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Why polyamory is a great approach to your global payments strategy

1
Nov

International eCommerce success requires a local attitude towards payments. Despite this, many businesses take a one-size-fits-all approach, assuming international customers will pay by credit card or debit card through their one payment provider.Unfortunately, it doesn’t work that way. Businesses who stick to just one or two large payment providers are restricting their success and income. You may be used to PayPal and Stripe, but payment methods differ wildly across the world. In many African countries, for example, mobile payments dominate, while in India, bank payments and pre-paid cards are popular.It’s not just about customer preference either. Businesses who stick to a limited selection of payment providers risk becoming uncompetitive due to decreased conversions, reduced acceptance rates, and higher fees.

Let’s look at this in a bit more detail…

5 Benefits of Using Multiple Providers

Switching from using just one or two payment providers to a larger pool of payment providers can bring significant benefits to businesses large and small. Here are the five biggest:

1) Access New Markets

It is tempting to assume that the way we like to pay is how everyone likes to pay - but nothing could be further from the truth. As we’ve already mentioned, growing markets such as Africa and India have very different preferences to what we might use personally. Even amongst Western countries, payment preferences change, and often specific local payment providers own a significant portion of the market. In France, for example, half of all eCommerce transactions come through local credit card scheme e-Carte Blue. It’s one thing to offer to ship to a country, but unless you speak their financial language, you are unlikely to receive a purchase. Businesses that fail to address this issue are significantly reducing the size of their potential market.

2) Increase Conversion Rate

A study carried out by JP Morgan found that the type of payments available had a significant impact on a customer’s willingness to buy from that business. In the survey, 59% of customers said the payment options had some impact on their willingness to purchase, and 24% said it had a large or very large impact on whether they made a purchase (83% total). Only 17% said the types of payment method available had no impact on their decision.

Using multiple payment providers can help increase conversions for several reasons:

  • Shoppers are more likely to feel comfortable making payment online if they use a payment provider they know and trust.
  • Shopping online is popular because it is convenient; remove that convenience and shoppers will go elsewhere. Local payment solutions make it easier for customers to pay.
  • Allowing customers to shop in their local currency looks more professional and increases trust.
  • Not all customers have a credit card, or even the ability to make bank transfers.

3) Increase Acceptance Rates

Out-of-country payments are more likely to be rejected by payment providers. This rejection is often because they are worried about fraud, but can also be because of regulatory or cost issues.

Why?

Fraud is a big topic in finance, and payment providers are naturally on the lookout for fraudulent payments to protect both themselves and you, their customer. When a payment is declined it is because the provider deemed it to be too high a risk.The problem is, international payment providers are not familiar with local fraud risks, so to reduce their risk they will err on the side of caution.By using local service providers who understand the local risk landscape, businesses will get increased acceptance rates on the payments they receive. These local providers have a far more detailed understanding of which payments are risky, so you will have fewer declined payments and problem is, international payment providers are not familiar with local fraud risks, so to reduce their risk they will err on the side of caution. By using local service providers who understand the local risk landscape, businesses will get increased acceptance rates on the payments they receive. These local providers have a far more detailed understanding of which payments are risky, so you will have fewer declined payments .The problem is, international payment providers are not familiar with local fraud risks, so to reduce their risk they will err on the side of caution.

4) Reduce Fees

Many providers charge more when taking international payments. This is lost money that is easily avoidable; a local provider won’t charge such high fees.It’s not just you that pays more either; your customer does. Taking payments internationally hurts your customer by forcing them to pay currency conversion fees. For some users, this will be enough to dissuade them from making a purchase.

5) Avoid Downtime

When you use just one payment provider your payment process has a single point of failure: if that provider experiences downtime you can’t make money. That’s not only going to cost you sales; it’s also going to damage your reputation. Unless your product is unique it is likely those potential customers will simply go elsewhere rather than wait This isn’t just about defending against technical errors: having multiple payment providers is also beneficial when spikes in sales cause slowdowns for some payment operators.

But isn’t It Hard To Manage Multiple Payment Providers?

Business owners can manage multiple payment providers manually, but it does take work. Rather than have each page list all your different payment options, the idea is that only the best and most popular payment options are shown for each visitor. This selection changes according to their locality. When you’re handling ten, twenty, or even more payment processors, manually configuration becomes impractical. Payment platforms like ZOOZ allow businesses to integrate new payment methods quickly and efficiently and use smart routing to process transactions the right way at the lowest possible cost.

Interested? Click here to request a demo so that our team can show you how this might benefit your business.

A few more interesting reads

International Payment Preferences part 1

International Payment Preferences part 2

Six Ways to Increase Your Approval Rate

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