Michael Evennett, Payment Specialist, International Business, Computop
Whilst PayPal and credit cards are preferred payment methods in many places around the world, consumers in different countries have distinct preferences and expectations at the checkout. In fact, 63 percent of the population in emerging markets does not have formal banking products, according to McKinsey & Company research.
Here’s a brief snapshot of the potential opportunity and the payments that are preferred and used in several highest-growth regions:
Regardless of region and payment method, preventing payment-related fraud is obviously critical. While there are secure payment methods such as Mastercard Secure Code and Verified by Visa, a payment guarantee will only provide limited protection of individual payments. Consequently, it’s recommended that retailers conducting business online in emerging markets also work with a payment service provider that offers effective fraud prevention solutions, with the goal of mitigating risk for the retailers, while protecting customers.
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In addition, some payment service providers also offer the capability for retailers to process payments without having a local entity in these high-growth regions. Given the costs and risks associated with having local entities, this represents an attractive option for many retailers.
Emerging markets present a wealth of potential opportunity for retailers, with e-commerce in these regions growing significantly faster than in developed countries. However, if retailers rely on a payment platform that only accepts credit cards they are going to hurt their chances for success. While credit cards still play an important role for purchases, it’s key for retailers to understand and offer localised payment options, such as payment by instalments,in many of these markets. Presenting the option to pay with cash – including COD – also allows retailers to effectively serve a vast number of underbanked consumers in these emerging markets.
By offering the payment methods consumers expect and trust while ensuring prevention of fraud at the checkout, retailers can tap into more markets and growth, with little investment, while minimising the risk to themselves and their prospective consumers.
Michael Evennett is a payments specialist responsible for business development in the UK and Europe at payment service provider Computop. Michael has been in cross-border payments for 12 years from deliverable FX to payment gateways, both managing sales and accounts relationship teams and partnering with multi-national organisations in supporting their payment needs.