Share to Facebook Share to Twitter Share to Linkedin Stuart Neal, Payments Pioneer, Fintech Disruptor and CEO at Boku. getty This is going to date me, but I can just about remember the days when paying for a weekly shop or a tank of gas with a checkbook and check guarantee card was a normal thing to do. Back then, people didn’t notice the friction of paying for things. That was until something easier to use arrived—namely credit and debit cards. Suddenly, the old payments routine of a checkbook felt outdated and annoying. That’s the marvelous thing about payments. Payments technology is continually evolving—and with it consumer behaviors and expectations. But as William Gibson famously said, “The future is already here—it’s just not evenly distributed.” Indeed, when you look around the world of payments, there are fascinating differences in how people living in different countries and continents like to pay for things—and in what they see as frictionless. The U.S., for example, held onto checkbooks for longer than other regions of the world. Credit cards and then debit cards were rapidly adopted in some nations, but had much lower traction in countries where relatively fewer people had access to bank accounts. QR codes—and now even facial recognition—are now commonplace in parts of Asia but much less common in Europe or the U.S. Throughout history, we can see that innovation is rarely evenly distributed, especially when it comes to how we pay online. E-commerce now dominates how the world buys things. In 2023, retail e-commerce alone generated $5.7 trillion in sales worldwide. You might think we’ve now reached peak e-commerce, but over the next four years, that figure is predicted to grow by 39% to over $8 trillion. However, in our ever-more connected world—where international travel is so commonplace and where social media gives us a real-time window into how other people in different countries live—we’re starting to see consumer expectations being set by payments innovation that’s being adopted elsewhere in the world. Payments solutions that in many cases first rose in popularity in Asia or in Africa have now swept across the globe. MORE FOR YOU Does Inside Out 2 Have An End Credits Scene NYT ‘Strands’ Hints, Spangram And Answers For Friday, June 14 Conor McGregor Is Out And UFC 303 Main Card Gets A Massive Overhaul Younger consumers whose expectations on user experience are mobile-first are also driving behavior change rapidly upward to older demographics, even ones who can remember the humble checkbook. Millennials, Gen Z and now Gen Alpha have never known a time before e-commerce. They have little to zero loyalty toward traditional payments companies or card networks, so it’s no surprise that they’ve embraced the next generation of mobile-first solutions. At Boku, we recently commissioned extensive research by Juniper Research, looking at global e-commerce trends in 37 different major markets. The research surveyed 10,500 e-commerce consumers in 14 countries around the world. What’s striking is that credit card transactions online are falling dramatically—from 21% of all e-commerce transactions by value in 2022 to a forecast of just 11% in 2028. Paying with a physical card online is already the new checkbook in most countries across the world, and there’s no doubt in my mind that this trend will continue. Change is being driven by the enormous and growing popularity of local payments methods, known in the payments industry as LPMs. Many types of LPM first rose in popularity in countries with younger demographics or where there was a relatively high percentage of the population who were “unbanked”—that is, without access to a bank account. Even today, almost a quarter of the world’s population are unbanked. These early adopters of LPMs needed a way to buy things that was centered around their mobile device, and a raft of payments innovation was born. The research we commissioned shows that in 2023, LPMs represented 47% of e-commerce transaction values, and by 2028, LPMs will represent 58% of global e-commerce transactions. The age of local payments has well and truly arrived. Chances are you already use LPMs to pay online: digital wallets; buy now, pay later solutions; account-to-account payments including PIX in Brazil, UPI in India and iDEAL in the Netherlands; and even direct carrier billing where your purchases are automatically added to your monthly mobile bill. The similarity here is that all these LPMs are all easy, seamless and virtually without friction. And also key is that wherever you look in the world, you’ll find a different blend of LPM preferences. So, how are global merchants—the giant e-commerce and entertainment brands that we all love to buy from—responding to the increasing popularity and diversity of payments? Merchants that want to continue growing around the world are making the payments choices they offer to their customers more flexible, and they are tailoring payments options at a local level to best reflect diverse local consumer preferences. And because consumer payments preferences are continuously evolving, merchants are ensuring they have the global payments network infrastructure in place to easily switch up their payments options country by country in almost real time. When embracing a global payments strategy, merchants should foremost identify and understand the local payment preferences and methods that are most popular with consumers in the regions they want to grow. Navigating the different regulatory frameworks and ensuring compliance with these is also a key consideration and often a big hurdle for merchants to overcome. This is where working with a global payments network that understands these nuances and has licenses to operate in local markets is a huge benefit. As the world turns away from paying directly by card online, LPMs continue to grow in popularity. LPMs’ strength is in their innovation, their focus on delivering friction-free mobile first experiences and also in their diversity as a payments class, offering payments freedom to everyone, regardless of where they live. The nature of e-commerce today may be global, but the future of e-commerce payments is very much local. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify? Follow me on LinkedIn. Check out my website. Stuart Neal Editorial Standards Print Reprints & Permissions
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