Crossing Borders: How local payment methods drive global commerce

By Angela Hull, VP Global Payment Partnerships, PPRO

With traditionally card-loving American and British consumers now using digital payment methods for around 50% of their online transactions and the figure rising to 78% for Chinese consumers, local payment methods are strengthening their global grip.

Local payment methods play an increasingly important role in international business expansion, providing merchants with a simple way to tap into new markets effectively. If your business wants to sell cross-border, you really can’t afford to ignore them.

Thanks to rapid digitalisation, more sophisticated payment technology, and the e-commerce explosion, there are a host of newer local payment options that differ from the cash and cards issued by the world’s banks.

By offering payment methods to your consumers that are trusted and preferred in their specific markets, you can reach more people, improve their user and checkout experiences, and ultimately boost both conversion rates and revenue.

A growing menu of options to pick from

There’s an ever-expanding menu of payment options that consumers can choose from today in their search for convenience and a frictionless transaction.

These include digital wallets, Buy Now Pay Later (BNPL) schemes, and open banking-powered account-to-account (A2A) payments. Consumers will usually look for the local flavour they are most familiar with.

To succeed in any given market, you, therefore, need to develop a thorough understanding of the preferred local payment methods and ensure your checkout offers those options. If you don’t, you will be sidelining an entire segment of your target audience.

Brazilians, for example, love their mobile devices. Powered by Pix, the popular instant payment scheme used by more than 150 million people and 15 million companies, they’re adopting local payment methods faster than any other country in the world.

Each year, Brazilians spend more than US$3 billion with merchants based in other countries, especially China, the US, and Japan. If you add Pix to your payment platform, you’ll be sure to catch their eye and boost your global sales push.

And whilst credit cards remain the payment method of choice in the US with a 50% market share, digital wallets are catching up fast at 32%. Platforms like PayPal and Venmo are doing a fantastic job of driving significant growth in peer-to-peer (P2P) mobile payments across North America.

Avoid falling into the ‘one size fits all’ trap

Payment preferences vary from country to country, even within regional blocs. Most people think of Europe as being relatively homogenous. But despite the simplicity of cross-border trading that the European Union (EU) and Eurozone membership provides, it still has an incredibly fragmented payments ecosystem.

In Berlin, you’ll find that wallets are the leading payment method, with a 33% share of the e-commerce market, whereas in the neighbouring capital, Paris, it’s still cards with a 52% share. This might seem rather American, but French consumers are using different types of credit and debit cards as their main payment method. It’s essential to cater to that.

Italy is another European market to watch closely. The Italian e-commerce market is forecast to reach $82 billion by 2027. And volume is quickly shifting away from traditional card rails to newer rails, such as bank transfers and wallets, including Bancomat Pay and Satispay.

Meanwhile, digital wallets are surging across the Asia Pacific region and are now used for 60% of online purchases. But there are many different wallets – both regional and country-specific.

Popular options include China’s WeChat Pay, which has a massive 900 million users, and Southeast Asia’s GrabPay, with 180 million users. If you don’t support the right wallets, then you’re unlikely to gain much traction in the region. But true long-term success depends on carefully analysing each market and working out which wallet is used where, and for what purpose.

The picture is similar in whichever corner of the world you operate in. India, for example, is also pushing strongly for mobile-first payments, having moved rapidly from a cash-first society to using digital payment methods in 72% of online transactions.  The development of Unified Payments Interface (UPI), first launched in 2016, has taken India by storm, with total transactions processed by UPI hitting 117.6 billion in 2023.

By integrating the right local payment methods into your shopping experience at the right time, you can strengthen your cross-border offering whilst meeting the needs of the new customers you are hoping to acquire.