The Risks of Not Offering Local Payments

Andy McHale, senior director of product at Spreedly, and Adrian Burgess, head of strategic growth at PPRO, explain merchants’ challenges and solutions for providing local payments to their customers.

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eCommerce merchants expanding abroad are often surprised at the degree to which global payment trends differ from what they see in the West. There is a remarkable array of local and alternative payment methods around the world, each of which is some customer’s favorite, said McHale.

“For the U.S. and large parts of Europe, we tend to think of credit cards as the primary method of paying for things, whether that’s in person or online,” he said. “But that doesn’t work for every individual, every ecosystem, every region on the planet. You’ve got your digital wallets, PayPal, Apple Pay, Google Pay. You have your bank account and direct debit as well.”

Preferred payment methods are as diverse as the regions themselves. Burgess listed a few of the local preferences that PPRO encounters, each of which comes with its own quirks with which merchants must grapple.

“While Americans still love paying by card — around 60% of all eCommerce transactions in the U.S. are made with cards — Polish shoppers prefer bank transfer payment methods like BLIK, while in Brazil, cash-based payment methods are favored. It’s therefore essential that merchants offer the right mix of payment methods to their consumers if they don’t want them to abandon the checkout.”

It can be difficult for merchants on their own to provide this variety of payment types. Each method’s complexities affect both back-end systems and consumer-facing interfaces, leaving little room for error, said McHale.

“A lot of these alternative payment methods have different levels of consumer protection rights,” he said. “The merchant may want to take those things into consideration as well because if there are more liberal dispute rights on a given payment method, that could expose the merchant to more risk and create more disputes on the back end.”

Only the largest and richest corporates have a shot at navigating these challenges by themselves, but payments orchestration can lower the barriers to smaller organizations. Having a third party handle disputes and other local payment complications allows merchants to operate confidently in any region, knowing they can readily provide the payment options their customers will demand.

“What an orchestration platform can help [organizations] do is integrate with the providers that have a full suite of capabilities established in a way that is normalized and consistent,” said McHale. “So you can access your payment methods through an orchestration layer, and everything is [offered] through a single API integration and you can manage all those pieces together. The other part that the orchestration platform can play is simplifying and consolidating data settlement and reconciliation.”