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slow down, m-commerce will split into two categories: mature and emerging markets.
In mature markets, m-commerce is viewed as an extension of tradition- al e-commerce. Mobile-optimized Websites provide users with the same information o ered by a desk- top, in addition to greater conve- nience. Smartphone apps also en- able users to engage with a brand or retailer at a moment’s notice.
Low smartphone penetration in emerging markets, such as India, Turkey, Mexico, Russia and South Africa, requires merchants to adopt a unique approach. Feature phones —the device of choice in emerging markets—demand an entirely di er- ent user experience. As a result, merchants should implement a non-smartphone m-commerce strat- egy speci cally for up-and-coming markets, alongside mature ones.
Adapting to Consumer Preferences
When it comes to payment methods, catering to local preferences is key. Consumers in India and Italy, for example, still prefer to pay with cash despite living in rapidly growing e-commerce markets. Regardless of which alternative payments emerge, these types of cultural nuances may never truly dissipate.
But that doesn’t mean consumers must settle for traditional payment methods, either. JCB, a Japanese card scheme and a strong national brand, dominated the domestic in-store market for years. Its inter- national merchant coverage, how- ever, was not nearly as widespread.
This dichotomy did not a ect JCB’s consumer demographic, but as younger customers began traveling and purchasing goods and services outside of Japan, low international acceptance was a challenge. Al- though JCB has invested in and successfully expanded its interna- tional merchant coverage, speed is of the essence to appease consum- ers searching for a widely accepted, globally recognized card scheme such as Discover.
A similar scenario is playing out
in Malaysia, where companies are adapting to the buying preferences of a uent and tech-savvy custom- ers. A growing willingness to em- brace new ways to pay has led to higher availability of more culturally relevant payment methods, such as bank transfers and digital wallets. In turn, the use of credit cards— currently Malaysia’s most popular payment method—will experience
a decline. Over the next few years, credit and debit cards are projected to lose about 20 percent of their
2015 market share, while alternative payment methods, such as bank transfers, are expected to grow from 24 to 44 percent turnover.
The most e ective payment meth- ods adapt to the needs of current and future consumers. While young generations may have little say today, their buying power will increase with age. Once payment preferences are clearly established, changing them can be next to impossible for merchants.
The future of e-commerce is one de ned by alternative payments. Digital wallets and prepay are just two of the many payment methods gaining popularity with each day. Although it may be easy to predict the continued use of alternative payment methods, determining which method is the most appeal- ing to di erent customer segments is a much tougher challenge.
It requires research and in-market analysis, which is why we publish our “Global Payments Report.”
As merchants seek to expand internationally, understanding how consumer preferences vary and the nuances of each local e-commerce market will become all the more critical.
Kevin Dallas is chief product and mar- keting o cer at global payments pro- cessor Worldpay. This article is based
on Worldpay’s “2015 Global Payments Report,” conducted with Capgemini, which examines payment preferences and trends in 30 of the largest global e-commerce markets. For questions, please contact www.worldpay.com/us/forms/contact-us.
volume 9 • spring 2016
E-CommErCE ForECast For 2019
$2.4 Trillion global e-commerce market $603 Billion credit card e-commerce spend $668 Billion digital wallet e-commerce spend
55% of all e-commerce will be conducted via alter- native (non-card-based) payment methods, with North America accounting for the largest shift toward such payment schemes.
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