Chinese Consumers Prefer Local Payment Methods When Shopping Online

Expansion into the Asia-Pacific (APAC) region remains difficult because eCommerce merchants aren’t offering local payment methods.

This came through clearly in the new study “The Emerging APAC Opportunity: Local Payment Methods Edition,” a PYMNTS and Citcon collaboration, where 500 executives surveyed said lackluster localization is exacerbating cart abandonment rates, and 41% of businesses that sell to APAC sans localized payment options reported cart abandonment rates over 60%.

Compare this to the merchants selling in the APAC region and providing local payment methods, whose cart abandonment rates fall to 32%.

According to Wei Jiang, president and chief operating officer at Citcon, this is a matter of market perspective, as companies from the West wrongly assume the major card networks of North America and Europe work just as well in APAC, and that’s a mistake.

Jiang told PYMNTS that “many of the companies made decisions based on their own experience. For people who live in the U.S., Canada and the U.K., payments are largely dominated by Visa, Mastercard and global card schemes. It can be hard to understand that people in APAC countries and many countries don’t really use or have access to global card schemes. From that standpoint, it is harder to understand how big the obstacle is.”

The study found that not only is the use of local APAC payments low at 13%, but just 1.8% of eCommerce players even realize that APAC shoppers prefer local payments denominated in local currencies.

Noting that when expanding overseas, “payments are always the last thing to consider” for many merchants, Jiang said, “our experience is that if you don’t have the right payment offering in your checkout process, it’s going to dramatically reduce your conversion rate. It can put your entire overseas expansion plan or the business at risk.”

Every Country Presents a Challenge

In stark comparison to the West, APAC is comprised of dozens of nations, and most have a native digital wallet or payments app that is preferred by consumers in those nations.

Jiang pointed to the difficulties of serving this kind of diverse market, noting that “every country presents a little bit of a different challenge.”

Some countries are largely dominated by their mobile wallet,” he said. “Take China as one example, where Alipay and WeChat Pay are becoming dominant payment solutions for them. If you go to other countries, there are a lot of local debit card schemes or credit card schemes, such as in Korea.”

He added that even in markets like Singapore which have a relatively high card adoption rate for Visa or Mastercard versus other APAC countries, “local payment methods can still help increase your conversion rate.”

This also goes for payment options like buy now, pay later (BNPL). Jiang said because BNPL often carries higher limits in APAC, bigger baskets that convert can result.

“For example, Atome and GrabPay Later are two potential solutions the merchant can consider,” he said.

Read also: APAC Opportunity Beckons for More Than a Third of SMBs

Dynamic Display Plays Its Part

While the problem of local acceptance for offshore eCommerce sites is fixable, it’s a heavy lift, which is where gateways like Citcon enter the frame, enabling more methods for merchants.

“People recognize there is a fix needed to expand to those countries,” Jiang said. “The challenge is that it’s not easy to do. If you go to every country and you wanted to enable the local payment method, you’re talking about probably over 100 different payment methods [across] APAC.”

It’s not only a matter of piling on payment options but serving the correct options to individual markets at checkout to prevent the high cart abandonment rates now common.

“Another challenge for eCommerce to think about as they add those payment methods is how they can display the right payment method in front of the consumers,” Jiang said. “They need to dynamically display the payment methods to the consumers which are needed. You don’t want to display a Korean payment method to a consumer from Japan.”

Here again, a regional payments gateway like Citcon is the go-to solution in these cases.

Jiang added that “we want to demonstrate a solution that allows eCommerce to reduce the cost of setup on the platform accepting those payments from all of APAC as a one-stop service. They can add tremendous value and benefits to eCommerce and retail commerce.”