As your company expands its e-commerce efforts into international markets, understand that your global websites must do more than speak the language. You need financial fluency, too — i.e., a clear understanding of your new customers’ buying habits, particularly their preferred payment platforms.
MotionPoint Corporation localizes e-commerce sites for retailers around the world. Based on our 15 years of experience, global sites that support locally preferred payment methods generate much higher traffic, conversion and revenue than those that don’t.
Combining our exclusive research with third-party information, we’ve compiled a list of global payment trends your company should know about as it expands into new markets.
Rise of the E-Wallets
Companies taking their first steps into online markets will discover many competing payment methods, most of which may be unfamiliar. While credit cards remain the preferred payment method in the U.S. and Canada, there’s far more variety in other markets.
E-wallet platforms represent an ever-growing sector in this space. In fact, Worldpay believes purchases made via e-wallet platforms will overtake credit cards in three years. Research suggests global consumers believe these PayPal-like platforms are more secure and convenient than credit cards.
Supporting PayPal in your global e-commerce sites is a good start, but it won’t serve all of the e-wallet faithful. Investigate which platforms are most popular in which markets, and support them accordingly.
3 EU Markets
Let’s take a closer look at the preferred payment platforms for three European markets: France, Germany and the Netherlands.
We recently examined nearly 30,000 transactions on a client’s French e-commerce site. Our data revealed that credit cards are the overall dominant payment method in France — nearly 75 percent were attributed to Visa and MasterCard. However, a closer look revealed that the second-most popular payment method was PayPal. (PayPal represented 27 percent of transactions; MasterCard represented 24 percent.)
In Germany, we tracked 17,500 transactions on another client’s localized site. Here, PayPal represented a whopping 70 percent of payments. Other e-wallet platforms such as Giropay and Klarna are also growing in popularity.
We reviewed about 10,000 transactions on a third client’s Dutch site. E-wallet platforms were in full force here, too: 85 percent of all transactions were processed via the country’s iDeal platform, as well as PayPal.
The takeaway is clear: For many European markets, where privacy concerns are high, credit consumption is low, and consumers want to exercise more control over their funds. Therefore, supporting regional e-wallet platforms is critical for e-commerce success.
For e-tailers, Russia is “an essential component of any global e-commerce strategy,” according to Borderfree. We agree. However, compared to many markets, Russia has several unconventional payment methods. E-tailers should support them to ensure meaningful on-site conversions.
For instance, many Russians shun credit cards for online transactions, mostly due to fraud and a lack of consumer trust. For years, cash on delivery has been the region’s payment method of choice.
However, payment platform Qiwi has leveraged a unique system of public terminals to facilitate online transactions. Consumers use physical currency via these terminals to directly pay for a service by inputting relevant payment details or by adding the amount to their digital wallet.
In fact, an e-wallet service recently launched by Russian search giant Yandex is gaining traction. According to a recent report, residents are now “fully aware” of the emerging digital payment phenomenon. About half of the respondents said they use e-payments on a monthly basis.
China, Japan and South Korea
Supporting local e-wallet options in these Asian markets also yields powerful results.
E-wallet platform Alipay leads the pack in China, so it’s especially wise to support it. Our clients that integrate Alipay into their shopping cart software usually see an immediate surge in sales. When one of our clients offered Alipay as a payment option on its Chinese site, order sizes grew by 33 percent, and revenue and conversion grew by more than 200 percent each.
Japanese consumers are using credit cards for online purchases more than in years past. However, they far prefer alternate methods, such as a uniquely local method in which customers pay for online products at local convenience stores. Indeed, nearly 10 percent of Japanese online purchases are made this way.
Other popular non-credit card payment options include bank transfers and cash on delivery, comprising 15 percent and 16 percent of Japan’s preferred methods, respectively.
South Korean customers also prefer local payment platforms. Recently, we’ve seen the most explosive growth in mobile payment methods. Last year, Kakao Pay led the industry with an estimated 6 million users. Mobile payment usage in Korea has increased 155.7 percent between 2010 and 2014; e-commerce sales increased 18.1 percent during the same time period.
In addition to Korean online payment service leaders such as KG, Inicis, KCP and Danal Pay, mobile payment providers such as Daum-Kakao’s “Pay,” SK Telecom’s “Syrup” and Olleh’s “Clip” are gaining market share.