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How Payments Are Progressing on a Global Stage.

By Gabriel Montessus - Payments Journal


Over the past couple of years, the global payments industry has undergone considerable flux, and this is likely to continue for the foreseeable future. The cause of this is solidly rooted in the development of new, innovative technologies and changing consumer behavior. Businesses looking to trade globally are facing new challenges and changes in consumer demand. To meet the needs of their customers, companies must consider this change and find unique ways to compete in their target markets.

In a recent report, Ingenico explored the evolution of payments across the four corners of the globe: Europe, Middle East and Africa, North America, Latin America, and Asia Pacific. Our findings have given us new insight into how the landscape is changing and what we can expect to see over the next few years.


Europe, Middle East and North Africa

Making generalizations about Europe is hard, as the payments landscape is far more fragmented than many people realize. However, there are some general trends to be observed.

Payment methods are constantly evolving thanks to the growth of eCommerce and online marketplaces, as well as consumer behavior becoming more digital. This is made clear by the fact that online purchases are still rapidly increasing.

Despite this, the growth of eCommerce hasn’t been uniform across the continent. Western Europe has the greatest market share at 53 percent, while eastern Europe has the smallest at six percent. This trend isn’t surprising considering the level of internet penetration in the respective areas, however it does highlight the huge potential for eCommerce growth in eastern Europe.

Amazon is the dominant force in the eCommerce sector unsurprisingly. Yet, as payment methods are evolving, the retail giant is facing new threats. Consumers are beginning to pay for goods using social media platforms and, while Facebook’s marketplace has yet to take a significant foothold in European market, consumer interest in social payments is growing.

So, what’s next for Europe? With consumers making the move to digital, it’s likely that the next battle will be over eWallets and mobile payments. Although global players like PayPal, Apple and Samsung have already established themselves in this area, fierce competition is beginning to emerge between local players. This is likely to be amplified as the industry continues to get to grips with PSD2 and open banking, which will make it easier for merchants to initiate payments online and via mobile


North America

The adoption of eWallets and other alternative payment methods is also on the rise in North America. However, it’s hugely determined by demographic divides such as age and economic status. Currently, 35 percent of millennials and more affluent consumers regularly use their mobile phones to make payments both in-store and online – compared to 23 percent of the overall North American population.

Although the younger generations are driving this change, card payments remain the preferred payment method across the continent. Credit cards are the main payment method for 40 percent of consumers in the United States, both online and offline, and 35 percent favor debit cards.

Still, the digital revolution has had an impact on the way the North American population purchases goods. Following the rise of Amazon and other online marketplaces, 37 percent of U.S. consumers now shop less often in-store, exceeding the global average by 9 percent. The rise of social commerce is another trend we are seeing across the region. Last year half of social media users made a purchase directly from a social media post.

Despite the U.S.’s reputation for being slower to adopt emerging payment methods than other areas of the world, one size still doesn’t fit all. As the divide in preferred payment methods continues to expand, it’s important for merchants to offer a number of payments services that are tailored to the needs of their target audiences.


Latin America

In Latin America it’s also important to offer a range of payment options. With the region consisting of 20 countries, growth naturally varies from market-to-market, as do favored payment methods.

Therefore, to succeed, it’s essential for merchants to be aware of the local differences and ensure that they’re meeting the needs of their customers. The way consumers pay for goods in Latin America often depends on what’s available to them. In this way, locally available payment methods have become a catalyst for the evolution of payments in the region and as more and more individuals gain access to new payments technologies, the demand for payment methods is transforming.

This is contributing to the competitiveness of online marketplaces across the continent. Smaller marketplaces such as OLX and TiendaMia are successfully competing with Amazon, thanks to their ability to provide locally relevant payment systems.

In general, local credit cards and voucher systems are preferred across the region, while consumers favor paying in installments. This was made evident during Argentina’s Hot Sale last year, where instalment payments accounted for half of all online transactions.

Yet, the popularity of non-cash transactions has been rising in recent years. They’re expected to grow by 7 percent per year until 2020, due to investment from retail banks in digital technologies, including mobile apps and eWallets. This, along with increasing internet penetration, has led to the growth of both mCommerce and eCommerce.

mCommerce in particular, is thriving in this region. In fact, many shoppers have skipped desktop purchases altogether and gone straight to mobile. As a result, mCommerce is growing at a much faster rate than eCommerce.


Asia Pacific

Adopting a multitude of alternative payment methods is driving financial inclusion in the Asia Pacific region. In developing nations like the Philippines and Indonesia, mobile money services, eWallets and stored-value facilities are giving consumers access to financial services. Mobile devices, in particular, are enabling the rural population to gain access to banking and payment facilities.

This, however, isn’t the only reason Asia is leading the way, compared to the rest of the world, when it comes to the adoption of alternative payments. Like North America, younger consumers are driving the demand for mobile payments across Asia. This form of payment is most popular in big cities, where mobile network availability allows for a seamless consumer experience.

In China in particular, consumers are more willing to experiment with alternative payment methods. In this country, consumer demand for alternative payments is growing as ease-of-use is deemed more important than the storage of sensitive data.

Due to this digital transformation, like many other regions across the world, Asia Pacific has seen a surge in social payments in recent years. On average, 80 percent of merchants are selling via social media platforms, with 72 percent accepting digital payments. Facebook is still a popular choice in China, however it’s WeChat that is truly making strides in this market, as 90 percent of merchants use it to sell their products.


Understanding demand in all four corners

In all corners of the world, it’s essential that merchants recognize that demand for payment methods is fragmented. To enter markets, businesses must consider local consumer behaviors. To be successful in today’s climate, it’s important to offer payment options that serve and complement the different lifestyles of consumers across the globe. Success is no longer dependent on telling consumers which options they can choose.

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