37% Globally to Use Local Payment Methods by 2028

Payments | May 7, 2024

Image: Boku 2024 Global Ecommerce Report

Local Payment Methods to Reach 58% of All Ecommerce Transaction Payment Value Globally by 2028

The 2024 Boku Global Ecommerce Report, produced in collaboration with Juniper Research, offers a detailed analysis of the rapidly evolving landscape of global ecommerce and payment systems drawing from extensive data across 37 major markets to provide insights into the current trends and future directions of the payments industry.

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Traditional credit card usage like Visa and Mastercard are facing significant headwinds due to the rapid adoption of local payment methods that cater more closely to regional consumer behaviors and needs. These methods often offer greater security, lower fees, and are better integrated into mobile and digital user experiences. Furthermore, regulatory initiatives aimed at reducing foreign dependency in financial transactions are compelling markets to adopt and promote local payment infrastructures.

• Traditional global card networks like Visa and Mastercard are losing share at checkout points to various local and regional payment methods. These include digital wallets, direct account-to-account (A2A) payments, and buy now, pay later (BNPL) offerings. The transition reflects consumer preference for payment solutions that are tailored to local needs and offer added security and convenience.
• Account-to-Account (A2A) payments are growing significantly due to their cost-effectiveness and speed over traditional bank transfers. They’re becoming a preferred method, especially in regions where digital wallets and mobile money solutions are prevalent. This trend is expected to continue as these solutions integrate more seamlessly with other financial services.
• BNPL schemes are increasingly popular as they offer consumers a way to manage cash flow better without immediate financial burden. This method is attractive in both developed and emerging markets, with ecommerce platforms and merchants quickly adopting BNPL to increase their appeal and customer base.  While not as pervasive as in regions like Europe or Asia, there is growing interest in BNPL solutions among Canadian consumers. This interest is driven by the flexibility these services offer, allowing consumers to manage their budgeting more effectively without immediate financial strain.

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• In regions like Asia-Pacific, super apps that integrate various services including payments, shopping, social media, and more, are reshaping consumer expectations and behavior. These platforms are enhancing the stickiness of digital wallets and are central to the digital payment ecosystems in their respective markets.  See:  China’s CBDC: Offline Digital Yuan Payments via Super SIM Cards
• Governments and regulators are playing a crucial role in shaping the payment landscapes by fostering the development of local payment infrastructures that reduce dependency on international card networks and enhance national economic sovereignty. These efforts are leading to the introduction of new standards and protocols for payments, and a reduction in costs, further encouraging innovation in local payment methods.

Implications

• Canadian businesses and merchants must adapt their payment strategies to include a variety of payment options that cater to local preferences and regulatory requirements, ensuring they remain competitive and relevant while maintaining security and user experience.
• Staying abreast of regulatory changes and engaging with policymakers can help businesses anticipate and adapt to changes in the payment landscape, ensuring compliance and leveraging regulatory support for innovation.
• The increasing popularity of BNPL and digital wallets presents new opportunities for financial services providers to develop and offer new products that meet changing consumer demands.  Experian to Include Apple’s BNPL Data in Credit Reports

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• As payment technologies evolve, there is a need for consumer education to ensure that users understand the benefits and potential risks associated with new payment methods.

Conclusion

Overall, the 2024 Boku Global Ecommerce Report serves as a crucial resource for understanding the dynamics of the global payments industry, offering valuable insights for businesses looking to navigate the complexities of modern ecommerce environments.   Visit NCFA’s fintech industry reports and research page for more

The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada’s Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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• Source: https://ncfacanada.org/37-globally-to-use-local-payment-methods-by-2028/