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Financial Solutions
30 May 2017

With online payments, the magic is in the mix

Every country has its own favourites, and local payment hero

There’s a lot going on in payments just now, with a lot of talk around Apple Pay and Samsung Pay sewing up the market for mobile wallets. We even have AliPay, the mobile-payment heavyweight run by Chinese e-commerce giant Alibaba, moving into Europe and the US to corner the market for Chinese tourists (and possibly the rest of us).

As our Payments Review shows, you need to know the lay of the land, especially when expanding your online store into new markets. Apple Pay could theoretically take over payments in the Netherlands one day, but it is not going to happen any time soon with the local payment hero – real-time bank transfer service iDEAL – so strong.

Combining extensive qualitative research with expert insights, the Arvato Payments Review looks at the big picture when it comes to Payments, Risk and Fraud, and Consumer Behaviour in 14 of the most vibrant e-commerce markets in the world.

Across the board we have found that in payments, as in retail, one size doesn’t fit all. Card is king in much of Europe, but you still can’t afford to ignore local payment heroes, such as pay-after-delivery in Germany or direct debit in Finland.

Wish, the Amazon-like online bazaar selling everything from unbranded clothes, jewellery and shower heads to millions of American and European consumers out of China, has cottoned on to this with spectacular success. It allows Nordic consumers, for example, to pay by open invoice through Klarna, whose CEO credits it with taking over online shopping in Sweden without anyone even noticing.

If anything, alternative payment methods (APMs) are set to become even more relevant with the transition to mobile commerce and omnichannel retailing. With cards now being squeezed on everything from pricing to authentication as part of the regulatory onslaught sweeping the banking industry, the market is opening up like never before as innovations in, for example, authentication and real-time payment platforms drive the use of APMs based not on card but direct debit or financed pay-after-delivery solutions.

Back in the Netherlands, even iDEAL is beginning to feel the heat – not so much from Apple Pay but from APMs that give consumers even more payment flexibility. In this as in other markets for certain segments such as fashion or electronics, where return rates are notoriously high, pay-after-delivery, for example, is coming into its own. With high returns making it vital to maximise conversions, the added convenience of paying by instalments, account or subscriptions is also a powerful incentive to buy.

In other words, don’t put all your eggs, or your apples, in one basket. The best strategy is always to provide the optimal mix of payment methods. Download the Arvato Payments Review to find out what they are.

Jan Florian RichardJan_Florian

– Director BPO Finance, Arvato Financial Solutions




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