What are the global differences in international payment methods?

Common problems that businesses can face during international expansion

Cross-border payments are on the rise as more consumers shop from international merchants. Looking ahead, they’re expected to account for one-third of all e-commerce spend by 2028.¹

Before setting up shop around the world, it’s important for businesses to be aware of certain challenges when expanding globally.

Complex payment landscape

The global payment landscape is increasingly complex because countries operate under their own unique regulations. As a result, businesses may face regulatory issues as they begin to expand and accept international payments.

EU merchants, for example, are guided by the Payment Services Directive 2 (PSD2), while retailers in China are beholden to the Payment and Settlement Systems Act, and Singapore introduced its Payment Services (PS) Act to battle regulatory issues a few years ago.²

Transaction fees and conversion costs

Businesses can incur costs for processing global payments, especially if customers pay with credit or debit cards. For example, banks may charge international transaction fees, and merchants may also have to pay fees when they convert currencies from international shoppers.

User experience

Global businesses may not have access to the local payment methods shoppers use to make quick and convenient transactions in their home country.

To make instant payments from mobile devices, for example, customers in Spain may use Bizum, and German shoppers may use giropay. If growing businesses can’t offer these local payment methods, they risk frustrating customers at checkout and losing revenue. As studies have shown, 78% of German shoppers, 71% of Australian shoppers, and 66% of UK shoppers say it’s essential for merchants to provide their preferred payment method.³

Compliance issues

Established businesses may struggle with regulatory compliance issues as they expand internationally. It’s important for cross-border merchants to be aware of certain compliance standards, such as:

• GDPR. The General Data Protection Regulation (GDPR) is an EU-based framework that gives customers more control over how their data is collected and used by businesses.
• CCPA. The California Consumer Privacy Act (CCPA) was passed to strengthen data privacy rights for California customers. It may set a precedent for future state or federal U.S. regulations.
• KYC. Know York Client (KYC) is a standard that requires investment businesses to verify each customer’s identity and financial profile before providing services.
• AML. Financial institutions must comply with various Anti-Money Laundering (AML) laws and regulations to help identify suspicious payments and minimize criminal transactions.

Current trends in global payment methods

Alternative payment methods are becoming more popular as customers seek convenient and efficient ways to pay both online and in person. In fact, alternative payment methods are expected to grow faster than credit and debit card payments between 2022 and 2027.⁴

Examples of alternative payment methods include mobile wallets, tap to pay, cryptocurrencies, bank transfers, and buy now, pay later. As studies show, 60% of U.S. consumers prefer using tap to pay for in-store purchases.⁵ Meanwhile, online consumers prefer to pay via PayPal and 63% opt for mobile payments.⁶

That’s why it’s essential for businesses to find a global payment solution that enables them to seamlessly accept various methods of international payments.

The impact of offering consumers their preferred ways to pay

PayPal is one of the most connected payment partners, with a global network of 400+ million users across over 200 markets. Through PayPal’s secure, trustworthy, and scalable platform, large enterprises can easily accept and make payments, streamline solutions, and accelerate international growth.

PayPal supports a range of global and local payment methods, including card payments, Venmo, digital wallets, bank transfers, cryptocurrencies, vouchers, and buy now, pay later offers. That means businesses can reach shoppers across the globe with their preferred payment options, increasing sales and improving customer experiences. According to a recent study, PayPal has helped large enterprise merchants increase checkout conversions* by an average of 33%.⁷

Bolt’s global expansion utilizing PayPal

Bolt, an Estonia-based rideshare app, shows the power of PayPal’s solutions with their international expansion. The company was looking to serve Western Europe, but they needed a payment processor to help them offer alternative payment methods and meet complex EU regulations.

Bolt implemented PayPal Express Checkout for their launch in Germany. With PayPal Express Checkout, merchants can offer fast, one-touch payment options to customers in over 200 countries and 25 currencies. PayPal’s processes also meet the EU’s Strong Customer Authentication (SCA) compliance regulations, providing peace of mind to both merchants and their customers.

Since their launch in Germany, Bolt experienced an immediate rise in its approval rate, repeat purchases, and overall market share with the help of PayPal. In fact, PayPal captured over 50% of Bolt’s market share, with more customers choosing PayPal than credit cards at checkout. And nearly 82% of PayPal customers went on to make repeat purchases, increasing revenue for the brand at scale. Read the full Bolt case study.

Catering to local markets to boost sales

Expanding into international markets can help businesses increase sales and fuel exponential growth. In doing so, however, they’ll face common obstacles like complex regulations, transaction fees, and varying user experiences.

That’s why merchants need the right global payment solution to help them seamlessly accept international payment methods and cater to local customers — whether they're in your own neighborhood or on the other side of the world.

Let’s talk about how PayPal can power your global expansion. Connect with our sales team here.