The payment methods that merchants offer really do make a huge difference to conversion success – and not just for cross-border merchants either.
In our recent blog on cross-border payments, we looked at some of the key service elements that merchants need to consider to grow their overseas business growth successfully. One of the points we touched on was the importance of offering different payment methods in each market to cater to the most dominant options in each country.
The payment methods that merchants offer really do make a huge difference to conversion success – and not just for cross-border merchants either. So, we thought the topic deserved a bit more airtime.
The growth of alternative payments
Although cards are still the most popular payment method on a global scale, they are losing ground to alternative payment methods, especially in the e-commerce landscape.
While it’s still vital to support the biggest global card brands, it’s also important to recognise that there are now around 450 payment methods in use around the world. Of course, it’s impractical to offer even a fraction of this mass of payment options. It’s extremely fruitful to understand and cater to the most important payment methods for your individual business.
To show just how important payment methods have become, we’ve pulled together a few statistics and research highlights that give some interesting insight on this topic.
Seven surprising facts about payment methods
Here are seven surprising facts about payment methods:
- €243bn in abandoned sales is lost annually because a customers’ preferred payment option wasn’t offered.[i]
- By 2024, 50% of the world’s population will use e-wallets[ii]
- In Spain, 25% of e-commerce payments are made through e-wallets[iii]
- Local payment methods such as bank transfers, e-wallets, cash-based payments, and domestic cards are the dominant payment methods globally, used in more than 70% of all consumer transactions.[iv]
- 42% of millennials and 35% of Generation Z feel confident using, or have used, either a bank transfer or e-wallets as methods of payment.[v]
- The Covid-19 pandemic pushed 38% of consumers to try a new payment method[vi]
- 57% of Germans use debit and credit cards now more than they did before the pandemic. [vii]
Generally speaking, consumers have just one or two ‘go-to’ payment methods that they prefer to use where possible. We can see from the statistics above that it’s not just about understanding the most popular payment methods for each geographical market you operate in. Broader demographic factors – age group in particular – make a huge difference to the payment options you need to offer.
For instance, Millennials and Gen Z consumers – are much more comfortable with newer, mobile-native payment methods. Still, they’re also the ones driving the popularity of debit options such as bank transfer payments to manage cash flow better.
The right payment methods for particular customer groups
In summary, doing some homework on what the right payment methods are for your particular customer groups is a very valuable exercise. This is especially important for cross-border merchants and those catering to younger tech-savvy shoppers.
The figures related to the pandemic buying trends and the growth of emerging payment types also show that customer preferences change over time. It’s not just with each new generation of the buyer, but because of new technologies and other external factors. Keeping up with these changing preferences is just as important as making sure to remain relevant and maintain strong conversion rates over time.
[i] Adyen (2019, September 10). Adyen retail report: The checkout experience [Blog post]. Retrieved from https://www.adyen.com/blog/retail-report-the-checkout-experience
[ii] Juniper Search (2019, June 11). “Half the world’s population to use digital wallets by 2021” [Press release]. Retrieved from https://www.juniperresearch.com/press/press-releases/half-worlds-population-to-use-digital-wallets-2024
[iii] Brodbin, S. (2018). The changing dynamic of payments in Europe [Blog post]. Retrieved from https://www.imrg.org/blog/changing-dynamic-payments-europe/
[iv] The Paypers (2020). The Paypers Payment Method Report 2020 [Report]
[v] Harisson, P. J. (2020, October 31). Alternative Payment Methods: The Key Factors Driving the New Era [Article]. Retrieved from https://thefintechtimes.com/alternative-payment-methods-the-key-factors-driving-the-new-era/
[vi] Capgemini (2020). Capgemini World Payments report 2020 [Report]
[vii] Arneson, K. (2020, May 21). ‘Cash is king’ has long been the motto of German consumers and small business owners – but Covid-19 is bringing rapid change [Article]. Retrieved from https://www.bbc.com/worklife/article/20200520-will-coronavirus-change-germans-love-of-cash