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Blog - Published on May 26, 2021

Why local payments are key to Emerging Markets

eCommerce’s place in the global retail framework is ever growing. In 2021, over 2.14 billion people worldwide are expected to buy goods and services online, up from 1.66 billion global digital buyers in 2016.1 And with the total market size expected to approach $5 trillion this year, it’s clear that for many businesses, global expansion is the inevitable next step.2 Thanks to rapid digitalization, and ever developing global payments technology, the borders that previously prevented businesses from expanding internationally have all but been removed. 

But while unlocking access to such a broad customer base is undoubtedly attractive, it brings with it equal challenges. Perhaps most significantly, understanding the local payments culture in the region you are expanding into. In this blog, we’ll take a close look at five things you need to consider when looking to build, or enhance, your local payment method offering.

1. Offer payment methods that are relevant to your customers

    Local payment methods have long been one of the preferred ways to pay, worldwide. But with hundreds of options to choose from, discerning the right ones for you and your business can be tricky.

    The key thing to consider when selecting local payment methods is your customer. 7% of people are more likely to abandon the checkout process if their preferred payment method isn’t available, and that’s just in the US, where cards are the preferred online payment method.3 That 7% could just be because the merchant doesn’t offer ApplePay or Amex. Imagine if you launched in a country with cards as the only checkout option, when 50%+ of the population don’t have a credit or debit card or prefer an alternative. If you want to implement a successful global expansion strategy, your customers’ preferences need to be at the core of your decision-making process.

    However, you will begin to see that when it comes to local payment methods…

    2. One size doesn’t fit all

      Just because a local payment method is attractive in one region, doesn’t mean it will necessarily be the right fit in another. For instance, in Argentina, 22% of transactions are done with cash methods and 45% with locally issued cards that are not cross-border enabled.4 In Malaysia, nearly 50% of transactions are done with local bank transfers and cards account for only 30%.5 These markets are very different to the US and EU, so you need to consider each region individually.

      Moreover, just because a local payment method may be attractive to one merchant in one region, doesn’t mean it will work for you. You need to ensure that it fits with your payment model – Does it support subscription payments? Are there restrictions on transaction volumes?

      Merchants should also check that your payments partner will offer you a scalable solution, one that can grow with your needs and offer you an expanding set of local payment methods to match your broader business expansion. And, on top of this, enable you to unlock access to new local payment methods as they emerge.

      You may be thinking ‘Why not just offer all local payment methods so that all bases are covered’, but…

      3. Offering too many local payment methods can do more harm than good

        We understand the logic, ‘more payment methods = more sales = more revenue’ – right? Well, not always. Offering too many local payment methods can leave your checkout page looking cluttered and confusing, causing your customers to become frustrated. According to a survey, almost 20% of consumers have abandoned a cart at checkout due to a too long, or too complicated, checkout process.6 A clear and simple checkout process is essential to minimizing friction for your customers and ultimately maximizing conversion and revenue.

        Just imagine having to scroll through dozens of payment options on a tiny screen…

        4. Mobile is key

          Digital and mobile wallet payments accounted for 44.5% of online transactions globally in 2020.7 Optimizing your checkout experience for mobile is no longer an option – it’s a necessity. Merchants need to ensure your chosen local payment method is compatible with mobile, or risk losing out on a large share of the market.

          But while optimizing your checkout experience is key, you also need to…

          5. Marry local options with local expertise

            So, you’ve launched in a new country, you’ve taken all of the above into consideration when choosing your payment methods in order to maximize your growth and success, but how do you repatriate those funds? Are there currency controls or restrictions in place? Maybe additional taxes? What if you need to do payouts in that country as well?

            Having the right payment method is essential, but not having the right legal knowledge and regulatory framework can undo those gains. As a business, devoting time and resource to such a task isn’t always possible.

            By working with a payment provider that has the local entities, tax knowledge etc., you can sidestep these challenges, leaving you free to focus on what matters most to you and your business.



            By providing regulatory services, up-to-date taxes, market insights and all of the major local payment methods for either recurring billing, or one-off transactions, Yapstone can help you to optimize local payment methods in emerging markets. Our local market expertise in these countries make us well placed to guide you through the optimal strategy to ensure your operations are fully compliant.

            To speak to a Yapstone representative about how your business can optimize local payment methods, contact us at globalscale@yapstone.com.



            Sources: 1. https://www.statista.com/statistics/251666/number-of-digital-buyers-worldwide/ 2https://www.emarketer.com/content/worldwide-ecommerce-will-approach-5-trillion-this-year 3https://baymard.com/lists/cart-abandonment-rate 4 Based on internal data 5Based on internal data 6https://baymard.com/lists/cart-abandonment-rate 7https://www.statista.com/statistics/348004/payment-method-usage-worldwide/

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