I don’t know about you, but whenever I am travelling in Scandinavian countries, I think that we in Germany are a little behind the times. We can always argue about taste in fashion and interiors, but this not the only area where I think the Swedish, for example, are more innovative than us. Stockholm gives me a W-LAN hotspot in the train from the airport to the city centre, and for payments other countries are already well ahead.
The best example of this is what I experienced during my holiday in Denmark: when I wanted to pay my parking ticket in Copenhagen, I was informed that I could only pay by credit or debit card, and this was not written in English but only in my home language. Do we Germans really have a global reputation for only wanting to pay for everything in cash?
This anecdote, to which my international colleagues of course laughed when I told them before a meeting at the office, clearly shows the national differences when it comes to payment. While cash is hardly used in Scandinavia, many Germans do not even have a credit card yet. This is also noticeable in online shopping: According to a current EHI study payment on account is still the most popular and highest-earning payment method in e-commerce, and the credit card as a payment method even lost more revenue shares compared to the previous year – a development which is virtually unthinkable in other European regions.
Preferred payment methods differ from country to country, which was also shown in our Arvato Payments Review last year. On the one hand, this is related to the level of digitalisation, but cultural differences will probably also influence preferences. And then there are of course the industries that go hand in hand with a payment method. Let’s take for example the fashion industry, which traditionally needs to handle lots of returns. Because customers order a t-shirt or trousers in multiple sizes at the same time, the proportion of payments on account is often far above 80 percent. Buyers know that they will not keep the majority of their order, and so why should they pay for the goods at all?
Online retailers have to handle these circumstances, in any country regardless of how innovative they are. It is therefore no accident that last year’s Global Innovation Ranking included three Scandinavian countries in the top 10 with Sweden (No. 2), Denmark (No. 6) and Finland (No. 9). It would be a big mistake to assume that online retailers from these or other highly developed countries therefore get past the presumed old-fashioned payment methods such as payment on account. According to statistics, every third customer cancels their order transaction if their preferred payment method is not offered, which generally makes it preferable to offer all common payment methods at the checkout.
In my opinion, innovation and payment on account are not mutually exclusive – on the contrary: Customers have long let go of the image of the paper invoice in the letterbox or in the parcel. In the age of digitalisation, they naturally expect to receive their invoices by e-mail, to be able to try the goods out or on and only then to have to decide when and how they pay, preferably in their customer account with only a few clicks.
With our pay-after-delivery solution AfterPay, we offer precisely this level of flexibility. Customers can pay for their products not only on account and by direct debit, but also pause these invoices or divide them into flexible instalment models. In the MyAfterPay customer portal, you can at any time view all purchases and payments, amend them and have everything under control.
This is good for consumers, but in the long term also for the companies: payment flexibility ensures customer satisfaction, and satisfied customers come back and buy more – that’s how simple the magic formula of innovative payment methods such as AfterPay is. We not only look after the needs of the end customers, but equally those of merchants, who can create sustainable brand value with the pay-after-delivery solution by Arvato Financial Solutions.
Online retailers in Scandinavian countries know this too, who in many things may at first glance be a little ahead of us, but won’t pass on the option of buying on account in e-commerce.
If you have any questions or wish to find out more about our pay-after-delivery solution, you can contact me at any time by e-mail.
Managing Director | AfterPay Germany