What pays in your country? Customers' preferred payment methods

Lucy O'Gorman
Lucy O'Gorman

Currency is a global affair but how it is exchanged is anything but universal. Simply jumping back 20 years would reveal this. Remember all of the different types of coins; their designs literally imprinted with illustrations and patterns from their country’s culture and history. Fast-forward to the present day, and how money is traded digitally is likewise informed by a nation’s makeup.

For firms seeking expansion into new geographies, no matter how brilliant their product or service might be, no matter how great their marketing launch is, all would be in vain if they do not provide consumers with the correct payment method.

To ensure that you get your international payments working perfectly, explore the most popular alternative payment methods (APMs) by country below.

What is an alternative payment method?

First of all, what is an alternative payment method? An alternative payment method or APM is a way to make payments without the use of conventional methods like cash or cards. In recent years the variety of APMs have increased drastically to include mobile wallets like Apple Pay, cryptocurrencies like Bitcoin, Peer-to-Peer Payment Apps like PayPal, and contactless payments thanks to NFC technology.

With an increasing amount of options available, everyone inevitably has their own preference. Curiously, there appears to be trends within populations, which is especially useful for businesses, and important for them to take into account when they begin trading in new geographies.

Alternative Payment Methods across the globe

Across the entire financial-services sector, the electronic payments industry has attracted the highest amount of investment over the last decade and in turn generated the largest levels of growth. This has no doubt been influenced by the global pandemic, forcing every country and business to push on with making payment options other than cash available. As a result, alternative payment methods are now available in every country. Below is a closer look at the variety of APMs in certain regions and countries:

Europe's payment scene

Much of Europe views itself as part of the western world. As such, across the continent there has been an embracing of American technologies like the networks of VISA and Mastercard. Recently however there has been a movement to become less reliant on such technologies in favour of homegrown alternatives.

This is the driving force behind the European Payments Initiative – a pan continental project to introduce a unified payment system across the countries of Europe. Whilst this would be an extraordinary feat which in years to come would likely dominate the payments landscape across a whole host of European countries, already there is a broad selection of APMs in play.

In Britain for example, despite being a small nation in size, it is the world’s 3rd largest e-commerce market behind America and China. As a result, the British population expect a selection of different payment methods with digital wallets proving to be one of the most popular throughout all age groups. Whilst Britain’s preferred APMs tend to be common on the international scene (PayPal, Apple Pay, Google Pay etc.), in other European nations, APMs created within their home nation tend to prove the most popular. For instance, iDeal is used by over 70% of the Dutch population and mobile payment scheme Swish has been adopted by nearly 80% of the Swedish population.

Overall, whilst there are some instances of APMs sharing popularity across European nations, before the European Payments Initiative aims to unify this payments landscape, firms expanding into specific countries within Europe should definitely take their time to first assess the payment preferences in each local market.

Japan's payment scene

An anomaly to much of the world thanks its insular culture, Japan defies expectations when it comes to payments as well. Despite being a leading technology force and a developed country, Japan was very much a cash-heavy nation prior to the world going into lockdown. This might be hard to comprehend now but 82% of all Japanese payments in 2018 were made via cash.

However, since Covid, contactless payment options have soared and seem to be ubiquitous across Japan apart from in some small independent shops. The APM of preference appears to be Alipay. As a creation from nearby China this is not surprising, especially considering that Chinese tourists in 2019 made up a third of those who visited Japan in one calendar year.

To further add to the confusion, Japan’s e-commerce market is the fourth largest in the world. Yet despite this Japan has one of the world’s lowest online overseas shopping habits.

Overall, despite making progress in terms of APMs which was not seen prior to the pandemic, Japan as a cashless society is still far behind similar Asian countries like South Korea where 93.6% of all payments were cashless in 2020. For businesses considering expanding their operations into the Japanese market, they must therefore be considerate of the limited options at present. Nevertheless, they should also note that this could change rapidly if the Japanese government’s flagship scheme for salaries to be paid digitally without banks proves popular with companies and shifts Japan’s attitude towards APMs.

Australia's payment scene

Although they share a time zone, Australia and Japan have very different attitudes to making online purchases from overseas businesses. Those down-under are in fact the second-most likely to make purchases online from other countries.

Something else which makes the Australian market an attractive proposition for businesses to enter is the fact that it is a popular tourist destination. This means that businesses in the Land of Oz have had to become expansive with their own payments options to accommodate the various methods of tourists.  

For its own demographic, Buy Now Pay Later (BNPL) schemes are proving incredibly popular. In 2022 alone, 26% of Australians said they used BNPL, contributing to A$63.8 billion being spent via them in one year. One firm which is benefiting from this trend is Klarna; they surpassed 1 million downloads in Australia in September 2021, doubling their numbers in under a year.

Expansion into Australia therefore offers the ability to select from a broad range of APMs thanks to the country's tourism identity and their native appetite for new payment methods like BNPL.

Africa's payment scene

Having access to traditional banking methods in Africa is not common. In fact, according to the World Bank, 97% of the population doesn’t have a credit card. However, the impetus which the pandemic placed on developing contactless money technology has changed the narrative completely regarding financial autonomy.

With reliable internet connectivity and mobile technology being ubiquitous, the uptake of APMs has been almost natural. This pairing has proved so strong in Africa that the continent accounts for nearly 70% of transaction volume via mobile money accounts. And this is only the beginning; it is projected that adoption of e-payments will accelerate with a growth of 30% per year until 2025.

Although the numbers regarding e-payments in Africa sound tremendous, it should be noted that there are differences across African nations. Notably, Egypt, Kenya, Ghana, South Africa, and Nigeria are likely to be responsible for half of all future electronic-payments revenue from the entire continent.

Historically, for businesses seeking expansion, Africa might not have been at the top of their list. However, new digital technologies, the youngest median age across the world of 18, and a growing urban population means that the opportunity and appetite for consumerism in a modern capacity is ripe in Africa. Undeniably, this presents an opportunity for firms seeking new commerce should they adopt contemporary payment methods.

America's payment scene

As the world’s largest economy, America offers huge opportunities for companies. It’s vast economic potential however is not reflected in its appetite for APMs. Credit cards initially really took off in America and they continue to have a stronghold as to how people like to make purchases.

Nevertheless, a lot of APMs were inevitably developed in America meaning that they are available to choose from even if they are not yet overwhelmingly popular. For example, both PayPal and Apple Pay are American creations but the former is said to be used by five times as many Americans in comparison to the latter.

Ultimately, there is no doubt that the US offers consumers a range of APMs but due to some not being adopted en masse, companies operating in America should be selective when it comes to choosing which to work with considering the costs which some of them come with.

Alternative markets, alternative payments

Our world is famed for its diversity, and when it comes to APMs this rings true as well. Whilst it does add a level of complexity for financial professionals, the competition within the payments industry also breeds opportunity. Select the right payment method for your new geography and you are bound to prove popular with your customers.

Crucially, no matter how many additional payment methods you add, there is also a way you can be a hit with your finance team – take care of all payment sources with Aurum’s automated reconciliation software. With a vast range of APIs and the ability to extract, transform, load and reconcile payments data in seconds, payment sources can be expanded to attract more revenue without causing new complications.

Find out more about Aurum’s payment solutions by booking a demo today.

Lucy O'Gorman
Lucy O'Gorman

Business Development Representative

Author page

With a First in Accounting and Finance from the University of Southampton, plus experience as an audit graduate at KPMG, Lucy O'Gorman's financial perspective helps her build a natural rapport with Aurum Solutions' customers.

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