No one seems quite sure how many local payment methods (LPMs) are out there. Some sources put in at 500-plus, others at 1,000-plus, but everyone agrees, there is a HUGE number of them, and they are rapidly taking share from better established alternatives.
This creates a series of dilemmas for any online merchant, especially those that operate across borders.
Which LPMs should they support? How many should they support? How much incremental business could well-chosen LPMs bring? And how much would be lost if they are ignored?
A new white paper from LPM specialist Boku sets out the story.
Called Choosing the right Local Payment Methods – How to select and onboard the Local Payment Methods that will make the biggest difference to your online sales, the paper cites analysis from Boku and Juniper Research based on data from 37 major markets worldwide.
Together, they highlight global, regional, and country specific trends, and present mid-term forecasts.
And they conclude that, across the world, consumers are rapidly adopting new payment preferences and exhibiting new behaviours.
By 2028, card-based payment, including card-linked wallets, is set to account for just 41% of global e-commerce payment value – down from 50% in 2022.
With so many LPMs available, including upwards of 100 in some countries, it’s not feasible for merchants to accommodate them all.
So, the paper argues, online merchants need to develop a coherent, evidence-based LPM acceptance strategy.
Boku suggests that the details of such a strategy will be determined by the merchant’s business specifics across three key dimensions: geography, business model, and customer characteristics.
From the Boku perspective, this environment puts an onus on payment service providers to change the nature of the service they deliver: “As well as providing elegant connections and effective processing solutions, it’s also changing the nature of the business relationships – working more collaboratively and consultatively with digital merchants.”
Payment service provider, Boku says, can offer unique insights into which LPMs matter the most.
“They have a direct line-of-sight to the performance and impact of LPMs. They see the respective payment flows across each of their customer segments.
They also have the inherent capability to benchmark the performance in areas like fraud and refunds. As the shift to LPMs gathers pace, it’s their responsibility to share those insights – and the responsibility of digital merchants to demand them.”
To find out more, download Choosing the right Local Payment Methods – How to select and onboard the Local Payment Methods that will make the biggest difference to your online sales.
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