Whether you’re expanding your physical premises or selling products online, the world of payment processing is a competitive one.
By Katya Puyraud
While some providers have broad international sway, many countries have homegrown platforms, and some unusual payment preferences. Here then is a brief guide to payment processing in some of the biggest territories around the world.
Credit and debit cards weren’t allowed in China until extremely recently, as the companies who regulate them (such as Visa and Mastercard) are American. UnionPay was China’s alternative, launching in 2002, and is now the largest debit and credit card provider in the world, and facilitates most bank transfers in China.
However, the proliferation of smartphones in China and relative lack of attachments to old methods has led to a sudden transition to a unique form of mobile payments: QR codes. These barcode like images are somewhat familiar in the west as promotional gimmicks, but in China, the functionality to read QR codes is built into the most popular payment and social media apps, including Alipay, Tenpay and WeChat Pay.
A huge proportion of small businesses have now transitioned entirely to mobile payments, providing a QR code for each item. By scanning the QR code with your phone, you can immediately pay for the item and walk away with it – ideal for everything from taxis to street stalls. These payments are deemed to be more secure and convenient than cash — and from businesses and the government’s point of view, also allow transactions to be easily tracked.
With 94% internet and 93% English language penetration, the Netherlands offers a highly developed eCommerce economy and a perfect place to expand your business. When it comes to payment options, bank transfers are far and away the most popular option – and specifically the country’s unique service, iDEAL.
This online payment method is supported by the vast majority of Dutch banks, and at last count constituted 54% of all online payments. Dutch banks have also recently introduced an eWallet solution called Paycoinq, although these transactions only make up around 7% of total payments at present. Mastercard is by far the dominant card provider in the Netherlands, representing 94% of all cards distributed.
It’s little wonder that Amazon has chosen to develop its drone technology in the UK: the compact set of nations is home to the world’s third largest eCommerce market. Around 80% of the population shops online, the highest percentage of any country in Europe. This is unlikely to change even in the wake of Brexit, making the UK a prime target for any online business.
Debit and credit cards rule the roost in the UK, with a majority of people using Visa cards for online purchases, and direct debits for subscriptions. This may be done through Visa Checkout or a similar card portal, portals such as Paypal, or cart systems such as Amazon.
Contactless payments via mobile and card have begun to dominate high street purchases, and cash is on the way out for daily transactions. Apps and alternative processing platforms like Stripe are encroaching, but have yet to gain a foothold in anything but the most niche, cutting-edge businesses.
Germany and Austria
In saving-mad Germany, cash is still king. The reluctance to spend freely through card payments has led to limited card availability in many major outlets. You may have more luck using a bank card in Berlin, but travel to Munich or Hamburg and you will be extremely cash reliant.
Security is also of central importance to German consumers, and eCommerce companies should be aware that Germany is still very much ‘desktop first’, with 70% of shoppers preferring to browse on a computer.
Germany is also keen on bank transfers, with providers Giropay and Sofort dominating the online space. These bank transfers are instantaneous, requiring only your online banking details to authorise the payment. The ability to meter spending through eWallets has led to a rise in mobile payments, however.
Austria prefers EPS, which comprises half of all bank transfers and over 30% of eCommerce transactions. EPS is a highly secure and well supported payment option, using customers’ existing banking credentials to make payments directly to merchants.
While Japan is thought of an an extremely technological country, it’s also deeply traditional in many respects, and this extends to its payment systems. Many products and services are paid for through convenience stores, while bank cards are often tied to regional institutions, and unusable outside of one prefecture.
Konbini (literally ‘convenience store’) allows shoppers to pay for online goods, bills and other services through a convenience store terminal or cashier, using a reference and voucher system. Another popular system is Pay-easy, which allows people to pay either through an online bank transfer, an ATM or at their local post office.
France and Belgium
Carte Bancaire (CB) cards represent between 90% and 95% of all cards distributed in France, and are held by 94% of the population. Sometimes known as Carte Bleu, they are often Visa or Mastercard co-branded, but are not operated by either company. If you are selling in France, it is absolutely imperative that you support CB cards.
With a preference for traditional shopping and worries around security, mobile shopping in particular has been slow to take off in France. Double-digit growth is expected for this year, however, and eWallets have already become a dominant form of payment for small purchases.
eCommerce has also been a slow-grower in Belgium, where it’s estimated only 30% of people will purchase something online if it’s available on the high street. eWallets are however taking off, while the popular Bancontact payment system – which dominates payment cards in the country – has introduced a QR code system similar to China’s.
India boasts the fastest growing eCommerce market in the world, and is well on its way to becoming the biggest overall. This is due in no small part to some innovative shopping portals and payment processing companies, including Amazon-a-like Flipkart, developed by two former Amazon employees.
India has been quick on eWallet uptake, with apps like Snapdeal, MobiKwik
and Paytm forming the dominant payment method for eCommerce. Other popular methods include bank transfers, and the more unusual process of cash on delivery.
Visa and Mastercard maintain a relative monopoly on payment cards in India, where over 90% of credit card transactions and nearly all debit transactions are domestic. To combat this and lower fees, India’s banks set up a competitor called RuPay (a pun on the currency, rupee), which is gaining ground and international acceptance.
Former journalist Katya Puyraud is the co-owner of company formation experts Euro Start Entreprises. Euro Start Entreprises provide online payment processing services to businesses around the world, and have helped budding entrepreneurs and expanding SMEs to open their companies in over 30 countries worldwide.