In recent years, the borders that previously held back global sales have all but disappeared. Need proof? Cross-border B2C ecommerce spend is expected to rise to a record $736 billion by 2023.1 But while access to a global market of billions is undoubtedly attractive, that near-limitless customer base brings with it a nearly equal number of challenges -- especially with how customers prefer to pay. That's why it's crucial for merchants to accept the local payment methods (LPMs) that customers most frequently use.
But simply offering hundreds of payment methods and hoping for the best isn’t the way to go. Too many payment options can be frustrating for customers, but more than that, it all comes down to quality -- or relevance -- over quantity. As the number of LPMs multiply and fragment, the strategy around your LPM approach can be the difference between expanding your reach to a broader range of customers and alienating the customers you already have.
In this article, we'll discuss the reasons why more payment methods aren't always better, what to consider in order to make the most of your LPM offering -- and how Braintree can help you find the right mix of LPMs.
LPMs have long been a factor in many countries, though not always easily available to cross-border merchants. But thanks to new technologies -- and the fact that people are increasingly more comfortable with digital payment methods -- LPMs are now one of the preferred ways to pay globally. And with nearly half (47%) of global ecommerce payments expected to be made using LPMs by 2022,2 the ability to seamlessly accept a wide variety of global LPMs is critical enabling business growth. There are already hundreds of LPMs worldwide, with new payment methods introduced every year. Some payment methods, like PayPal, are popular across continents, while others are favored in their home country but unrecognizable outside of it.
Research shows that consumers are as passionate about their payment preferences as they are about where they shop. 82% of shoppers say they're more likely to shop with an online retailer when it displays their preferred payment provider's logo,3 while 76% say they spend more per visit when an online retailer offers their preferred payment method.4 In fact, 50% of online shoppers say that they've abandoned a transaction because a merchant failed to offer the payment type they want.5
For merchants, the logic seems simple: The more payment methods you offer, the higher your conversion rates and sales. But in reality, that may not be the case.
Attempting to accommodate every customer's payment preferences could introduce unwanted friction into your checkout process. Customers can get confused and frustrated as they scroll through dozens of payment buttons to find their favorite method, especially when shopping on mobile. Too many options clutter the checkout experience, slow down page loading times, and can even cause you to lose customers.
Confusion in the checkout process can lead to cart abandonment -- a massive business concern. Research shows that 69.57% of consumers who add items to their cart ultimately abandon them before completing the transaction.6 To help get customers to the home stretch and finalize their purchases, a quick and simple checkout process is essential.
The fact is, you don't necessarily need to offer every LPM under the sun to help maximize sales. You likely only need to offer the ones that are most relevant to your customers.
Even within the same market, an LPM may be right for one merchant but not for another due to business model (i.e., physical vs. digital space, direct vs. marketplace), average ticket size, and in some cases, constraints in areas such as treasury or fulfillment. Your product, type of business, target demographics, and processes are all critical factors in determining which payment methods you accept.
That's why, when evaluating a payments partner, it's not enough to compare the raw number of LPMs the platform lets you offer. Examine its ability to let you experiment with your payment mix on a market-by-market basis, as well as how easily additional payment methods can be integrated.
At the same time, delivering the right LPM to the right customer at the right moment across multiple countries is easier said than done. Many platforms require lengthy development times every time you update your payment options, making it more difficult to add or subtract new LPMs on the fly. And some may even display all possible payment methods to all global customers, which can leave you no choice but to offer the lowest common denominator payment methods or struggle with a cluttered checkout process. So it’s crucial to research the full capabilities -- and limitations -- of the platforms you’re considering.
Braintree makes it simple to provide the most relevant payment methods based on your customers and business strategy. In short, your customers see the right payment methods at the right time.
Braintree’s custom UI gives you maximum flexibility and control to accept the right LPMs for your customers and your business, along with features and functionality, such as instant funding for eligible LPMs, that you won't find anywhere else. Our platform can deliver the most relevant LPMs to your customers in a single integration without the hassle of multiple processes. LPMs can easily be turned on and off so you can experiment with the payment mix that works best for your audience. Plus, Braintree enables you to offer PayPal, the payment method that leads the way in online wallet payment volume7 and that has been shown to outperform other digital wallets in conversion rates by up to 60%.8
Global growth requires an approach to LPMs that is flexible, scalable, and seamless. Braintree's innovative payments technology, combined with PayPal’s global footprint and proprietary payment methods, help make it simple to offer relevant LPMs to your customers -- no matter where in the world you do business.