By Charles Whiteman
SVP of Client Services, MotionPoint
When Western companies launch e-commerce sites in global markets, many discover that the new customers they wish to woo aren’t making on-site purchases. Often, this problem has little to do with product selection, and everything to do with a fundamental transactional disconnect: a lack of locally-preferred payment options.
Indeed, retailers must be fluent in far more than their new market’s preferred language. Presenting their favored on-site payment options is an oft-overlooked financial fluency that is critical to a global site’s success.
Data we’ve collected at MotionPoint reveals that shoppers in specific countries who use PayPal-like e-wallet platforms often have smaller average order values. But the quantity of these local e-wallet consumers far outnumbers those using regular credit cards. This ultimately leads to far more revenue generated through these emerging non-card platforms.
The takeaway: e-retailers that support locally popular payment types generate windfalls they wouldn’t otherwise see.
Every market has unique payment preferences. However, we have a clear perspective on emerging trends and best practices, thanks to third-party information and our exclusive data.
Many key developed markets and emerging markets simply don’t use credit cards online the way Americans do.
These markets prefer e-wallet services like PayPal. Worldwide, such platforms are on track to eclipse online credit-card use by 2019, says a WorldPay report. Generally, consumers see these platforms as more secure, flexible and convenient.
The report further suggests that global consumers want more control over their finances and less debt—which is why these debit and prepaid payment methods are so popular. Consumers “are hyperaware of the damaging effect of credit, and their buying behavior has changed accordingly,” according to the report.
This jibes with what we’ve seen. When clients integrate local e-wallet functionality into their global sites, sales immediately surge. In one case, conversions rose 217 percent when one client offered Alipay on its Chinese site. Return visits grew dramatically. Cart size per transaction grew by a full third.
But e-wallets don’t rule supreme. Emerging markets, including India, Indonesia and Russia, greatly prefer cash on delivery, as these consumers generally don’t trust digital payment methods. We’re certain this wariness will eventually abate, but smart retailers should offer COD in the meantime.
In European markets (especially in Northern Europe, according to our data), privacy remains a primary concern for consumers. These shoppers want tight control over the personal information they share during transactions.
Catering to these consumers, several payment platforms now provide robust privacy features. E-wallet services like the Netherlands’ iDeal, Germany’s Giropay and Sweden’s Klarna provide simple and secure user interfaces. Retailers also experience less payment-related risk.
Let’s shift focus from global trends to a few European markets:
France: To study local payment trends, we examined nearly 30,000 transactions conducted on a French e-commerce site. Generally, French consumers prefer to pay online with credit cards. But there’s more to the story.
Credit cards represented nearly three-fourths of transactions; Visa led with a 48 percent share, followed by MasterCard with 24 percent. However, at 27 percent, PayPal usage was higher than MasterCard’s.
Further, MasterCard transactions were about €3 higher than PayPal transactions—but the quantity of PayPal transactions outnumbered MasterCard’s, which generated more revenue for the site. Supporting this e-wallet platform made all the difference.
Germany: Compared to other European consumers, Germans generally aren’t very trusting of e-commerce sites. As seen in our analysis of nearly 17,500 transactions tracked on a German site, these shoppers prefer bank transfers and payment-on-delivery.
Indeed, nearly 70 percent of transactions were conducted via the PayPal e-wallet platform.
The Netherlands: We also reviewed nearly 10,000 transactions conducted on a Dutch site. E-wallet platforms reigned supreme: 85 percent of all online transactions were processed via iDeal and PayPal.
iDeal led with 70 percent share of the transactions. At 12 percent, PayPal was the second-preferred option.
As your organization expands into new global markets, make sure to be fluent in more than just a market’s local language. Be financially fluent—support the market’s preferred online payment options. This will lead to increased engagement and conversions.