One of the most important – and to many, most difficult – task you’ll face as a business looking to expand into E-Commerce markets in different geographical locations is determining which online payments are used most often. Knowing which online payment option is best for each respective market you want to enter is critical, since customers are substantially more likely to complete a purchase if they’re offered the right payment methods
I am sure you’re aware of how popular credit cards and PayPal are, but can your organization really satisfy the demands of all audiences you’re seeking to reach? If you only take the aforementioned two payment methods into considerations, then I can assure you that you won’t fulfill all customer expectations when it comes to payment methods.
Let’s take a deeper look into the best payment options online to see if you’re making any mistakes, or if you’re fully covered.
International E-Commerce payment methods
Consumers nowadays want to see a variety of payment options available on the websites of online retailers, so they can pick the one that best fits their needs. To appeal to the broadest audience, you must ensure that your site offers support for the most popular payment methods online – both on a global level, but also in markets where more localized solutions are a must.
If you’re casting a wide net and want to include any of the planet’s 4.6 billion internet users, your payment option list should certainly include:
1. Credit & debit cards
Credit and debit cards are still one of the most popular online purchasing options across the world, although their market share has been declining in recent years due to eWallets. Cards made up more than 35% of all E-Commerce transactions worldwide in 2020 and are expected to decline towards 2024 according to Statista. Cards have a stronger preference in longer established E-Commerce markets such as Europe and North America.
The popularity of cards as online payment methods was helped by the security benefits they offered – card transactions have been governed for decades by global and regional compliance standards as well as consumer protections enforced by payment processors, such as those upheld by Mastercard, American Express, and Visa.
In Western markets, credit cards have a slightly more obvious preference vs debit cards, owing to their additional capabilities. Some consumers are encouraged to use credit cards to participate in bank reward programs, for example. In the US, particularly, credit card spending influences a user’s credit rating and adds to the incentive of using it as an online payment option.
Card’s position as the number one solution in consumer preferences for E-Commerce payment methods has been challenged substantially in recent years, which will also be outlined in the following sections.
eWallets, also known as digital wallets, are a type of online payment method that is quickly becoming one of the most popular ways to pay for goods and services across B2C E-Commerce sites all around the world. By 2022, eWallets are expected to account for half of all global eCommerce sales.
Using an eWallet, you can pay for items without applying your credit card. Instead of customers have to enter their bank account information, they are redirected from the checkout to the eWallet’s site where they simply has to log in using their username and password to finish a transaction.
PayPal (mainly in the West), AliPay (particularly popular in Asia Pacific), ApplePay, GooglePay, WeChat, or Venmo are the most common digital wallets. eWallets may also be used with mobile wallets to take advantage of a smartphone’s biometric capabilities, which allow consumers to authenticate faster and complete their transactions faster.
3. Bank transfers
Customers may pay using their bank account and funds directly. It is seen as having a higher level of security because transactions are authenticated through the user’s bank. In essence, when chosen as payment option during checkout, a bank transfer sends the customer to their internet banking site, where they must log in and authorize the transaction.
In 2020, around 8% of worldwide E-Commerce transaction volumes were paid with bank transfers, which was mostly used in Europe.
4. Buy now, pay later
Buy Now, Pay Later (BNPL) is a relatively new online payment method that has seen tremendous growth in the previous two years. This is a form of instant lending that more and more young consumers are seeking out.
Customers may choose to pay later, over time, without having to open a credit card for this when opting for this option. According to reports, availability of this choice at checkout has been able to persuade 30% more customers into finalizing a transaction that they would have otherwise abandoned.
Despite the fact that this alternative payment approach is still in its early stages, with just over 2% of global E-Commerce transactions in 2020, it is anticipated to grow rapidly in the coming years. Some of the payment providers which offers this payment options include SplitIt, Klarna, Bread, Viabill, and Afterpay. For more information about, I encourage you to read the following article.
5. Prepaid cards
Alternatives to credit and debit cards include prepaid cards, which are popular among unbanked people and minors, allowing users to choose a specific amount of money on the card that they can spend online when shopping.
Prepaid cards are yet to experience significant penetration in the E-Commerce market, with just about 1% of all global E-Commerce transactions currently using them. Some of the most popular prepaid cards chosen by customers include Mint or Paysafecard, which have a limited usage among users. Gaming is one industry where this payment method has seen increased use.
6. Cash On Delivery
A “cash on delivery” transaction is one in which payment is made upon delivery rather than at the time of order. Although the term “COD” commonly refers to cash on delivery, it may also refer to collect on delivery. You do not have to provide a cash payment. You may offer the amount owed with any sort of payment that the merchant or delivery company accepts, such as a credit card or money order. The payment method took up a bit more than 3% of global E-Commerce transactions in 2020, and is expected to decline quite significantly in the coming years.
The payment method is especially used in developing countries, where the fraud rate on online transactions can be quite high in certain markets.
7. Electronic checks
Acceptance of e-checks, which are subject to ACH rules, entails drawing money from a checking account. The payment is authorized directly from the user’s internet bank account and carried out in the same manner as paper checks, but quicker.
Electronic checks are popular among American companies with large sales volumes and a high average order values, as they are seen as an inexpensive online payment option. E-checks were the first Internet-based payments used by the US Treasury to make major online purchases, which may explain their popularity in areas where the payment values are very high.