Facilitated by widespread access to high-speed Internet and customers’ insatiable appetite for simplicity, online commerce is growing rapidly around the world, and forecasts point to a volume of four trillion dollars in 2020. However, in the field of online payments, companies that experience international development and take advantage of the wide reach of internet commerce must deal with the wide variety of preferences of their customers. Not only can the delivery terms be very varied (for example in the case of payment after delivery, common in Europe and Asia, where the company only expects to receive payment after the products have been delivered), but the means of payment used for online transactions are also highly diversified. Bank cards, which are not always trusted by customers, account for only half of online transactions worldwide. Bank payments, digital wallets, and cash are ubiquitous, and can even be beneficial for businesses, with high risk merchant account and transaction costs.
To realize the full potential of online commerce, businesses must adapt to an eclectic audience and master this diversity of payment preferences. This guide details the characteristics of the means of payment which intrinsically determine their relevance for a given economic model; it helps identify the questions businesses should ask themselves when considering accepting new payment methods, and provides an overview of the payment methods offered by Stripe.
Choose the right payment methods
Good coverage of different payment methods can accelerate the growth of companies wishing to reach a wider target. Whether it’s to increase conversions in their home market or improve their international presence, the key to business success is being able to offer their customers’ preferred options at checkout. However, depending on the nature of the transactions and their specific characteristics, certain payment methods are more or less suitable. Companies must take into account the specificities of their economic model and their operational constraints to assess the benefit of adding means of payment.
Start with the client
As indicated above, the relevance of a payment method depends on the audience, both geographic and demographic, that a company wants to reach.
The fragmentation of means of payment varies enormously from one country to another. While a few means of payment, such as major network credit cards, have spread around the world, others have remained confined to a single country, or even to a single segment of a country’s population. Therefore, a business must first identify its target audience before even deciding which payment methods to implement. The distribution of payment methods used in online commerce varies radically by region, but also even within certain regions.
The nature of the business model of the business is another factor to consider in all decisions relating to payments. Some payment methods, like electronic wallets, are designed for individuals, and limit their support for higher transactions or B2B payments. Others, like billing by bank transfer, are not suitable for mobile purchases which must be immediate, but more relevant for the exchange of funds between companies. In some industries, the average transaction amount can play an additional role: for example, a retail business with a high average basket may offer a credit option to its customers to increase conversions.