On a global stage, one size does not fit all when it comes to payments.
In an interview with PYMNTS, Deirdre Ives, CEO and managing director at Wirecard North America, noted that when it comes to innovation, issuers face challenges in meeting the needs and expectations of a diverse populace of users spanning borders and cultures.
For example, she said, some users may wish for payments to be done digitally, with speed and ease. Others may still prefer to transact with cash. And firms striving to gain share of wallet must identify and satisfy the diverse needs of their targeted consumers.
Ives said, “Economic stratification and emerging payments trends around the globe mean businesses must strive for flexibility rather than totally reinvent their processes. Progress in the payments space isn’t just about what is possible … it’s determined, at least in part, by economic realities.”
Though the cashless society beckons, there is still room for legacy means of making (and receiving) payments.
Payments, on a Global Stage
Ives pointed to the U.S. market as an example of the co-existence and collision of cash and digital payments.
Firms in the U.S., she said, are finding that they need to expand the scope of their payments offerings. Consumers may still champion cash as their preferred method of payment, but its use declined 3 percent as measured between 2015 and 2018. Other options, such as credit cards and payment apps like Venmo, are increasingly gaining traction. That’s especially true among younger users such as millennials.
But Ives noted that hesitance to go cashless, in some industries, arises from concerns about disenfranchising the underbanked. She pointed out that the Federal Deposit Insurance Corp. (FDIC) estimated that 6.5 percent of households remain unbanked, with no checking or savings accounts in place. Another 18.7 percent of households are underbanked, with at least some reliance on financial services that include money orders, remittances or payday loans.
Taking the Unbanked and Underbanked Into Consideration
Against that backdrop, Ives told PYMNTS, firms that serve unbanked or underbanked consumers often strive to offer alternate payment methods across acquiring and disbursement scenarios.
“Take utility companies, for example,” she said. “In this case, prepaid cards can serve as a payments alternative to traditional banking offerings like checks, and more technology-driven ones like real-time bank deposits.”
In short, addressing the banking divide means investing in a payments ecosystem that honors rather than penalizes financial diversity. And it’s no excuse for failing to innovate on the cashless front.
Some providers have developed mobile payment apps that cater to customers who want convenience, permitting them to pay with anything from ACH to prepaid debit cards. Refund solutions that are delivered through a digital portal but offer several payment options – including virtual and prepaid cards – also ensure that everyone’s needs are met.
Diverse Global Payment Preferences
“The growing prevalence of cross-border commerce has also shed light on the importance of payments choice,” Ives noted.
Many rapidly expanding eCommerce companies want to serve as many international markets as possible, while offering a frictionless payment experience, no matter how customers wish to pay.
“The challenge comes when payment preferences vary widely from market to market,” Ives said.
For online shoppers in Germany, payment by invoice remains the most popular choice. That’s not so for Finland and Sweden, where real-time bank transactions held 35 percent of market share. China is the global leader in mobile payments, with shoppers widely using payment apps like Alipay and WeChat Pay. And no matter where in the world they live and pay, shoppers value price assurance and a hassle-free experience.
Understanding these preferences unlocks new opportunities for global retailers.
For one, enabling mobile payments may ensure that consumers around the world can encounter a company’s brand on their terms, since smartphone usage has grown rapidly in emerging as well as advanced economies. Particularly for itinerant workers or those without a permanent address, a smartphone can serve as a critical portal to economic participation.
A Digital Future That Also Accommodates Cash
But again, not everyone prefers digital payments. Cash on delivery (COD) is the most popular payment method for online shoppers in India, and has been a key driver of eCommerce growth in that country. Since COD gives shoppers a sense of control over when and how they pay, offering this choice alongside digital payment options is essential to keeping these consumers engaged, even as other forms of payment find footing in India’s growing economy.
The same is true for some African countries like Nigeria, where low literacy levels mean many citizens face barriers to opening bank accounts, Ives said. What’s more, finding local providers to process digital payments has been an ongoing challenge in this part of the world. Increasing digital access is an effort worth sticking with, in anticipation of burgeoning smartphone usage and improvements to Nigeria’s literacy rates and financial infrastructure. Yet cash acceptance remains a high priority among merchants who understand that, in Ives’ words, “digitalization is a long game.”
“Even as the world moves toward a cashless future, true innovation means nobody is left behind,” she said.
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