The power of global payment acceptance in marketplace growth

The power of global payment acceptance in marketplace growth

Online marketplaces make up two-thirds of global ecommerce sales. The rapid expansion of online marketplaces has revolutionized the way we shop, sell, and conduct business globally.  A critical aspect of their operation is a tailored payment processing system, designed to match the specific payment preferences of each local market—a strategy pivotal for international expansion. Navigating the complexities of global commerce requires implementing the right payment methods for each region, making the expertise of a seasoned global payment provider indispensable for accelerating marketplace revenue and fostering their sustainable growth.

What makes marketplaces unique?

To understand the critical role of global payment acceptance in marketplaces, it is important to first examine the differentiators that set these platforms apart from other eCommerce models:

1. Onboarding and underwriting: Marketplaces excel in streamlining the complex processes of vendor onboarding and underwriting, which includes evaluating the risk and credibility of sellers. By allowing for rapid, efficient, and risk-assessed onboarding, they facilitate a swift market entry for new sellers, all while maintaining a secure and trustworthy environment for consumers.

2. Payment processing: At the heart of every marketplace is its ability to process payments for both buyer and seller — a function that involves more than just moving money. It encompasses the capability to accept diverse payment methods, split payments, and handle payouts, all while minimizing fraud, which are vital for platforms that operate with an array of vendors and buyers from various jurisdictions.

3. Billing and funding: Marketplaces manage intricate billing and funding cycles, ensuring that all financial transactions are seamlessly conducted, sellers are compensated promptly, and buyers are billed accurately.

4. Reporting and backoffice: Data is the new oil for marketplace operators, so ensuring these platforms have seamless reporting and backoffice operations allows better insight into seller performance, customer behavior and operational efficiency.  

With these differentiators as a backdrop, payment processing emerges not just as a logistical necessity but as a strategic cornerstone for marketplaces aiming to carve a niche in the global market.

Global payment acceptance: The marketplace's gateway to expansion

For marketplaces, the challenge of global expansion is twofold: navigating the complex regulatory landscapes of different regions and catering to the diverse payment preferences of a global customer base. In this context, global payment acceptance is less about accommodating a wide range of payment methods and more about delivering a tailored payment experience that resonates with local customs and behaviors.

The linchpin: Credit and debit card acceptance

While credit cards’ share of digital commerce spend has dipped below 50% globally, they remain a pivotal part of the online payment ecosystem, both directly and as a funding source for alternative payment methods (APMs) such as digital wallets. For marketplaces, the integration of direct card acquiring capabilities is vital, especially when facilitating cross-border transactions. Local acquiring plays a significant role in this context, optimizing acceptance rates by processing payments in the purchaser's region. This not only offers customers the ease of using their familiar payment methods but also supports marketplaces in maximizing successful transactions, a critical factor for global scalability.

However, marketplaces cannot rely solely on cards if they wish to expand into multiple geographies.

Navigating APMs: Tailoring payment strategies for global marketplaces

In international eCommerce, alternative payment methods (APMs) are not just alternatives; they are essential components that ensure inclusivity and preference in payment options. Marketplaces, with their diverse consumer bases, must integrate a variety of APMs to cater to regional preferences and ensure a frictionless payment experience. Listed below are the key APM categories that will vary in popularity and usage across different markets:

• Direct debits: Often used for recurring transactions, direct debits like ACH payments in the U.S., EFT in Canada, and SEPA payments in the EU, are ideal for subscription-based services within marketplaces (a monthly subscription for Amazon Prime, for example). They offer the convenience of automated payments, essential for ensuring uninterrupted service for consumers and steady cash flow for vendors.

• Bank transfers: These payments allow consumers to transfer funds directly to marketplaces, a preferred method in regions like the EU with the PSD2 open-banking initiative and in countries that have established systems like iDEAL in the Netherlands and giropay in Germany. With the upcoming FedNow Service in the U.S., real-time payments are set to redefine the immediacy with which transactions are conducted, which is invaluable for marketplaces that thrive on the speed of commerce.

• Digital wallets: In 2023, digital wallets, including mobile money, accounted for an estimated 50% of the global transaction value in eCommerce. In Asia, for example, Alipay and WeChat Pay dominate the market, while PayPal is widespread in over 200 countries and regions. Marketplaces benefit from integrating these wallets to simplify transactions for users who prefer not to enter card details for each purchase and to capitalize on the wallet providers’ robust security measures.

• Buy Now, Pay Later (BNPL): BNPL options like Afterpay, Klarna, and Affirm are revolutionizing the payment space by allowing consumers to spread the cost of a purchase over time. In markets like Australia and the Nordic countries, BNPL is a fast-growing payment method. For marketplaces, offering BNPL means appealing to budget-conscious consumers and those who prefer not to use traditional credit.

• Offline payments: Offline payments remain relevant in regions with lower credit card penetration or where consumers are wary of online transactions. For instance, Boleto Bancário is widely used in Brazil, offering a trusted payment method that can be completed at ATMs, post offices, or even supermarkets. Including such options allows marketplaces to extend their reach to consumers who prefer or rely on cash-based transactions.

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Integrating diverse Alternative Payment Methods (APMs) into their systems allows marketplaces to cater to the unique needs and preferences of a global audience, creating an accessible and inclusive ecosystem. The importance of partnering with an experienced payment provider like Nuvei, which can offer a broad range of payment options, is highlighted by the success of OnBuy. Through its collaboration with Nuvei, OnBuy not only diversified its payment methods but also saw a 35% increase in revenue and a 13% improvement in acceptance rates. This demonstrates the significant advantages of choosing the right payment partner to thrive in the competitive global market.

To conclude, marketplaces are reshaping global eCommerce by effectively combining diverse sellers and buyers on a unified platform. Their growth hinges on customized, region-specific payment systems that are vital for tapping into international markets. Adopting various payment methods tailored to local preferences is not just about transactional efficiency—it's about crafting a user experience that resonates worldwide. Successful global expansion thus relies heavily on collaborating with skilled payment providers who can navigate the varied landscape of global commerce, ensuring marketplaces can increase their revenue potential while fostering long-term growth.

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