Digital commerce and payment platforms are still in a not-so-mature state. What can we expect for the next 4 or 5 years: technology, buyer sentiment, and competitive landscapes are likely to change drastically. Stripe would have to take advantage of opportunities and overcome numerous challenges in the market. Stay tuned to learn more on how to digitalize your platform or marketplace with various payment methods supported by Stripe and book a free call with us: http://bitly.ws/REx2 - we are the Stripe-certified experts from VR Team.
Challenges: The biggest challenge for Stripe is that it has been growing too rapidly. In 2017 alone, Stripe increased its employee base by nearly half. This growth will challenge Stripe’s ability to scale and remain agile. This is crucial considering the pace of innovation in the digital commerce market. Stripe’s success was driven by their focus on providing excellent APIs and documentation, which helped win over developers. However, to see sustained success, Stripe will need to expand its product development and marketing efforts and win over more traditional businesses and line-of-business users in upmarket segments, many of whom do not specialize in technology. To do so, Stripe will need to focus on making all of its applications interface first and enable no-code configuration. A potential challenge for Stripe lies with Apple’s and Google’s control over the iOS and Android mobile operating systems, respectively. With digital commerce moving increasingly to mobile devices, Apple and Google will hold more influence on how mobile users make digital commerce transactions in browser and in mobile applications. For example, Apple could expand the scope of Apple Pay to the detriment of Stripe and other payment companies. To prevent this, Stripe will need to maintain its close relationships with Apple and Google.
Opportunities: Because Stripe’s business model is based on a per-transaction basis, Stripe benefits directly if its customers’ businesses grow. We can expect sustained growth in the digital economy over the next 10 years, meaning Stripe’s customers will process more transactions online and directly benefit Stripe itself. In fact, less than 8% of business today is conducted online. The payments technology market is full of vendors. However, Stripe does not have a direct competitor with its breadth of offerings. While most payments vendors focus on offering products that satisfy specific commerce needs — such as payment gateways, consumer payments, or recurring billing — Stripe has a broader solution set as a platform on which businesses can build their entire digital commerce strategy. This value proposition resonates highly with Stripe customers, who declared Stripe an integral component of their success.
As online tools make it easier to connect with global customers, more and more businesses are selling overseas. In fact, a Stripe study found that 70% of online businesses are selling internationally today. While it’s easier than ever to reach a global audience, online businesses are also faced with a new challenge: How do you address the diverse customer preferences of a global audience during the checkout experience? The way customers prefer to pay for goods or services online varies drastically based on where they are located. If you don’t create a relevant, familiar payment experience, you could cut off entire countries from your addressable market.
While the global payments landscape has become increasingly complex and fragmented, Stripe makes it easy for any type of business anywhere in the world to discover and accept popular payment methods with a single integration.
We will now classify and identify the payment methods that Stripe supports. This can help any merchant to decide which ones are best suited to his business model and customer preferences.
We categorize payment methods into eight families:
Cards
Bank debits
Bank redirects
Bank transfers
Buy now, pay later
Real-time payments
Vouchers
Wallets
Cards
Cards are a common way for consumers and businesses to pay online or in person. Stripe supports global and local card networks. See the card brands that Stripe supports.
Bank debits
Bank debits are commonly used for business-to-business and high-value consumer payments. Your business debits the customer’s bank account directly, with their permission.
Bank redirects
Bank redirects let customers pay online using their bank account, using a secure, intuitive checkout flow. They are popular among non-US consumers and can improve conversion and reduce fraud.
Bank transfers
Customers or other businesses can use bank transfers to send money directly to your bank account and are common for accepting large payments from other businesses. In some countries, bank transfers are popular for consumer payments as well.
Buy now, pay later
Buy now, pay later payment methods help retailers reach customers that want to pay in installments. Your business is paid immediately and in full, and your customer pays nothing or a portion of the total cost at checkout.
Real-time payments
Real-time payments let customers send money directly from their bank account or other funding source using an intermediary to authenticate, such as a phone number or other account. They’re a common payment type in Asia and Latin America.
Vouchers
Vouchers are a popular way for customers in Asia and Latin America to complete online purchases in-person. At checkout, customers receive a digital voucher with pending transaction details and then complete the payment at local stores.
Wallets
Wallets provide a fast and secure way for consumers to pay with a saved card or a stored balance. Wallets improve conversion and reduce fraud, especially on mobile.
Accepting more payment methods helps your business expand its global reach and improve checkout conversion.
1. The benefits of payment methods
Over the past decade, payment methods have evolved to support different consumer and business needs. Markets with high card penetration, such as the US and the UK, have seen a significant shift toward wallets like Apple Pay and Google Pay, which offer more security and convenience. Some markets, such as France and Japan, even have their own local card networks that help businesses reach more card users. In markets like Germany and Malaysia, where card use is much lower, bank-based methods are strongly preferred and trusted for online purchases. The banking networks in these markets typically offer a faster and more secure checkout experience where users can authorize a payment using their online banking credentials. Meanwhile, in economies with a large unbanked population, such as Mexico and Indonesia, popular payment methods allow customers to pay for online goods with cash using vouchers.
By accepting payment methods that are both preferred by your customers and relevant for your business model, you can:
Reach more customers globally: As you expand into new regions, accepting local payment methods may be necessary to capture the total market opportunity. For example, 54% of online transactions in China involve wallets such as Alipay or WeChat Pay, and 20% use the local card network China UnionPay. Without supporting these payment methods, you may risk missing out on the substantial and growing buying power of Chinese consumers.
Increase conversion: Up to 16% of shoppers abandon their cart if their preferred payment option isn’t available. Surfacing the right mix of payment options to customers can meaningfully increase the chances that they’ll successfully complete a purchase.
Reduce fraud and disputes: Anticipate and manage the risks associated with accepting online payments by choosing payment methods that match your risk preferences. As a general rule, the better the level of customer authentication, the lower the likelihood of fraudulent and disputed payments.
Optimize your transaction costs: Payment methods have inherently different cost structures. Depending on your business model and where your customers are located, certain payment methods may or may not be relevant.
2. Choosing the right payment methods for your business
Whether you want to improve conversion in your domestic market or expand globally, surfacing relevant payment methods to your customers is key. But, depending on the nature of your transactions and where your customers are located, certain payment methods may or may not be relevant.
This section covers the seven major payment method families and specific considerations based on your business model: e-commerce and marketplaces, on-demand services, SaaS and subscription businesses, or professional services. If you are a B2B platform that enables your users to accept payments, your relevant payment methods depend on the business model of your users.
2.1. For e-commerce and marketplaces
Recommended: Cards, wallets, bank redirects, “buy now, pay later”
While frictionless checkout experiences are vital for any business model, their importance is magnified for e-commerce and marketplaces. Customers expect streamlined payment experiences—ones that give them what they want when they want it. The right set of payment methods not only offers payment flexibility and convenience to maximize conversion but also reduces fraud and increases transaction speed.
Cards are the most commonly used payment method, and it’s important that you support all relevant card brands to optimize conversion and costs. Wallets and bank redirects can also help increase conversion by allowing customers to use stored payment information (the added verification also lowers the possibility of disputes). Wallets, like cards, are a reusable payment method—customers provide their payment details once, and if that information is stored, they don’t need to share any additional information for future payments. This enables you to offer one-click checkout experiences. If you sell high-value goods, consider “buy now, pay later” payment options, which allow your customers to customize their payment terms and break up purchases into smaller installments.
In many large markets with low card use, such as Brazil, Mexico, and Indonesia, customers prefer to pay with cash-based vouchers and bank credit transfers, which don’t support immediate payment confirmation or native refunds. This can create challenges for e-commerce businesses that typically rely on real-time payment notifications to manage their shipping flows or refunds to promote customer loyalty. Stripe can help global businesses cater to these customers by enabling automated refund experiences and faster notifications for payment types that don’t typically support these features.
2.2. For on-demand services
Recommended: Cards, wallets
With instant fulfillment at the heart of the customer experience, on-demand services need to encourage conversion—often on mobile—while managing fraud risk. Consider focusing on payment methods that offer immediate confirmation that the transaction was successful, such as cards and wallets. These payment options also allow you to store customer payment details on file and enable one-tap confirmations, shortening the checkout experience. While wallets typically have the same transaction cost as cards, they are more secure since authentication is required to complete payment, lowering fraud and dispute rates.
It’s still important to consider the local context, as payment methods with more friction may be trusted and preferred to pay for on-demand services or add top-ups to customers’ app balance.
2.3. For SaaS and subscription businesses
Recommended: Cards, wallets, bank debits
If you manage recurring revenue and want to optimize your checkout experience for ongoing transactions, it’s important to consider whether or not payment details can be stored on file and reused. The ability to reuse a customer’s payment credentials allows you to initiate payments on a custom schedule, without requiring any action by your customers. Cards, wallet, and bank debit payments are all reusable—customers only need to provide their card number or bank account details once. And, for customers who prefer to use bank redirects such as iDEAL, SOFORT, or Bancontact, Stripe makes it possible to use these methods for recurring payments by converting them into direct debits.
In addition, many SaaS and subscription companies face involuntary churn issues, where customers intend to pay for a product but their payment attempt fails due to expired cards, insufficient funds, or outdated card details. In fact, 9% of subscription invoices fail on the first charge attempt due to involuntary churn. Stripe Billing can help manage recurring declines for cards, in addition to supporting many of the most relevant payment methods for increasing recurring payment conversion (for example, because bank account information doesn’t expire, accepting bank debits can increase retention).
While accepting reusable payment methods is beneficial to the business, it’s also important to consider local expectations regarding recurring billing. For example, in markets like Brazil and Indonesia, it’s common to send recurring invoices or reminders for customers to initiate each payment. (Stripe Billing makes it easy to accommodate both recurring charges and invoicing.)
2.4. For professional services
Recommended: Cards, bank debits, bank credit transfers
If you offer professional services or wholesale products, even a single payment failure or dispute could result in significant revenue loss. The ability to securely and successfully accept large payments can protect your business and can be solved, in part, by invoicing your customers so they have more flexibility to initiate payment when funds are available. Historically this has often meant asking customers to send checks. You can also send a hosted invoice with built-in support for cards and bank methods to minimize payment failure and automate payment tracking and reconciliation.
In addition, bank credit transfers are a secure, nondisputable payment option that is often preferred for very large payments. Credit transfer funds are deposited directly into your account once the payment has been confirmed. Credit transfers also require your customers to initiate the payment, adding an extra level of authentication and security. And, because contracts are typically in place before payment, it’s less important that your business initiates the payment and more important that payments don’t fail and can’t be disputed. While tracking and reconciliation for credit transfers can be difficult, Stripe generates virtual bank account numbers to keep your company’s banking details private and automatically reconcile incoming payments with outstanding invoices.
3. How VR Team can help
VR Team is a Stripe official partner who will guide you through your journey with Stripe. Companies of all sizes and from around the world use Stripe to accept multiple payment methods and simplify global operations. Stripe is actively adding new payment methods with the goal of enabling businesses to accept any payment method in the world with a single integration. Stripe offers:
Seamless integration options for all business models: The entire Stripe product suite comes with built-in global payment support, so you can create localized payment experiences regardless of your business model. Stripe’s Payments API makes it easy to support multiple payment methods through a single integration. This leaves you with a unified and elegant integration that involves minimal development time and remains easy to maintain, regardless of which payment methods you choose to implement.
Supporting a localized and compliant payments experience for global customers is even easier with Stripe Checkout, our drop-in payments flow. With Stripe Checkout, you can add payment methods by changing a single line of code and rely on Stripe to dynamically display the right payment methods and language based on IP, browser locale, cookies, and other signals. Checkout is also able to trigger 3D Secure and can handle European SCA requirements by dynamically applying card authentication when required by the cardholder’s bank.
Recurring revenue businesses can use Stripe Billing to manage subscription logic and invoices and give customers the ability to pay their invoices with bank debits or other preferred payment methods. Platforms and marketplaces can use Stripe Connect to accept money and pay out to third parties. Your sellers or service providers benefit from the same streamlined Stripe onboarding and get instant access to select payment methods.
Simple payment method setup: Stripe allows you to quickly add and scale global payment method support without filling out multiple forms with the same information or following one-off onboarding processes. You can also enable certain international payment methods without having to set up a local entity, bank account, or Stripe account.
Expanded payment method capabilities: Stripe can fill in certain gaps in payment method capabilities and expand their supported use cases. For example, bank redirects such as iDEAL, SOFORT, or Bancontact don’t normally support recurring payments. However, Stripe converts these payment methods into direct debits so customers can use them to pay for subscription services.
Unified monitoring and reporting: Payments made with any payment method appear in the Stripe Dashboard, reducing operational complexity and allowing for lightweight financial reconciliation. This enables you to develop standardized processes for typical operations such as fulfillment, customer support, and refunds. And, because Stripe abstracts away the complexity of dealing with each payment method provider, you also benefit from one single point of escalation and accountability on disputes or other exceptions that may arise when dealing with diverse payment methods.
Contact our Stripe experts at info@vrteam.online or book a free call with us: http://bitly.ws/REx2
Sources:
1. Global digital trade news: Stripe report finds businesses are racing across borders with digital trade: https://stripe.com/en-bg/newsroom/news/global-digital-trade -
2. Payment methods guide: https://stripe.com/en-bg/guides/payment-methods-guide
3. DC White Paper | The Business Value of the Stripe Payments Platform: www.idc.com