Know How Your Customer Prefers To Pay - Worldwide
By Bob Johns, associate editor
Alternative payments such as mobile wallets, direct debits, real-time bank transfers, and e-wallets are gaining ground in the payment space at an exponential rate. Worldwide, alternative payments account for 22% of online transactions, with this number expected to grow 13% in the next 3 years, according to data released by WorldPay. WorldPay recently launched its Optimizing Your Alternative Payments whitepaper, which takes an in-depth look at alternative online payments around the globe. I had a chance to sit down with Phil McGriskin, CEO and founder of Envoy Services and chief product officer at WorldPay, to discuss the report and the global payment market for retailers.
As customer experience comes to the forefront, I wanted to know how payments fit into the equation. “Retailers are struggling to maintain a high level of customer satisfaction, and making the online checkout process quick and easy can help. This starts with knowing what forms of payment the customer prefers to use. This is especially important as retailers become multinational and also focus on e-commerce,” says McGriskin. The report is broken down by country and shows preferences and tendencies across the globe.
One thing that struck me as odd is the fact that Paypal accounted for 70% of the alternative payments online in the United States. “As Paypal has expanded past ebay, it has gained market share throughout the e-commerce world,” McGriskin notes. Additionally, 70% of the merchants that participated in the study noticed an increase in alternative payments in the past 12 months. Consumers seem to be edging away from traditional credit cards, even as online sales growth is continuing at a 10% yearly rate. Knowing how the U.S. customer prefers to pay can help influence retailers’ decisions on what options to offer.
Throughout the world, though, this is not the case. As retailers begin selling outside the U.S., the use of alternative payments jumps dramatically. In China, for instance, the use of alternative payments represents 37% of online spending. WorldPay’s study points out that, similar to the United States and PayPal, China’s market is dominated by one eWallet, Alipay. Alipay has a 60% market share, while other eWallets and cash-on-delivery occupy the majority of the remaining 40%. With China’s e-commerce growing at an amazing 58%, as the internet becomes more readily available, the revenues represented by alternative payments are skyrocketing. While retail in China is tricky for U.S.-based companies, the opportunities are huge. But, the retailer must complete the sale with the Chinese customer in the manner they prefer, in order to get that customer to come back again and again. McGriskin pointed out that if the retailer doesn’t offer the payment method the customer prefers, they may make one or two purchases with a different method, but they will more likely move on to a different retailer that offers their preferred payment method.
E-commerce is truly global, and retailers need to realize this sooner rather than later. Many of the company executives I have spoken with have noticed a jump in orders from other countries, even though the company is not targeting these customers. As this segment grows, the retailer must understand the culture on a transactional level. These customers want to be offered a range of payment options, but they need to be the right options. This all goes back to knowing your customer, from product offerings to the payments.