Which APM’s Do Your Cross Border Customers Use?
Alternative payment methods (APMs) can provide the key for expanding into new markets and converting consumers in those markets into customers. How? By providing them with their preferred payment methods your business can build trust, increase conversion and customer retention, and get your brand in front of a larger customer base*.
In the UK the most familiar APM for most consumers is PayPal. It’s an ewallet, one of the most popular types of alternative payment methods. However in the rest of Europe and around the world, other APMs are equally as popular and familiar to consumers in different countries.
Types Of APMs
A good example is another popular ewallet, Alipay. This boasts a staggering 520+ million users in China. Compare that to PayPal’s 210+ active accounts and that demonstrates why you don’t necessarily need a global APM to reach new customers.
In other parts of the world, bank transfers are a widely used online payment method, for example in the Netherlands 59% of payments are made using bank transfer**. iDEAL, an APM that facilitates real-time bank transfers, is therefore a popular choice for consumers with a 59% market share.
Alternative payment methods are characterised by not being credit and debit card payments, using the international card schemes VISA, Mastercard and American Express. However, many countries have their own domestic debit card schemes, such as in Belgium, which are widely used by consumers there. 55% of payments in Belgium are made using a payment card, the most common being a Bancontact / Mister Cash card. This is not a VISA or Mastercard debit card and therefore cannot be processed using the normal credit / debit card payment option seen on an online payment page. Instead, if your business wants to reach customers in Belgium, adding the Bancontact APM to your payment page is essential.
Across Europe many consumers regularly use direct debit online for one-off purchases, as well as for subscriptions and other recurring payments. SEPA Direct Debit is a Europe wide direct debit scheme that allows merchants to collect Euro-denominated payments. This APM can help your business reach any consumer in the SEPA zone.
Prepaid cards and vouchers can also enable your business to reach international consumers. Paysafecard is a global prepaid card APM that reported a 2.8 billion prepaid transaction volume in 2016.
So how do you choose the right alternative payment method for your target market? We recommend you explore the following key areas to identify the right solutions for your business situation and objectives:
Choosing An Alternative Payment Method
- Online payment landscape – identify the popular online payment methods in your chosen market and explore trends in payments. What payment methods are widely adopted?
- Sector preferences – are there trends in the types of payments used in your business sector? Are all APMs open to your business? High risk sectors may not be suitable for certain types of payment method.
- Trusted APMs / market share – having identified the type of APM most appropriate for the market and sector (i.e. ewallet, bank transfer, prepaid schemes, direct debit, mobile payments, etc.), look for APM solutions that are trusted and used by your target customers.
- APM providers – while it is possible to set up a merchant account directly with an APM and integrate it with your payment page, many merchants prefer to work with a Payment Service Provider that offer a range of popular APMs and consolidate the integration, management and reporting through one platform. Speak to your PSP about the options they offer, and APM providers they are partnered with.
To find out more about specific alternative payment methods, how they work, and what markets they operate in, visit our alternative payment method page here.
* There is an opportunity to increase your business’ reach and customer base through referrals, reviews and social media. By providing target customers with their preferred APMs and integrating social media and review options into the ‘thank you’ page, customers can promote your brand.
** Source: all statistics PPRO