According to a report published Tuesday by Juniper ResearchA U.K. based company.
Alternative payment methods, such as digital wallets and account-to-account transactions, will drive this growth. e-commerce growth Lorien Carter, an analyst at Juniper Research, wrote a report that noted the importance of emerging markets. She predicted that by 2029 APMs would account for 69% all global ecommerce transactions.
APMs are making e-commerce payment more inclusive. Unbanked customers in emerging markets, the report said, will change their shopping habits to online. This shift will also be accompanied by increased investments in delivery eco-systems, which will make deliveries more viable and increase ecommerce’s value proposition.
Carter stated in a press release that “Alternative Payment Options have grown substantially with APM transactions volumes leapfrogging card in emerging markets.” “As merchants seek to reach new customers and geographic areas, they should consider APMs. [as] “A key strategy is to achieve this.”
Lou Haverty is the owner of Tank RetailerA former financial analyst for the banking industry, and a storage tanks seller in Springfield (Pa.),.
The E-Commerce Times reported that the move is being driven by a fundamental shift of consumers’ comfort levels with payment methods for online e-commerce transactions, as well as cost savings benefits to traditional merchants in transitioning from an expensive brick-and-mortar to a more affordable e-commerce with a low inventory cost structure.
Trust is essential for E-Commerce Growth
Haverty said that alternative payment methods could support growth, as long as both consumers and merchants are confident in them. “The risk of fraud is the greatest limitation to growth in electronic commerce,” he stated.
Credit cards are a great way for consumers to feel confident when making online purchases. They can chargeback the purchase if they don’t get what they ordered. If alternative payment methods are not providing consumers with strong fraud protections in emerging markets, [they] “Online shopping is a risky business.”
Low consumer trust will stop the growth of ecommerce cold, he said. “So building and maintaining payments systems that do an excellent job in building trust with customers will be big winners in future markets for ecommerce.”
Eric Shoykhet CEO of Link MoneyThe company added that “it’s very important for e-commerce companies to offer different payment methods, because people prefer paying in various ways.”
He told E-Commerce Times that “there are a lot people who may not be able to use a credit or debit card for various reasons.” “Alternative payment methods can be very important in order to complete a transaction.”
He said that alternative payment methods like account-to -account transfers are cheaper than credit cards. “That is really important for merchants who want to save money, and ultimately consumers.”
Key to Growth in Developing Markets
In developing markets, alternative payment methods are essential for growth. This is especially true as smartphone use grows. According to estimates, smartphone adoption in Latin America is expected to increase from 80% to 92% by 2030. Statista.
Esteban Sarubbi Vice President of Latin America said: “These consumers are specific in their payment preferences and have mobile phones with them.” Paysafe, a global provider of payments.
Paysafe’s Inside the Wallet report found that 37% Latin American customers were using digital wallets more than a month ago to pay for online purchases. This was also true for 25% of North Americans and 29% of Europeans, he told the E-Commerce Times. “And 20 percent of Latin American customers had used a bank transfer in the last month. This was in contrast to 14% in Europe and 8% in US and Canada.”
He explained that “APMs” will make ecommerce more inclusive, by offering payment options to those who are unbanked or underbanked in Latin America.
Cash is still a very prevalent currency due to [the] Informal economy and street trade. He said that most Latin American customers have smartphones and therefore digital wallets are essential at the check-out. “These methods give consumers who do not have access to traditional banks the opportunity to take part in digital commerce, increasing their ability to access goods and services,” he said.
Breaking down Barriers to Commerce
Sarubbi acknowledged there are still barriers to the growth of e-commerce in developing markets. “The growth in e-commerce has been hindered in Latin America by barriers such as limited access and trust in online payments, a lack in credit and banking services and logistical issues, like inefficient delivery infrastructure,” said Sarubbi.
He added that “additionally, high costs of cross-border transaction and complex regulatory environments across different countries have hindered the expansion.”
He noted that “most countries have addressed the major issues, unlocking potential of the E-commerce market in this region.”
Michael Chien CEO and cofounder of 101 PickleballIn Cleveland, Tenn., a pickleball gear seller who plans to expand into developing countries, acknowledged that there were barriers to the growth of e-commerce in these regions, but stated that digital wallets and account to account payments are set to transform these markets by offering more accessible and safe ways to pay, particularly in areas with low card penetration.
He told the E-Commerce Times that “for e-commerce retailers like me, we must adapt to this trend by integrating APMs in our payment systems to remain competitive and reach a wider customer base,”
He said that the continued evolution of APMs would likely shape the ecommerce landscape and push merchants to innovate payment methods and security to meet diverse customers’ needs.
Checkout options
Juniper’s study also found that, as more payment service providers (PSPs), including APMs are offered to customers at the checkout, it will be important to optimize conversion rates by offering users a variety of payment options.
The report stated that PSPs can maximize their customers’ satisfaction by customizing purchase options to match the demographics and location of consumers. PSPs could maximize conversion rates if they partnered with local payment providers who have in-depth understanding of the preferences of consumers and supported regional payment options.
Sarubbi, Paysafe’s Inside the Wallet researcher, said: “Paysafe’s research showed that 43% (of global consumers) said they abandoned their online shopping carts when their preferred payment method was not available.
“The ecommerce payments market in the world demands payment choices, convenience for consumers and seamless checkout. Merchants who adapt to local needs are well-positioned for this growing market. They will cater to more consumers, and increase conversion rates.
