As an eCommerce merchant, cash and checks aren’t your bread and butter—electronic payment methods are. (According to this New York Times article, the same might soon be true for all types of businesses!)
But in order to make the most of electronic payment methods, you need to offer your customers the most types of methods. Your payment gateway is key to making that happen. As the New York Times rightly notes, electronic payments are made in very different ways around the globe. If your gateway doesn’t support numerous types of electronic payment methods internationally, it’s putting your business at a disadvantage.
But before we look at payments worldwide, let’s look at the types of electronic payments in general. (If you’re asking, “How do electronic payments work?” take a look at this article.)
Types Of Electronic Payments
There are essentially three types of electronic payments:
1. Card payments—Cards are the most familiar type of electronic payment the world over, though they are preferred mainly by older millennials and up, according to a 2016 study. Cards remain attractive in part due to the rewards they offer, which have been increasing for the past several years. Major credit & debit cards in all corners of the world include Visa, Mastercard, American Express, Discover, and Diners Club.
2. Bank transfer payments—The transfer of money from one bank account to another can be done in several ways. ACH transfers are one type of bank transfer payment specific to the U.S. Similar to direct deposit, money is electronically withdrawn from the shopper’s bank account, transferred to an ACH network, and then deposited into a merchant’s bank account. Bank transfers happen over the world and are referred to by different names. Sofort is a popular real-time bank transfer payment method for several countries in Europe, and Giropay is Germany’s most-used payment method.
3. EWallet payments—eWallets are poised to take over the payments scene, according to Citibank’s Michael Corbat (and lots of other people in the know). EWallets store your credit or debit card information in a mobile device; you can use the eWallet either by holding your phone near a special payment terminal in-store or by using the eWallet app for in-app or web purchases. Varying forms of eWallets are used all over the world, so if you’re not offering them as a payment method, you’re missing out.
Electronic Payment Methods Around The World
Your payment gateway can play a significant role in growing your business if it has the right tools. One of those tools is the ability to accept a wide variety of payment types—not just those used in your country, but others, too. (And that includes foreign currencies!)
You may not be thinking about selling overseas, but you should be! Researchers say consumers are increasingly buying from foreign websites for products they can’t find in their home countries. In fact, cross-border online consumer purchasing is increasing 28% each year and is expected to reach $1 trillion by 2020!
And it pays to be forward-thinking. Even if you’re not selling globally now, it’s a mistake to choose a gateway that doesn’t support global sales. We know plenty of merchants who’ve signed on with multiple payment gateways to get the cross-border coverage they need, but that story usually ends in frustration—and a search for a way out.
So what are the electronic payment types around the world that your payment gateway needs to support? Here’s a summary by region:
Chinese consumers and companies spent $10 billion through cross-border ecommerce in 2015, so this is a market you don’t want to miss! Australians, too, are increasingly using credit and debit cards in place of cash. The types of electronic payments your gateway should support to reach shoppers in this region include:
- Cards—credit and debit cards were the most popular form of payment for Australians in 2016. Visa, MasterCard, American Express, Discover, Diners Club, JCB, and China Union Pay.
- eWallets—Alipay (China’s version of the wallet is the most popular, with 48% of Chinese shoppers using it!), as well as Visa Checkout, Masterpass, PayPal, and Apple Pay. WeChat Pay is also gaining ground; in 2016, Alipay and WeChat Pay dominated the mobile wallet ecosystem in China, with 92% market share between them.
- Local payment methods—including local bank transfers and eNets (Singapore).
Europe has numerous variations on electronic payment types according to country. If your payment gateway supports the below, you should be able to reach the maximum number of shoppers in this region.
- Cards—Visa, Mastercard, American Express, Discover, Diners Club, and JCB.
- Local Payment Methods
- Netherlands: iDEAL has more than 50% of the market share in terms of payment methods, with credit cards in second place.
- Italy: CartaSi is the most frequently used credit card.
- Denmark: Dankort is the national debit and credit card and the preferred means of payment.
- France: Carte Bleue is the leading debit card payment system in the country (also known as Visa Debit).
- United Kingdom: U.K. Direct Debit is the preferred payment method for more than 50% of bill payers in the U.K.
- Across Europe: SEPA Direct Debit is preferred by 45% of European shoppers, and it has 500 million potential users—definitely a sales-booster if you have it!
- Bank Transfers
- Germany: Giropay is this country’s most-used payment method. It’s one you can’t afford to miss, with 14.1 million German shoppers purchasing cross-border!
- Austria, Belgium, France, Germany, Italy, and Spain: Sofort is a popular real-time bank transfer payment method for several countries.
- eWallets—eWallets used in Europe include Apple Pay, PayPal, Masterpass, Visa Checkout, WebMoney (Russia and Ukraine), and Skrill (U.K.).
- Prepaid Cards—including the PaySafe Card, used in several European countries.
Selling to Latin American customers could be quite costly to your business if you don’t have a local legal entity to manage taxes. Your payment gateway should be able to help with that by providing tax-efficient solutions that don’t require local incorporation, offices, or agents. The payment methods you’ll need to effectively sell there include:
- Cards—Visa and Mastercard everywhere, and additional local branded cards by country. The local cards listed below are the preferred method of payment for 48 percent of Latin Americans!
- Argentina: Diners Club, Tarjeta Naranja, Nativa, Tarjeta Shopping, Cabal, Cencosud, Argencard.
- Brazil: Diners Club, Discover, JCB, Cartao MercadoLivr, Hipercard, ELO.
- Chile: American Express, Diners Club.
- Colombia: American Express, Diners Club.
- Mexico: American Express.
- eWallets—PayPal, Visa Checkout, and Masterpass.
- Local & USD Bank Transfers.
- Vouchers: Boleto Bancario (Brazil only)—a critical payment type to capture Brazilian shoppers because it accounts for 25% of all online transactions.
United States & Canada
The below types of electronic payment are common in these regions and should be supported by your payment gateway:
- Cards—Visa, Mastercard, American Express, Discover, Diners Club, and JCB.
- eWallets—Apple Pay, Masterpass, Visa Checkout, PayPal, Android Pay. Apple Pay is currently the leading eWallet, but Pay with Google, launched in October, is quickly gaining momentum.
- ACH Payments (U.S. only)—also known as eCheck, which is similar to ACH but is geared toward small business and individual use. ACH transactions grew by a billion transactions or more over the previous year for three years in a row—it’s a biggie!
- Bank Transfers.
And…. we’ve gone around the world in just a few minutes!
One final tip: Payment types are important, but there are also other requirements for a payment gateway if you’re serious about growing your business through cross-border sales—you can read about them here.