Across established and growing economies alike, consumers are increasingly prioritizing alternative payment methods (APMs) and local payment methods (LPMs) when making purchases.
As APMs and LPMs grow in popularity, merchants and merchant aggregators must consider how to enable these payment methods and implement localized payment strategies.
This article explores evolving consumer expectations and the growing need for alternative and localized payment methods. Plus, we cover how merchants and merchant aggregators can leverage payment orchestration to enable APMs and LPMs without taking on extra technical burdens.
Keep reading to learn about the rising popularity of APMs and LPMs, and uncover how you can create and implement a localized payment strategy in 2023.
The Rising Popularity of Alternative & Local Payment Methods in 2023
With one-third of consumers citing acceptance of digital payments as an influential factor when deciding to buy from a merchant or merchant aggregator — and more than 50% of online merchants that do not already accept digital wallet payments stating they plan to do so — it is clear that merchants and merchant aggregators need to focus on enabling APMs to meet customer expectations and remain competitive.
Not only this, but local payment methods (LPMs) are also on the rise. Government-driven, real-time payments (a type of centralized LPM) are beginning to take center stage. For example, in 2020, the Central Bank of Brazil (BCB) debuted Pix — an instant payment system that offers greater transactional efficiency and ease of use to Brazilian consumers.
Since its launch, Pix has experienced extraordinary growth and is now the second-ranked payment method in Brazil according to availability. As of July 2022, 78% of online stores offered Pix as a payment option, compared to just 16.9% a year prior.
Other countries have taken note of the success of Pix, driving the development of more localized payment systems. As a result, local payment systems have the strong potential to be a top payment trend in 2023.
Why Payments Orchestration is Crucial for Enabling APMs & LPMs
Although traditional card payments still remain the top preferred payment method in many regions, APMs and LPMs offer promising opportunities for reaching more customers and alleviating payment pain points.
Yet, these payment methods can present challenges to merchants and merchant aggregators, particularly in terms of compliance and security. Establishing a secure payment system is crucial — but without a unified solution, payment systems can quickly become overly complex and hard to manage.
Payments Orchestration strives to solve this issue for merchants and merchant aggregators.
With the support of a reliable orchestration provider, APMs and LPMs can be enabled quickly.
Plus, Payments Orchestration eliminates the need for merchants or merchant aggregators to take on the relevant compliance and security burdens. Instead, the orchestration platform handles these requirements, allowing businesses to remain fully operational while adapting to new customer demands and upgrading their payment system.
Additional key benefits of orchestration include:
- Entering New Markets with Greater Speed: For merchants or merchant aggregators working to expand into new markets, payment orchestration provides the necessary capabilities for enabling local and alternative payment methods instantly. Payments Orchestration utilizes API technology that is easily integrated into your payments stack to allow you to quickly and easily integrate.
- Attracting More Customers and Merchants: Along with enabling APMs and LPMs quickly, orchestration helps merchants attract more customers, and helps merchant aggregators attract more merchants with the ideal mix of payment services. Payments Orchestration allows not just efficient integration of new payment methods but also access to a wide variety of payment services such as fraud tools and payment gateways.
- Maximizing Revenue: A well-designed Payments Orchestration platform helps to maximize revenues by optimizing transactions and offering value-added services. For example, at Spreedly, our value-added services — such as Account Updater and Network Tokenization — can have a tremendous positive impact on authorization rates and the overall customer experience.
Creating & Implementing a Localized Payment Strategy: 3 Key Steps
For merchants and merchant aggregators that hope to remain competitive in 2023 and beyond, it is essential to establish a clear strategy for enabling localized and alternative payments.
Here are three key steps for creating and implementing a localized payment strategy in 2023:
- Understanding Your Local Audiences - First and foremost, it is crucial to have a clear understanding of your target audiences. Customers in the U.S. will inherently have different payment preferences than customers in Europe, Latin America, Asia, Africa, or even other North American countries. Moreover, if you plan to expand into new regions, you have more customer expectations and preferences to grapple with. Thus, the first step when developing a localized payment strategy is to research customers in your target regions, as well as research which payment methods your most successful competitors are offering.
- Choosing a Payments Orchestration Platform - Next, you need to choose the right orchestration platform. Payments Orchestration can generally be divided into two categories — agnostic and augmented orchestration. With agnostic payment orchestration, you can leverage any mix of payment services, regardless of the provider. Meanwhile, augmented payment orchestration is provider-specific and generally only offers services from one provider. Overall, agnostic payment orchestration is the more advantageous choice for merchants and merchant aggregators. This approach to orchestration ensures you can build a customized payment system with the ideal combination of tools and services to fit your exact needs.
- Selecting the Right Mix of Payment Services - Finally, once you have chosen a payment orchestration platform, you must determine the best mix of payment services to integrate into your system. In an ideal scenario, the Payments Orchestration solution you partner with will offer consultation and support services that help you determine which services to leverage. Moreover, the best platforms will offer a strong range of different services to choose from, giving you maximum customization options.
Implement Payments Orchestration with Spreedly
Here at Spreedly, we leverage an agnostic approach to payment orchestration to ensure our clients have access to all the best payment services and methods.
With the Spreedly API, you can quickly and easily connect to a global payments ecosystem and begin utilizing multiple PSPs and the best mix of payment methods. Spreedly maintains Level 1 PCI compliance, ensuring all of the regulatory burdens associated with payments are handled and continually managed for you.
Additionally, Spreedly provides you with access to virtually any payment service and more than 100 currencies.
Contact Spreedly today to learn more about how our team can help you enable alternative and local payment methods with speed and efficiency.