How to choose the right payment methods when expanding globally

It’s an exciting time when your business is doing well enough to consider expanding its customer base outside of its own borders. There are vast new audiences to reach as you work to generate revenue growth for your business. The global, B2C e-commerce market is expected to grow by a whopping 30% by 2032.¹

However, global expansion doesn’t just happen. It takes planning and strategy, particularly when it comes to payment options for customers. And both global and local payment methods can serve customers outside of your own country or region.

Fortunately, there are many options to choose from when accepting payments in a new country – in addition to the usual debit and credit cards. For example, digital wallets allow people to pay for purchases directly from their devices, eliminating the need to manually enter card or billing information. Some, like PayPal, can be used worldwide, and others, like WeChatPay, are more regionally focused.

Local payment methods (LPMs) are only available for use in a specific country or region. LPMs can take many forms, such as digital wallets, bank transfers, or even vouchers. Both global payment methods and local payment methods fall under the category of alternative payment methods (APMs).

Before setting up shop in a new local market, take time to weigh the impact that the payment options available to a new country or region may have on your business. When deciding from among the many global and local payment options, consider which payment options are most popular in your chosen market for your target audience. And you’ll need to know which ones offer options like recurring payments or buy now, pay later features.

Choosing the right payment methods makes a difference to your business

Addressable market size, country-specific regulations, localization – they all fit into plans to move into new markets outside of your own borders, and are factors in the eventual success of your global expansion. Payment options also play a critical role in global success. Here’s how.

Gain access to new markets and customers. In some countries and regions, APMs have the lion’s share of the payment market, or have been enthusiastically embraced by local consumers. For example, BLIK, a bank redirect payment in Poland, is the country’s most popular method of payment in e-commerce, comprising 70% of transactions.² In Germany, PayPal is the most popular online payment method.³ In the United States, more than 40% of users of the Venmo digital wallet are highly engaged, which means they’ve sent or received more than 37 transactions in the past year and have transacted with more than 20 merchants.⁴

Certain payment methods can also help your business reach a specific demographic that fits in with your marketing strategy. In the United States, 56% of Venmo users are between the ages of 18 and 39 years old.⁵ Your own research should reveal the top payment choices that support your global expansion plans.

Drive conversion. It’s all about smoothly guiding customers through checkout. Naturally, customers in a country or region where a payment method is dominant will expect to see their favorite payment option as a choice when they finalize a purchase. If they don’t see that option, they might not complete the purchase. The lack of a preferred payment method is one of the top frustrations consumers note about the checkout experience.⁶ For example, 67% of PayPal Pay Later users have abandoned a purchase because PayPal buy now, pay later options were not available at checkout.⁷

Reduce risk. People may be understandably nervous about handing over credit card numbers and other personal information – particularly to a business based beyond their region – unless they feel assured the business is protecting that data.

Payment methods that link directly to people’s bank accounts or that offer two-factor authentication can give customers confidence that the business is taking the proper steps to secure private data. And digital wallets store customers’ financial information so that the data doesn’t need to be entered on every business’s site. Forty-nine percent of US consumers said that security and trust are the most important features when shopping on an e-commerce site.⁸

How to assess payment methods

The payment methods you choose will need to support your business strategy. They’ll also need to be easy for your business to manage and integrate with checkout.

Choosing the best payment options for your business doesn’t mean adding every possible payment method to checkout. Too many payment options can be confusing and frustrating for customers – particularly mobile customers – and can add extra friction to the checkout process. A few relevant payment options are better than too many.

Take the considerations below into account when selecting payment methods.

Country and region-specific customer preferences

Your research should consider a payment method’s share of the market, its demographics, and its customer reach. For example, if expansion plans include the Netherlands, research would uncover that iDEAL – a payment method that allows customers to complete transactions online using their bank credentials – is one of the country’s most popular payment options, with 70% of all e-commerce transactions paid with iDEAL.⁹

The research stage is important for squelching assumptions about which payment methods customers use and like most. For example, credit cards are not always the first choice due to different customer preferences around the world.

Reduced friction

All payment methods should allow customers to check out in as few steps as possible. Do the payment options link seamlessly to a credit card or bank account – or allow for hassle-free bank-to-bank transfers?

Questions like these can help you determine how easy (or difficult) it is for customers in new markets to pay for products and services. Two-thirds of consumers surveyed said that a positive checkout experience was very or extremely influential on their decisions to return to an online business for repeat purchases.¹⁰

Ease of integration

Once you make the decision to move into new markets, integration of the payment options should be fast and easy. Long integration delays could set back entry into a new country, placing your business at a disadvantage with competitors. Consider digital wallets that have both global and local payment methods built in. Digital wallets are trusted by 40% of consumers surveyed, with Gen Z shoppers showing an even higher level of digital wallet trust (48%).¹¹

Flexibility for different product types and price points

Depending on your business’s products or services, you may need to research payment methods that allow for recurring purchases and buy now, pay later (BNPL) options.

If your business offers ongoing subscriptions, you need the ability to set up recurring payments with APMs – and present that payment option as the first choice at checkout. Likewise, if your business offers more-expensive products, you can offer BNPL at the top of checkout. Typically, BNPL payment options offer installment payments over weeks or months.

Some payment options are popular in certain verticals, offering another avenue of research for businesses looking for the most appropriate payment methods in a given country. The paysafecard from Paysafe is a popular payment method in the gaming community, for example.

Orchestrating your way into a new country

There’s a lot to manage when businesses expand globally, like driving conversions, mitigating risk, and simplifying payouts. As you research payment options in your chosen markets, you can also think about finding a global provider to connect you to multiple payment methods through one integration, such as PayPal Braintree.

A global payments provider can help you focus on growing your business in new countries, while also optimizing operations. You can also get insights on the payment preferences in your chosen country.

Need to grow your business by improving payments? Read PayPal’s new ebook, Evolving Payments: Orchestrating and optimizing for profitable business growth.