Payment strategy needs to change as alternative payment systems go mainstream
There is lots of noise about alternative payment systems, so should corporate treasurers about using alternative systems? The recent “European Payment Cards Statistical Yearbook 2015-16” by Payment Cards& Mobile who report, “When bank-funded payments, real-time payments, mobile and other digital payments are actually the default way to pay in many countries, the term ‘alternative’ seems a misnomer.”
Payment habits strongly local
PC&M explain that payment habits are strongly national:
- Germans love direct debit whereas Russians do not
- 48% of cashless payments in Germany are via direct debit
- Dutch make 56% of their payments online (€18.1 billion) using this real-time bank transfer method
- In Russia, acceptance of e-wallets such as Qiwi, WebMoney and Yandex are a must
- Merchants selling online in Brazil have to accept the post-pay Boleto Bancário option, which accounts for around 15% of online payments
- Merchant selling into the Netherlands have to accept iDEAL.
They continue, “Payment habits have developed over time and are formed by various cultural, political, economic and technological factors. Consumers and businesses rarely go out of their way to pay in a new way. Behaviour becomes entrenched for face- to-face payments. It is the same online as the growth of e-commerce is driving take-up of local alternative payment methods (APMs).”
There are already 300 Alternative Payment Methods (APM) worldwide and the use of APMs is expected to continue to grow with “APMs being expected to account for 55% of e-commerce turnover by 2019, with North America showing the biggest shift towards these methods, says Worldpay.”
Not only this,”The revised Directive on Payment Services (PSD2) is another driver of APM growth, particularly in Europe. The regulation has the potential to drive more bank-to-bank payments, rather than credit or debit card payments.”
CTMfile take: The growth of APMs raises many questions for the corporate Treasury Department such as: 1) where are we missing out on potential growth are not using APMs?, and 2) should we have a structured policy on how to review and use APMs?
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