The general shift in retail towards e-commerce transactions and online payments – broadly accelerated by the pandemic – has been evident for quite some time. Industry observers who have been watching the rise of digital transactions have universally been encouraging retailers to undergo their digital transformation at speed if they want to survive well into the coming era – and at the very least, to set themselves up to receive payments online in the many convenient forms now available to customers.
These trends are something that Praful Morar has been carefully monitoring in his capacity as chief expansion officer, digital payments (Apac) for global payments technology firm Nuvei. Founded on the belief that payment barriers can be turned into accelerants, Nuvei helps propel merchants’ businesses forward with powerful, tailored payment solutions. Nuvei connects businesses to their customers in more than 200 markets, with local acquiring in 45+ markets, 150 currencies and more than 550 alternative payment methods, including cryptocurrencies – all on one powerful platform.
Nuvei offers its merchants connectivity with more global alternative payment methods (APMs) than anyone on the market. But why are local, alternative payment methods becoming so impossible to ignore in today’s payment ecosystem?
APMs are closely related to customisation, which can ultimately help merchants drive more revenue out of their payments. Consumers have come to expect payments to be secure, frictionless, and fast. They want to pay using their preferred currency and payment method, and these often differ, depending on where they are in the world. Merchants, on the other hand, can have their own needs – often based on their business model. Some may need recurring billing, while others may wish to expand into specific territories. All these differences point to the sophisticated needs businesses have when it comes to offering optimal payment experiences – and they make the case for customisation.
The ‘one size fits all’ approach made popular by incumbent payment providers a decade ago no longer suits the need of the modern business. Merchant needs are far from being ‘one size’ and therefore their payment solutions shouldn’t be either. It all comes back to profitability – payment providers who refuse to customise to meet their merchant’s needs are depriving them of incremental revenue.
So, at a table stakes level, payment providers wishing to succeed in today’s increasingly digital payments world must be flexible, nimble, and innovative to keep pace with shifting business and consumer expectations for secure, frictionless and fast payments. They will succeed by working in close partnership with their merchant clients and customizing their solutions to fit the needs of their clients and their customers. That’s why at Nuvei, we’re always looking for new ways to customise our offering to suit our client’s needs across the different regions in which they operate.
The rise in popularity of APMs is also a key reason why customisation is so important to helping merchants drive revenue through payments.
There are a few changes that directly contributed to the rise of APMs in the global payment ecosystem.
- Growth in domestic schemes: Born out of a desire for governments around the world to gain independence from card networks, domestic schemes are a key driver of APMs. Domestic payment schemes accounted for 12 per cent of all global payments last year – and they’re adapting strongly to the digital environment. (1).
- The rise of open banking: Underpinning much of the innovation we are witnessing in payments today, including the rise of real-time payments, open banking provides a secure and frictionless alternative to paying by card. Open banking enables anyone with a bank account and a mobile phone to make a payment.
- Growth in cryptocurrencies: While still nascent and not yet a widely adopted payment method, cryptocurrency is slowly gaining traction as major brands like Microsoft, Home Depot and even Starbucks (2) are leading the charge in accepting crypto payments.
- The rise of Buy Now Pay Later (BNPL): The flexibility and convenience of BNPL have already enjoyed initial success, particularly in the retail sector and with younger shoppers. The BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 24.5 per cent during 2022 to 2028 (3). On the topic of BNPL, Praful comments: “I’m also starting to see consumers picking what they want to do when it comes to purchases – they could use a credit card and then pay later, but they may also want to use a BNPL option because the local payment method is cheaper, faster and more flexible.”
- Growth of digital wallets: With more and more consumers being accustomed to living life through the digital lens of a mobile phone, this has translated into the payment space as well. A report by Mordor Intelligence published last year estimated that between 2021 to 2025 the adoption of digital wallet apps will increase by a compound annual growth rate of 26.93 per cent (4).
The rise and growth in popularity of these methods have helped shape consumer attitudes toward using alternatives when paying for goods and services. But an increase in trust brought on by strong data protection capabilities is another reason consumers today are more susceptible to using APMs.
“More and more consumers have confidence in the merchants they’re dealing with,” says Morar. “Data protection is paramount, it’s virtually sacred that people want to assure that their card, account and personal data are assured and managed. And I think the growth of data protection practices will really drive volumes on the e-commerce side, certainly beyond 2025. So, more countries will have to start to provide that. I think this is a key growth point.”
But what makes APMs tricky for merchants? This lies in the lack of uniformity when it comes to processing and accepting preferred payment methods globally.
Across APAC for example, most consumers use WeChat and AliPay but in Brazil, it’s Pix or Boleto and some of those payment methods are completely based on offline dynamics. The US is largely dominated by ACH, RTP and cards – but even cards are complicated because not all cards are created equal. So, merchants wishing to operate in more than one territory globally must seek out relationships with domestic schemes.
This is important because if merchants can’t accept payments using methods their customers know and trust in the countries they operate in or wish to expand to, those transactions are ultimately lost. So, payment localisation ultimately makes good business sense, and it is paramount for payment partners to be able to connect with multiple APMs globally.
For Nuvei – whose strategy going forward relies on further expanding its capacity to process payments across these localised next-gen platforms – the goal is to allow its merchants to take payments from consumers at any time and any place, via any payment method that the consumer prefers to accept. Through its vast capabilities in the realm of APMs, the company aspires to drive higher acceptance amongst merchants of these different payment forms that already have strong user bases in the local areas where they operate. This, in turn, will help accelerate their merchant client’s business and drive incremental revenue.
“It’s built for the future,” says Morar as he sums up how Nuvei’s proprietary technology platform is built to service international retailers at a time when digital payments of all forms are starting to indicate how the character of global markets will evolve over the next decade. “We monitor our services constantly, we’re flexible, and we’re agnostic – which basically means we can sell our own services, but if a merchant wants to partner with multiple providers, we have a solution that connects with all of them, which is a key differential because it allows the merchant to operate with whoever they want. And we’re a fully licensed, fully regulated provider, including all of the security data protection requirements that you would need as a global processor of payments.”