In today’s diverse and growing digital marketplace, global brands and consumers share a common awareness of the way payments can differentiate the overall customer experience.
According to a 2019 Forbes and J.P. Morgan survey of 300 business executives worldwide, at least 80% of business leaders—90% in the Americas alone—believe the payment experience is central to attracting, retaining and growing customer relationships.
But upon a closer look at the survey data, global differences in how consumers prefer to pay begin to emerge. Having the ability to pay across multiple channels (e.g., website, mobile app and connected device) is the most important in Asia and the Americas, but much less so in Europe, where ease of use is the most important feature.
Considering that the concept of “charging” purchases to a customer account “on credit” in lieu of exchanging cash originated in the U.S. almost a century ago, it’s not surprising that Americans continue to have a strong preference for credit and debit card-based payment methods.
Meanwhile, in Europe and the Middle East, consumers have a strong preference for debit cards and bank transfers. In major Asia-Pacific economies, where mobile device adoption and use is widespread, consumers have been early adopters of digital wallets, skipping plastic cards and going straight from cash to digital payments.
Because the payments landscape is fragmented, succeeding locally in new markets can be challenging. Today, there are more than 300 different ways to pay around the world with each country having its own favorite method: e-wallets, cards or cash.
Businesses have no choice but to offer regional consumers the types of payments they are comfortable with. Ryan Sparks, head of transformation and global expansion at J.P. Morgan, believes that when it comes to global payments, merchants do not have the luxury to choose whether they want to cater to the preferences of a local market.
“You're not going to have the ability to choose whether you want to be local or have global consistency. You're going to have to be able to do both,” says Sparks. “If you don't accept that method of payment, you’re just not doing business in that country.”
If you don't accept that method of payment, you’re just not doing business in that country.
Ryan Sparks
Head of Digital Transformation, J.P. Morgan Merchant Services
“You're not going to have the ability to choose whether you want to be local or have global consistency. You're going to have to be able to do both,” says Sparks. “If you don't accept that method of payment, you’re just not doing business in that country.”
Our survey reveals that business leaders agree. When it comes to payment solutions, the biggest group (42%) favor meeting the needs of each market and offer processes and solutions accordingly. The remaining respondents are split roughly in the middle between favoring a consistent, global solution and offering both at the same time (local and global).
A uniform approach is an elusive goal in payments. There is simply too much variance in customers’ expectations, technology infrastructure, regulatory environments as well as different adoption levels across regions. Companies are thus compelled to meet the local needs of each market, rather than try to impose a universal set of solutions. As a result, there are some region-specific payment options favored in the Americas, Europe and Asia.
Our survey reveals that digital wallets (57%) and mobile payments (48%) are the top payment options offered by businesses in the Americas. In Europe on the other hand, digital wallets are much less popular, and the top options are mobile payments (51%) and biometric authentication (43%). The most popular payment options offered by businesses in Asia are biometric authentication (40%) and digital wallets (40%).
Some payment solutions are brand names in some regions and almost unknown in others. PayPal, is enabled by 42% businesses in the Americas, but only by 6% in Asia. On the other hand, Paybox, dominates in Asia with 60% of businesses enabling it, and SafetyPay is the most common in Europe (29%).
This fragmentation can be tricky for businesses, such as e-commerce marketplaces or ride-sharing companies, which made customer experience, including payments, a big part of their brand. They are going to have to be able to do both—maintain their global brand while offering local options.
“Having complete consistency globally is something that's going to be challenging,” says Sparks. “The emerging thinking is to create variations of the payment processes and the ability to pool consumer funds from different places, depending on local preferences.”
API integration is a critical enabler of payment processes that can quickly adapt and adjust to local market preferences, which continuously evolve.
The fragmentation of the global payment landscape goes beyond consumer payment preferences and extends to the global data security issues, fraud considerations, regulatory and enforcement jurisdictions and currency fluctuations. That means additional risks and complexity.
“What businesses are looking for is one organization to do payments business with globally. It takes the complexity out of the equation,” says Sparks.
