The cross-border e-commerce market has reached new global heights. Every day, a significant number of cross-border payments are made by online shoppers. By 2023, an estimated 4.2 billion e-commerce users will be active. Plus, the demand for goods from overseas will boom as younger generations join the internet. All in all, this means the potential for growing your online sales is huge.
In preparation for a truly global customer base, it’s more important than ever for businesses to facilitate international payments. How? Offering local payment methods is one of the most effective ways to keep up.
What are local payment methods?
Put simply, local payment methods are how people pay online in a specific geographic location.
Typically, these methods are accepted across a country or region but rarely outside of it. Local payments are so valuable because they help merchants gain access to entire populations. The more payment choices available, the higher your online conversion rates. In 2018, 11% of all e-commerce transactions in Europe were paid for through local payment methods.
What are the benefits of offering local payment methods?
1. Reduce cart abandonment
Picture this: you’re browsing a website, decide to buy something, add it to your cart, go to the checkout, and then discover you can’t pay the way you want or are used to. You abandon the purchase altogether and probably won’t try to buy from the brand again.
For merchants, the most frustrating part of the process is that your customer had already committed to buying. The conversion wasn’t prevented by the end user, but by your own organization.
The scenario is all too common. On average, 69% of people abandon their carts when shopping online. However, lost revenue due to a limited number of payment methods can easily be avoided. By adding local payment methods and optimizing the checkout process, that rate can be improved by up to 35%.
2. Cater to a wider consumer base
If your business only supports credit and debit cards, you’re automatically shrinking your customer base. The payment methods shoppers choose varies widely across different geographic regions and demographic groups.
What that means for merchants is that it’s essential to offer alternative payment methods to convert as many customers possible.
For example, while online shoppers in the US predominantly use credit cards, 67% of millennials don’t own a credit cardi. In France, Cartes Bancaires is most popular, but PayPal isn’t far behind. In China, WeChat Pay or Alipay are king. Cash is still the go-to in Latin America, and the Netherlands favors iDEAL.
To successfully operate in different markets and to capture the largest audience possible, you’ve got to offer your customers their preferred ways to pay.
3. Improve your online shopping experience
When targeting new customers from other countries, it’s crucial your user experience (UX) seamlessly aligns with how people assume they can pay. Local payment methods are essentially part of a wider localization strategy. And localization will go a long way towards reducing any anxiety someone may have when shopping on your online store. A confident consumer is a converting consumer.
If an international shopper has a payment expectation that differs from what your site shows, chances are they’ll hesitate and not buy. Offering the payment method that your customer is most comfortable with can make a big difference in making your shopper journey a smoother one, which will naturally lead to higher e-commerce conversion.
For instance, in the Netherlands, iDEAL accounts for the vast majority of all e-commerce purchases. In recent years, the service has expanded to more than 136,000 online stores and over 60 countries worldwide. If you already know that your online store gets a lot of interest among Dutch customers, it’d be a mistake to not include iDEAL in your payments mix.
4. Increase trust in your brand
Many consumers still assume companies offering local payment methods must have a local entity in the area. So if an online store in Germany is set up for WeChat payments, Chinese users feel more reassured that the store has a legitimate presence in the country, and that they can trust the transaction. They also more feel considered and included, rather than marginalized by a Europe-only brand.
In the long run, offering a wide range of local payment methods will definitely help you improve brand trust and loyalty.
Choose the right payments partner
You can add local payment methods to your online business anytime. Even if you’re already live and need to add in a new option, no worries. A partner like Payvision can help you identify and offer the right payment methods for your customers. To get started, check out our handy infographic on the most common online payment methods in Europe.