We’re all used to paying for goods and services with a credit card, especially when it comes to online transactions. Consumers don’t worry about inputting financial information and debiting their accounts online anymore.
For business owners in North America, credit card and PayPal are the go-to methods for receiving payment. One in three Americans have one or more credit cards. This totals over 160-million people and equates to a lot of credit card usage across the United States.
But what about other countries? Are credit cards always the preferred payment method? Is PayPal prominent across the globe? We explore five big markets and look at the ways in which businesses should be aware of differing payment protocol.
While credit cards are growing in popularity for Canadians — especially for millennials — many consumers are still inclined to use the conventional debit cards to pay for items. In Canada, the most popular form of online transaction is completed using a debit card, with PayPal following as a close second. Canadians are also inclined to use their own method of electronic money transfer, called Interac e-transfer.
Interac e-transfer allows people to transfer funds of up to $3,000 CAD via a combination of online banking and email. For business owners, this means that they are able to receive payments without the use of any type of payment terminal.
For example, if you’re at the hairdressers and your total comes to $65, you can simply transfer the funds when you get home or with your mobile device. This payment method puts a lot of emphasis on business and consumer trust, which contributes to building relationships.
The Chinese are fans of using credit cards for large-ticket items such as electronics, but when they’re shopping online, they opt for other payment options such as the e-wallet provider, AliPay or Chinese bank card, UnionPay. While PayPal is fully localized in China, they have a lot of competition. Any business moving into the Chinese market must familiarize themselves with the fast-changing payment habits of their consumers.
The Chinese are now spending almost 70% more on credit cards than they were in 2005. There’s also a general concern that the Chinese are heading toward credit card debt as the middle class strive to have more extravagant purchases.
Elektronisches Lastschriftverfahren (ELV) is one of Germany’s most popular payment methods. When consumers choose to pay online with ELV, they authorize the merchant to make the collection from their bank account; this is usually done in through an email, web interface, or written form that is set up by the merchant.
According to research by the Forrest Group, Germans don’t rely as heavily on credit cards as Americans. On average, Germans only charge $158 to their credit card and — along with ELV — prefer to use debit cards and PayPal as their payment method of choice.
The Dutch use PayPal, but also their own online payment provider called iDEAL. Launched in 2005, the system allows consumers to pay online using direct transfers from their online bank account. A major advantage of iDEAL is that using this method has a real-time payment guarantee and is a simple way to make purchases.
Across the world, many countries are still relying on more traditional methods of payment. For business owners thinking of expanding to the South East Asian market, they must be aware that consumers prefer to order online and collect their product at a physical payment center where the transaction is then completed — such is the preferred method in Thailand. Nevertheless, the PayPal adoption in Thailand is growing, as the developing country trends toward digital payment methods.
The differing methods of payment across the world are largely stemmed from cultural differences. For example, in America it’s more socially acceptable to be in debt than in countries such as Germany or Poland. Unsurprisingly, when countries aren’t relying on credit cards, they’re able to save more disposal income. France and Germany save more than 10% annually, compared to America’s 4.3%.
Expanding a business may mean reaching markets in new countries and continents. For business owners, understanding the different payment cultures and payment methods across the world is imperative to growth. Both credit cards and PayPal are widely accepted but researching other ways to collect payment could help support and grow your business globally.
If you want timely data from your PayPal account, sign up for Control today and get payment metrics you can use to grow your business globally.