust their preferences. Merchants must tailor their offering and technology to meet the demands of each of their local markets. At the same time, consumers are increasingly turning to new alternative payment methods, providing more payment options than ever before both on- and offline. 

 

To offer the best experience and ensure the highest possible conversions, merchants are under an increasing amount of pressure to provide consumers with a variety of online payment method options that are popular and recognizable in each local market. 

Intro graphic for online payment methods blog post

What customers expect when it comes to online payment methods

The changing sphere has changed the customer landscape and has positioned customers in an advantageous position. During the pandemic, more than one-fifth of global retailers have adapted to the changing consumer landscape during the pandemic by either building e-commerce sites or starting to accept contactless transactions. The initial catalyst for this transformation was primarily the lack of alternatives (with in-store retail being closed for extended periods), but many changes in online purchasing behavior have caught on in a way that looks like it’s here to stay. 

 

Consumers’ growing adoption of alternative payment methods also indicates that they expect retailers to offer more shopping and payment options — and that they might take their business elsewhere if this is not provided. 79% of consumers prefer to shop at stores that offer both in-person and digital presences, while more than half avoid retailers that do not offer electronic payment options and 68% are particularly interested in shopping with merchants that provide the latest payment methods.  

 

Consumers also point to lack of preferred payment options as a key factor behind abandoning their carts at checkout. Cart abandonment impacts almost 75% of global purchases and can cost merchants a staggering $4 trillion annually.  Gearing up to enable a variety of cross-border digital payment options helps merchants to reduce cart abandonments and increase online conversions. 

 

 

Alternative payment methods are changing the global payments landscape

The continued growth in cross-border sales and the use of alternative payment methods by consumers demonstrates  that digital payment adoption is altering global payment infrastructure on two distinct fronts. 

 

First, the payment system is evolving to enable an increasing amount of contactless transactions via cards, digital wallets, instant payments, bill payment solutions and pay-per-link. At the same time, cryptocurrencies, BNPL (Buy Now Pay Later) and other newer alternative payment methods represent an additional shift in the ecosystem. 

 

Together these market changes are making cross-border payments more frictionless and streamlined, resulting in online transactions that are faster, more transparent, more efficient and more secure than ever before. From a merchant perspective, tailoring the checkout experience to meet consumers’ expectations for speed and seamlessness results in higher customer satisfaction and payment approval rates, leading to increased sales and online revenue. 

Infographic showing online payment methods insights from global payments report 2021

How can merchants offer more payment methods?

To help merchants answer the growing demand and need for more payment options, PayU’s advanced payment gateway offers not only an efficient way to reach new audiences, but also the ease of growing sales via a single, direct connection to popular global and local online payment methods throughout the entire world. 

 

Here’s a quick overview of some of the key emerging markets around the world where PayU offers merchants access to important local payment methods, many of which are not always available with conventional payment gateway providers. 

 

  • Poland: With access to over 20 million online shoppers, our platform provides merchants in Poland with the capability to offer a variety of popular local payment methods including BLIK, bank transfers, open banking payment, installments, cards, and e-wallets.  

 

  • Slovakia and Czech Republic: A combined market of over 10 million online shoppers, the Czech Republic and Slovakia is an unsung success story when it comes to European e-commerce. Common payment methods include online bank transfers, cards, digital wallets, wire transfer, and alternative credit options like BNPL. 

  

  • Romania: In this market of more than 9 million e-commerce customers, PayU’s platform supports the broadest free installments offering from local banks, as well as credit card payments with all local banks, wallets, bank transfers, credit and cash. 

 

  • Russia: Our platform offers access to the 102 million online customers in Russia through payments methods including MIR (Russia’s national payment scheme established in 2014), as well as cards, wallets, bank transfers and cash. 

 

  • South Africa: PayU is one of the leading payment gateway provides in this market of 20 million online customers, providing access to payment methods including debit and credit cards, wallets, bank transfers, and exclusivity to popular loyalty points methods like Discovery Miles as well as local credit options such as RCS. 

 

  • Nigeria: For those interested in one of Africa’s leading emerging markets, we help merchants reach the more than 60 million Nigerian online customers through the most common payment methods including bank transfers (via 8 different local banks), as well as cards, wallets and instant account transfers.  

 

  • Kenya: In Kenya, payments methods including cards, digital wallets, bank transfers and mobile money help merchants reach an online customer base of over 100 million.  

 

  • Brazil: In South America’s largest market, PayU merchants can reach over 105 million Brazilian e-commerce shoppers through payment methods including credit cards, cash payment options like Boleto Bancario, and bank transfers. 

 

  • Peru: Merchants interested in one of Latin America’s fastest growing e-commerce markets can use PayU’s platform to sell to more than 5 million Peruvian customers via a variety of payment method options including local credit cards as well as the PagoEfectivo scheme, a method of allowing customers to pay for online orders later with cash at participating retail locations.  

 

  • Mexico: Mexico’s consumer market includes nearly 70 million online shoppers, reachable on PayU’s platform through payment methods including credit & debit cards, wire transfers such as the official SPEI scheme as well as cash payments. 

 

  • Chile: Chile’s e-commerce sector has grown to some 4,5 million online customers, with PayU offering merchants access to common payment methods including popular local cards such as Redcompra, as well as cash-based payment schemes. 

 

  • Argentina: 25 million online customers in Argentina are accessible via PayU’s platform through popular local payment methods including local credit cards as well as multiple cash-based payment schemes like PagoFacil and Rapipago.   

  

  • Colombia: The digital economy is growing rapidly in Latin America’s second-largest consumer market, boosted by the current global trends as well as a supportive public sector.  Merchants using PayU’s platform in Colombia have access to the more than 12 million Colombian online shoppers through a variety of local and alternative payment method options. This includes Pagos Seguros en Línea (PSE – the number one alternative payment method in Colombia), global credit cards and wallets, Condensa (a popular local credit card that is not supported by many PSPs), as well as a variety of cash-based payment methods such as Baloto, Efecty and Su Red. 

 

 

 

Conclusion: Why offering more online payment methods is critical for supporting e-commerce growth

As the opportunities and importance of cross-border e-commerce continue to expand, global merchants must look for ways to reduce friction and improve customer experience and engagement during the checkout process. 

 

On the customer side, an increasing amount of both local as well as global e-wallet products are making it easier than ever for customers to purchase items online, reducing the checkout process a matter of few clicks while allowing customers to have confidence that their information is being handled safely and securely. 

 

For merchants, new digital payment options are helping to create improved checkout experiences, both when it comes to speed as well as increasing conversions by minimizing the probability of abandoned carts. 

 

As merchants look for ways to tap into new markets in the midst of the global boom in e-commerce, the importance of offering as many payment method options as possible has never been more apparent.

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