Local and alternative payment methods are a vital part of your digital strategy. Customers in markets around the world expect to use their preferred payment method for their your conversion rates, but the customer may not consider you for future purchases either.
Most gateways offer some types of alternative payment methods or local payment methods (APMs / LPMs). There are even some gateways that offer a very wide range of LPMs. Credit cards, debit cards, digital wallets, bank transfers, BNPL (Buy Now Pay Later) are all critically important to specific segments of the market in different locations around the world.
So how do you determine which provider(s) to use?
This piece assumes that your organization has already considered the needs of your customer and your teams are confident in what payment options should be offered and to whom. More on that here.
Several factors go into the decision on where to source a given alternative or local payment method from. Below are the key considerations to be taken into account when determining through which provider your organization should access your selected local payment methods.
How many LPMs will you offer?
There are many components to consider in your checkout strategy. Local payment methods can drive additional sales or reduce your costs. However, just because an LPM is offered, does not mean that customers will be drawn to use it. In some cases, offering too many LPMs can be detrimental to the checkout experience and confusing to your customers. Who wants to sort through hundreds of payment options every time they buy from you?
Consider your target customer base and which payment methods fit well with your business model. For example, if an average cart value is $5, buy now pay later options may not be attractive for customers. Working with a provider who offers several payment method options gives you the opportunity to experiment with your checkout experience to find the best mix of payment methods that increase sales, increase authorization rates, and optimize your fee cost.
What should you consider when selecting the right gateway or service provider for an LPM?
Understanding the needs of your customer base and what payment methods align well with your business is a good place to start when evaluating providers of payment methods.
Not every gateway has every LPM, and payment gateways may not offer all features of an LPM, or offer it in every region. Your current payment service provider may only offer a portion of the LPMs you would like to offer to your customers, or none at all. Also be aware of back office implications for dispute management or finance operations when evaluating which or how many providers to leverage to access LPMs.
How quickly can your provider execute on your selected LPMs?
Integration effort to access a single LPM vs integrating to a platform offering multiple LPMs is typically similar. If you want to offer a wide variety of LPMs, the ability to integrate with a provider that lets you offer multiple LPMs in a single integration may give your customers more options and reduce your development time.
Once these questions are addressed, the resulting insights will help drive what source(s) your team will select to support your LPM offerings.
Payment Orchestration Platform for Local Payment Methods
In many cases, there are a mix of providers in order to meet a robust LPM strategy. A payments stack bolstered by a payment orchestration platform allows you to more rapidly roll out local and alternative payments. Select your preferred methods and then control your integrations via a single, managed API connection.
Building and maintaining the connections to providers necessary to offer numerous local and alternative payments is time-consuming and distracting. The resources required to build and maintain these connections are significant. There is also the need to modify these offerings over time as customer requirements shift.
For example, if your business operates in the US and parts of the EU, you may want to offer PayPal, Apple Pay, iDeal, and Sofort. You could choose to integrate directly with each payment method which requires dedicated engineering resources to build and maintain each integration.
Alternatively, you could decide to integrate with an orchestration provider who can offer you all your payment methods in a single integration. A single integration reduces your investment to build and maintain the integration, yields a broad selection of payment methods to offer, and can help simplify your back office finance activities with a single source of settlement data.
Getting Started with Payment Methods
At Spreedly, our global orchestration platform has the tools merchants need to activate and offer a wide range of APMs. Once a merchant connects to our powerful API, they can then carry out transactions through virtually any payment service.
With Spreedly’s universal gateway and PCI-compliant payments ecosystem, activating the local and alternative payment methods your customers prefer has never been easier.
To get started, create an account with Spreedly today.
Interested in more?
What are alternative payment methods? From our friends at PPRO
Local Payment Methods – Think Locally To Grow Globally From our friends at Rapyd