Global payments are getting much easier for customers to transact with retailers overseas. The advent of new technologies in the checkout experience such as Apple Pay and Amazon Pay is becoming more prominent as shoppers get more comfortable with mobile commerce.
“The ability for you to transact with biometric authentication is an epic game changer,” said Olann Kerrison, Vice President FX and Global Payment Products for payment provider Worldpay. “This is very different from a risk point of view than someone signing their name and using a PIN.”
How customers are transacting in global ecommerce is changing. Alternatives to credit and debit cards now account for more than half of ecommerce transaction volume, according to Worldpay’s report. The survey of 36 countries found that at least 140 online payment methods are used today.
E-wallets are front and center of payments for global customers, offering both convenience and security.
Mobile apps integrate the act of payment into daily lifestyles and routines, and preloading credentials speeds the checkout process. E-wallets do everything safely with encryption, tokenization and device authentication, providing extra layers of security. China is seeing continued growth with this method of payment and North America is expected to see growing adoption over the next five years.
The Worldpay report found that bank transfers are also growing in popularity as an online payment method. Benefits include convenience for consumers, lower costs of acceptance, fewer chargebacks for merchants and a rise of banked populations in emerging markets.
In the Asia Pacific region, consumers demand a seamless experience and security in their digital lives, according to the Worldpay report. Payment methods vary within countries and between urban and rural areas.
Ecommerce in Asia continues to be defined by extraordinary rates of growth. Worldpay estimates the five-year CAGR for ecommerce sales at 21.3% in Malaysia, 20.2% in Vietnam and 18.6% in the Philippines and Indonesia.
In China, digital wallets are seeing broad adoption, led by Alipay and WeChat Pay apps via mobile devices. Consumers are choosing a seamless integration and trusted environment offered by all-inclusive apps.
In China, e-wallets account for two-thirds of ecommerce transactions, according to Worldpay. In India, ecommerce is expected to grow at a 21% CAGR over the next five years. Still, it is far from the saturation point in terms of online access or mobile phone penetration.
In North America, affluent and savvy U.S. and Canadian consumers demand the latest in secure, convenient payment methods. However, e-wallets are challenged by mature technology infrastructures, habits and preferences established over generations.
Credit cards remain the primary consumer payment method in North America, both online and in store. Also, consumers here are heavily banked: The Federal Reserve estimates the share of unbanked Americans fell to 5% in 2017. Debit cards remain a strong preference, representing 34% of spend at point of sale and 19% of ecommerce sales. Together, card-based payments represent almost three-fourths of POS and over half of ecommerce volume.
The North American ecommerce market is projected to grow at a five-year CAGR between 9% and 10%, according to Worldpay. However, concerns about fraud and convenience still remain, leading some consumers to avoid online shopping.
Over the next five years, use of cash is expected to drop by about 5% at POS, and a majority of spending will go towards e-wallets, according to Worldpay. On the ecommerce side, it found that e-wallet adoption will surge in North America.
In Latin America, overall retail sales and ecommerce growth are expected to exceed the overall 2% growth estimates for the region’s economy as a whole. Worldpay projects over $61 billion in ecommerce transaction value in 2018 in Latin America, increasing to more than $94 billion by 2022.
Credit cards account for 45% of ecommerce spending in the region, and even higher rates in other verticals. Online spend is fragmented among debit cards, credit cards, e-wallets and bank transfers.
Worldpay projects that credit cards will continue to be strong in Latin America, but will lose share to debit cards, e-wallets and bank transfers.
McMillon said Walmart is giving customers in Mexico new experiences such as a second digital payment option on their smartphones.
“If you’re selling to millennials they expect an optimized mobile channel,” said Kerrison. “That was not the case five years ago. You can really tell that retailers have invested in that payment journey. You’re paying to get that person in the door, so why would you make it a hard experience?”
Worldpay’s research found that 28% of millennials globally have used a mobile wallet at the POS vs. 20% of all respondents.
To find out more about trends in global payments, you can read our new report on the subject by clicking here.