What are local payment methods?

Are umbrella terms used to refer to several payment methods that use your phone. Examples of mobile payments include mobile wallets with either Google or Apple Pay. And due to smartphone biometrics, mobile wallets are a secure and convenient way to pay for goods. Alternatively, mobile payments can include contactless card payments, QR codes, and online payment links.

Although credit cards are synonymous with international payments, there are some that can be only used locally or domestically. That means that although debit cards and credit cards don’t count as traditional local payment methods, they can be described as local if they’re only mainly available in one location. As technology advances, businesses, eCommerce platforms, payment processors, and gateways are increasingly adapting to new ways of processing these global credit cards through a local entity.

A bank transfer lets you transfer money from one bank account to another bank account. Bank transfers are a great alternative payment method for those who either don’t have access to a credit card or do not want to use it for a transaction. Some of the most popular bank transfer global networks include iDEAL in the Netherlands, the Faster Payments service or network in the UK, and the Unified Payments Interface process in India.

As the name suggests, “Buy Now, Pay Later” or BNPL allow customers to pay for their purchases in installments. Examples of countries where BNPL commerce is popular include Australia with AfterPay and countries in Scandinavia and the UK, where Klarna is the dominant BNPL commerce provider.

Similar to BNPL, payment in installments is a common practice in certain countries and global industries. For this payment option, the merchant or customer usually pays the seller a percentage commission in addition to a fixed fee for every card or eCommerce gateway transaction.

This local payment method lets businesses deliver goods to the customer but with an invoice attached. Then the customer can either pay for all or some of the goods within a certain, previously agreed period, or they can return them to you. These types of business payments are based on long-term commerce relationships. For example, if you’re dealing with a first-time buyer, it’s unlikely that you’ll offer open invoicing to them.

Whereas, if you’ve known a certain buyer for years, it’s likely you’ll be more open to such an agreement. That’s because with open invoicing, there’s no advance payment made by the customer, and you have to assume all the risk. The open invoice system is especially popular in global trading powerhouses like Germany, where there is a long tradition of local customers purchasing goods from eCommerce catalogues.

This is similar to open invoicing except that there’s no invoice, and the items are paid for as soon as they’re delivered. Although somewhat outdated, cash on delivery is a perfect commerce method for industries where the provider is usually the person delivering the goods. Examples of retailers that would benefit from cash on delivery include butchers, florists, and tradesmen in the UK.

Cash on delivery is prevalent in countries lacking a high level of financial and digital infrastructure, such as access to fintech. For instance, cash on delivery is still the top and preferred local payment method in countries and nations like India or Serbia. That’s because, for customers, there’s minimal risk to their money, and the goods can be checked before any money or bank card payment changes hands.

Also known as P2P payments, peer-to-peer payments allow users to send or request funds from one another. The peer-to-peer element comes from the fact that people such as colleagues, friends, or family can use payment apps such as PayPal, Wise, and Monzo to transfer, process, or request money from each other.

As well as peer-to-peer payments, you can also use P2P payment apps to pay for goods and services online. Examples of other P2P online card payment apps that are popular around the world include Bizum in Spain, Verse and Joompay in Europe, and Visa Direct globally.

They can be used in a similar way to bank debit cards and credit cards, but you don’t need a bank account to have one. Instead, they’re loaded up with cash like a pay-as-you-go mobile phone or global gift card, or online voucher. You can then use the card to spend some or all of the amount you wish.

Internet banking can be used to make all sorts of payments, including the so-called “Buy Now, Pay Later” BNPL method. The user will need to sign up with their bank before they can get started, but once they’re up and running, it can be used to transfer or process money to anyone they want. With online banking, direct debits, standing orders, or one-off payments to friends, family, or businesses can be set up via your online bank app.