What You Should Know About the Three Most Popular Global Payment Methods

There has never been a greater variety of ways to compensate someone. MasterCard is developing a new method that uses facial-scanning technology to confirm transactions with selfies. In July, Apply Pay launched in the United Kingdom, joining a crowded European global payments market. As a result of the Greek crisis, Bitcoin is gaining popularity.

These new technologies will be added to the approximately 200 distinct types of electronic payment systems that now exist on our planet. With so many alternatives and use cases, it may be difficult for any worldwide company to choose the best payment methods. It's more difficult for software-as-a-service and other subscription firms to manage sophisticated payment procedures than traditional, one-time-sale models.

In such a case, how can these enterprises locate the best worldwide payments for their needs? To begin, the most significant characteristics to consider when evaluating global payment options are push vs. pull and one-time vs. regular payments.

Push indicates that your consumer must actively send you the money if you are a merchant. You must request it, and your consumer must make the effort to make a discreet payment.

Cash, wire transfer, cheques, and coupon payment schemes like Boleto in Brazil or BVR in Switzerland are all examples. The majority of payment methods, in general, are push-payment methods, which are best suited for one-time payments because few clients are prepared to submit payments on a regular basis.

Pull-payment mechanisms are more suitable for subscription companies since they enable the merchant to actively withdraw funds. Agreements must be in place initially, but a merchant has all of the information and authority required to take funds from a customer's account.

There are a variety of pull-payment techniques that are suitable for SaaS and other subscription businesses. While many are regional in character, meaning they are popular in one nation but not in another, a handful are global in scope. Let's look at the most popular pull-payment techniques for subscription businesses:

1. Credit cards

Credit cards are at the top of the list of the most used worldwide payment methods nowadays (especially in e-commerce). Credit cards, as a pull-payment mechanism, are ideal for recurring payments for two reasons. For starters, payments paid with a credit card are guaranteed upfront, which eliminates settlement concerns. Second, if a consumer agrees to let you use their credit card information, you can continue to use that card on a regular basis.

There are a few drawbacks, such as fees, fraud, and charge-backs, but they are minimal in comparison to the convenience and benefits described above.

2. Bank transfers

Bank transfers are another common recurring pull-payment technique in which the consumer provides you with their bank account details and you may withdraw money straight from their accounts over a secure network connection. The majority of these direct-debit solutions allow you to set up regular payments. The main advantages of bank transfers are cheaper costs and the global use of this sort of payment mechanism.

The main disadvantage of bank transfers is that they come in a variety of flavors, and how payments are handled varies by nation. ACH (Automated Clearing House) in the United States, PAD (Pre-Authorized Debits) in Canada, SEPA (Single Euro Payments Area) in Europe, and U.K. Direct Debit in the United Kingdom are a few examples.

Processing SEPA bank transfers is far more difficult than processing ACH payments. As a merchant who accepts bank transfers, you must carefully choose which nations and kinds you will accept. In other circumstances, you just must have the ones that are widely utilized in your main markets, even if they are only used in one nation, such as iDEAL in the Netherlands.

3. E-wallets

The third key worldwide payment option to consider is an electronic wallet, often known as an e-wallet, which is a third-party payment mechanism that may be financed in a variety of ways. There is always another payment mechanism (such as a credit card or a bank transfer) that sits behind it, but the firm supplying the wallet handles all of the complexity, security, and procedure of the payment transaction.

Today, PayPal is by far the most popular worldwide e-wallet. While its e-commerce presence seldom reaches 20% of any particular local market, it is present in virtually every country and has a track record. Other growing challengers include Google Wallet, Amazon Payments, and Apple Pay, all of which are increasing their reach and adding support for recurring payments.

As more individuals accept subscriptions for services or items that are now one-time purchases, we will see the majority of spending occur with regular suppliers on a recurrent basis. In broad terms, this means:

1. Recurring, pull-payment options will continue to grow in popularity.

2. Simpler, more uniform user experiences will triumph over fragmented, localized approaches. Credit cards will remain popular, while big e-wallets will gain momentum. Bank transfers will continue to be dominant in some places, but worldwide norms for verification and assurances will need to exist before this payment mechanism can acquire traction.

3. In the long run, an e-wallet payment system, similar to Alipay in China, would most certainly achieve considerable market share. The ease of use for businesses and the ability for clients to fund the wallet via a number of methods appear to combine the best of both worlds. The key will be determining the costs and security factors so that the market has trust in using it.

Payment choices for SaaS and other subscription businesses should be thoroughly analyzed and assessed to decide what is best for them and their consumers.

"Nailing down the correct payment plan is not only crucial to conducting business abroad, but it's also one of the easiest things you can do to grow your business," as my colleague Iain Hassal rightly points out.

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