There’s no place like home, particularly when it comes to preferred payment mechanisms.
That’s why businesses looking to expand internationally need to ensure that their strategic approach includes diversification of payment methods and the integration of local payment solutions.
“You need to embrace local payment methods and prioritize them unless you want to have a lot of cart abandonment,” Deutsche Bank’s Head of Merchant Solutions, Asia Pacific and Americas Oliver von Quadt told PYMNTS.
Providing a frictionless payment experience helps increase the likelihood that online shoppers will complete their purchases, increasing checkout conversions and ultimately driving sales volume.
A frictionless experience starts with the local payment method your target customer base is most comfortable and familiar with. From cash on delivery (COD) to card and eWallet-based methods, international merchants need to adapt and incorporate local optionality and breadth of variety to be able to compete against incumbent peers.
“You have to embrace the local wallets that are very dominant,” von Quadt said, stressing that local payment methods are not just an option but a necessity for businesses looking to expand their reach across Asian markets.
He illustrated the success of local instant payment methods, such as UPI in India, which now processes 12 billion transactions per month. This surge from 5 billion to 6 billion transactions a year ago underscores the rapid adoption and effectiveness of these methods.
Government support, low fees and mandatory acceptance are driving the success of many local and digitally native methods, von Quadt said, as they benefit both consumers and merchants by improving margins and boosting adoption rates.
Embracing a Holistic Approach to a Local Payments Strategy
Expanding into new markets, no matter the approach taken, will always come with its own set of challenges. But by prioritizing user-friendly, seamless checkouts with a variety of payment methods, online shopping platforms can close the cart abandonment gap and foster greater loyalty in new markets.
Still, von Quadt cautioned against taking a fragmented approach to sourcing acquiring solutions or attempting to build payment solutions in-house.
Instead, he stressed the importance of finding the right balance between centralization and localization. At the same time, both over-involving or under-involving local subsidiaries can hinder the scalability of operations, a reality that highlights the need for a strategic approach to governance and decision-making.
“It’s super important to look twice, look beyond the sales deck and see how deeply rooted the partner really is in the respective country,” von Quadt said. “Beyond that, it’s important to also look beyond just treasury or collections. Tech teams need to be involved, salespeople need to be involved … you have to embrace a holistic view on payments because it is going to have an impact on your workflows, your logistics, and your sales and product teams as well.”
Depth of partnership, local settlement capabilities, contractual agreements and adherence to regulatory standards are among the most important key considerations that firms must not compromise on, he added.
By partnering with established and reputable providers, businesses can navigate the complexities of regional markets more effectively and capitalize on growth opportunities.
Automation as a Key Enabler of Growth
While the journey toward payment diversification is complex, requiring a strategic, holistic approach, the potential rewards in customer attraction, retention and sales volume growth are immense.
That’s why centralizing and automating payment processes have emerged as critical strategies for businesses looking to scale within regional markets. Automation streamlines reconciliation, enhances cash visibility and optimizes sales processes, while centralization minimizes fragmentation and ensures greater control over payment operations. By striking the right balance between centralization and localization, businesses can effectively manage their payment ecosystem while focusing on core business objectives, von Quadt said.
“Automation is a no-brainer,” he said. “Automation is your friend. Reconciliation across various jurisdictions or countries is very powerful for treasury. Cash visibility at the moment when the sale happens is very powerful. The more you automate, the more you can optimize.”
Looking ahead, the future of digital payments in Asia promises continued innovation and evolution. Local payment methods are expected to thrive, fueled by initiatives to promote financial inclusion and cross-border interoperability.
While some consolidation may occur in the realm of digital wallets, von Quadt said a diverse landscape of payment methods will persist, offering consumers and businesses a range of options. SoftPOS solutions, which offer cost-effective payment processing, are anticipated to gain traction, further driving the digitization of payments across the region.
As the landscape of digital payments continues to evolve, strategic adaptation and innovation will remain essential for success in the global marketplace.
