What are local payment methods?
In the past, businesses and customers alike were constrained by outdated, slow, and often expensive payment methods. That was especially the case when buying goods or services from overseas. With the rise of eCommerce and the advancement of technology, consumers can now pay like a local with local payment methods.
Local payment methods are different ways and processes you can pay for goods and services in specific regions, countries, or territories on platforms like eСommerce gateways. For example, Klarna is a popular local payment method prevalent in countries like the Netherlands and most of Scandinavia. Offering payment methods local to different people all over the world means that you can attract sales from different countries.
Continue reading to find out more about local payment methods, alternative payment methods, and their benefits to businesses in different countries around the world, including the UK.
Popular types of local payment methods
Local payments differ by country, but what you’ll discover is that there’s plenty of overlap. For instance, certain payment methods could be common in one country and relatively unknown in another. Similarly, two global trading countries can also have one or multiple payment methods and gateways in common. Some of the most popular local payment methods include:
eWallets and mobile payments
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.
“Buy Now, Pay Later”
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.
Payment in installments
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.
Cash on delivery
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, Russia, and 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.
Local payment methods with Fondy
When you use a payment gateway like Fondy, you can have peace of mind that you’ll have your pick of local payment methods. Even better, using geolocation, your preferred methods will appear automatically when it’s time to checkout.
These include local payment methods such as:
Need to know more? Then visit our page on local payment methods and cards.
What are alternative payment methods?
An alternative payment method can be used to describe any newer form of payment not including cash or a major global credit bank card or debit card network like Visa or Mastercard. Another way of thinking of alternative payment methods is that if the method is cashless or cardless, then it’s an alternative.
Additionally, alternative payments usually use fintech companies and new online digital providers rather than banks or global card networks to process transactions, sales, and global bank transactions.
Some of the most popular alternative payment methods include online mobile payments, digital wallets, and, more recently, cryptocurrencies. Alternative payment methods are especially crucial in parts of the world like Asia and in Africa where mobile phones (mobile payment) are more popular bank accounts and subsequently access to bank debit cards and credit cards.
The many benefits of alternative payments mean that more and more merchants are rushing to offer them to customers. These advantages include matching the world’s shift to digital wallets from traditional bank accounts, the reduced time and costs involved with alternative payment methods, and the greater level of cybersecurity.
From “Buy Now, Pay Later” to mobile wallet payments, offering the top and popular alternative payment methods, like accepting local bank cards, that consumers can recognise and trust is key to a successful expansion into new commerce markets, both overseas and domestically.
In conclusion, as you’ve seen, some local payment methods can count as “alternative”, and certain alternative payment methods can be considered as “local”. As a result, the two popular terms are often used interchangeably.
As a one-stop payment platform gateway, Fondy understands the need for businesses from the UK to the US to accept various online payment methods in various currencies. Want to know more about us? Great! Check out our About Fondy page and discover what inspires us and how that can benefit your business, no matter the size.
What are the benefits of local payment methods?
With the shift towards digital payment methods, businesses need both international and local payment methods to increase online sales conversions, grow their sales, and reach new customers across different borders. Some industries and merchants that benefit most from local payment methods include online marketplaces, online eCommerce stores, the local gig economy, banks, card lenders, and local remittance providers.
Giving people the opportunity to pay with methods they’re accustomed to creates a harmonious buying experience. That’s because local payment methods enhance the online user experience, lead to more conversions, and help to forge stronger customer loyalty.
- User experience – local payment methods are the best way to reduce checkout cart abandonment for companies looking to increase their cross-border customer base. Even better, adding more than one local payment option means that your existing customers have a plan B local payment method process in the event of an emergency.
- Conversions – with one (maybe two) local payment options, customers can trust your company to let them pay how they prefer. And with local payment methods, customers can usually side-step card transactions and currency conversion fees associated with ‘foreign’ payment methods. So, in the long run, the many advantages of local payment methods mean you’re likely to see increased sales on eCommerce platforms.
- Loyalty – payment methods are one thing. If you then give your customers a flexible choice of languages, country-only settings, card options, and currencies, you’re well on to making a conversion. Local payment methods give customers the confidence that they’re buying and paying locally, even from overseas businesses. From a marketing perspective, this means that your customers remain loyal to your brand because of your list of online eCommerce features like flexible payment methods.
- Competition – if your competitors offer a better range of local payment methods than your business, you’ll likely lose customers to the competition. That’s why it’s essential to diversify the payment options available in your eCommerce store by including local payment methods such as specialised payment cards or online apps that are popular among consumers in your area or the regions you sell to.
The most popular local payment methods in the UK
According to UK Finance, debit card payments account for around 40 percent of all online and in-person payments in the UK. But if you’re looking for the most popular local payment method solutions, look no further than digital wallets.
In a recent study conducted by J.P. Morgan, they found that 25 percent of local transactions were made with local digital wallets like Apple Pay, Google Pay, and Amazon Pay.
Elsewhere around the UK, the other most popular local payment methods available on online eCommerce stores include:
|Bank transfers||Debit and credit cards||eWallets||Online gift card vouchers|
|Charge cards||Cheques||Klarna||Online forms|
|Direct Debit||Cash on delivery||Sofort|
Popular local payments around the world
While the UK can boast a wide range of local payment methods, so can many other locations around the world, depending on the digital infrastructure and available eCommerce platforms. As mentioned previously, local payment methods and alternative payment method solutions often are one and the same. Some examples of countries and their top local payment methods available on eCommerce stores include:
Local payment methods in Austria
|EPS||SEPA||Online eWallets||Visa & Mastercard|
Local payment methods in France
|Paysafecard||Allopass||Bank transfers||Charge cards|
|SlimPay||Cash on delivery||CM-CIC Paiement|
Local payment methods in the Netherlands
|Visa||PayPal||Klarna||Cash on delivery|
|eWallets||PrePay||Charge cards||Prepaid cards|
Local payment methods in the Germany