opinion

Attempting to Make Sense of Alternative Payment Offerings

Cathy Beardsley

The way we’ve paid for things has evolved over time. Life used to be simple; we’d barter. I’ll give you eggs and you give me corn. It was face to face and each party got something they needed. And while it might have been simple, it wasn’t very scalable.

Then we looked for natural physical items that were available or represented some value. Shells, leather and even dung were used as currency. While that was more sophisticated, it still needed improvement. Precious metals like gold and silver came into use which lead us to currency. However, it still required a face-to-face transaction until the introduction of the first credit card.

As our economy and technology have become more sophisticated, our payment methods have had to evolve too.

As our economy and technology have become more sophisticated, our payment methods have had to evolve too. The things we buy, both tangible and intangible, are limitless; and in today’s economy so are the payment methods. Our challenge as digital merchants and payment processors is to make the transaction process as fast, easy and reliable as possible for the consumer to convert our sales.

Cash was once king but now debit and credit cards rule the economic exchange. In volume and ease of transaction, credit and debit cards are the omnipresent payment method of consumers. The question online merchants face today is deciding what alternative payment methods need to be offered in the future for the emerging digital economy.

At SegPay, we believe the key to offering alternative payment methods is to tailor your ecommerce options to the markets you are targeting for your sales. Mature markets, such as the U.S., Australia, Canada, E.U., Japan and South Korea are still dominated by credit cards. Sometimes local cards that fall outside of the traditional schemes (Visa and MasterCard) dominate in countries, such as Belgium and China.

Then there are countries like the Netherlands, Poland and Germany where consumers prefer direct debit or direct bank transfer. However, all of these transactions fall under traditional payment methods.

Before jumping on the alternative payment methods band wagon, merchants should perform a cost benefit analysis to determine if adding the additional options will cannibalize existing card traffic. Credit and debit transactions still dominate ecommerce sales in developed markets, but alternative payment methods are quickly growing in emerging markets such as Russia, India and Brazil.

Mobile payments, on the other hand, are leading digital transactions in the least developed countries, primarily countries located in Africa, where more traditional payment options don’t have as much of a foot hold. Digital merchants need to study web traffic to determine appropriate payment offerings for consumers that will yield the highest conversions.

E-wallets or digital wallets are an emerging trend that is growing in popularity among tech savvy consumers, allowing them to make payments from a single platform that contains multiple monetary transaction accounts.

Pioneering services like PayPal or Google Wallet are seeing growth in the marketplace as well an emerging competitive landscape. Both Visa and Mastercard are heavily promoting their own e-wallet solutions, and I’d be remiss if I didn’t mention Apple Pay. E-wallets are really places where you store traditional payment methods, so in some ways it’s not as revolutionary as it sounds but creates an easy way for consumers to manage multiple accounts.

Digital currencies at one point were all the rage but have since run into issues with lack of regulations. What once looked to be revolutionary cryptocurrencies, like Bitcoin, have hit a major bump in the road.

Not only do these digital currencies face resistance from major banks, their association with the Mt. Gox bankruptcy and dark web markets, such as Silk Road and Darknet, have kept them out of mainstream commerce for now, or at least until a more regulated environment evolves.

Ultimately, it’s important for merchants to work with a payment specialist within your target countries or a knowledgeable payment processor to map out payment offerings for consumers that will lead to higher sale conversions.

Specialists and payment processors will have a deeper understanding of the idiosyncrasies of each market, allowing you to focus on delivering better content more efficiently. You’ve worked hard for the conversion, so let it turn into gold and not dung!

It took only three years for Cathy Beardsley to turn startup SegPay into a profitable company. As president and CEO, Beardsley oversees the day-to-day operations and long-term strategic planning for the company. SegPay is one of four companies approved by Visa USA to operate as a high-risk Internet payment service provider (IPSP) in the U.S. Since 2005, SegPay has offered online merchants a state-of-the-art billing platform that provides real-time payment processing around the globe.

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