A thirsty crow happens across a pitcher full of water. To its dismay, the bird’s beak is too short to reach the life-giving liquid at the bottom of the pitcher. But the crow is industrious; it begins to collect stones from the local area and, one by one, drops them into the pitcher until the water level rises. Finally, the crow may drink. 

Aesop’s fable has an eternal truth at its core: necessity is the mother of invention. 

And there is certainly a necessity right now for ecommerce merchants to rethink how their customers around the world can pay for the things they love. A trend that first rose in popularity in places like Asia and Africa has now swept across the globe. And that trend is local payments methods where consumers pay for goods online with a dynamic mix of digital wallets, direct to mobile carrier billing, Buy Now Pay Later facilities and instant account-to-account payments. 

The dizzying diversity of local payments methods now available around the world - some 500 plus and counting - combined with highly local consumer preferences for which payment method they prefer to use, make it very challenging for merchants to drink from the ecommerce pitcher - predicted to rise to $12 trillion dollars in online transactions by 2028.

Extensive research conducted by Juniper Research on behalf of Boku this year revealed that cards’ direct share of ecommerce transaction volume is expected to decline from 41% in 2023 to 30% in 2028. By 2028, local payment methods (LPMs) will represent 59% of all ecommerce transactions by value - that’s equivalent to $7 trillion spent using local payments methods.

Card-based online payments will remain an important part of any payment acceptance strategy, whether that’s direct card payments or via card-linked wallets. But if global merchants want to see a rise in growth - especially in markets beyond the west - they’ll need to find a way to collect and deploy the best local payments methods for every region they wish to address. 

Rising levels of competition in local payments

The landscape of payments is marked by intense competition, with emerging fintech providers vying for the attention of convenience-hungry consumers with offers of ever more seamless payments solutions. Payments competition - combined with rising prosperity in many emerging markets - naturally leads to intense innovation. 

And the payments innovation race has led to the rise of LPMs. Local payment methods include digital wallets, account-to-account payments and direct carrier billing where purchases are automatically added to the customer’s monthly mobile bill. 

What do all of these methods have in common? They’re fast and easy to use. LPMs are playing a pivotal role in empowering individuals, enterprises and communities by giving them accessible and culturally relevant local payments brands.

Three reasons merchants are thinking local 

The research we undertook with Juniper looked at global ecommerce trends in 37 different major markets and surveyed 10,500 ecommerce consumers in 14 countries around the world. If you’re working a merchants’ payment team, here are three key takeaways.   

1. Customers are diverse, and so are the ways they like to pay
   
   When it comes to payments, one size doesn’t fit all. Local conditions and payments preferences can’t be met with a single global payments solution. Merchants need a fast way to diversify the payment options they give customers, without overburdening their development and payments teams.
   
   
2. Local is more secure
   
   LPMs offer a better user experience that can be tailored to local requirements, something the old hegemony of card networks can’t provide.
   
   LPMs also typically have biometric security built in, leading to quantifiable improvements in fraud performance versus cards. This creates a massive opportunity for digital wallets and A2A payments in particular, with A2A and non-card-linked wallets expected to account for over 50% of ecommerce transaction value globally by 2028.
   
   
3. Merchants don’t have to do the hard work  
   
   Merchants have to find an easy way to understand the different local payment preferences of consumers in the regions they want to address, and then integrate them seamlessly. That’s not as simple as it sounds. Consumer payments preferences can change rapidly. New methods emerge and can quickly displace previous consumer favourites. And not all local paymentmethods are the same. Getting to grips with the APIs of each individual local payment provider and doing due diligence on their ownership and security - this takes significant time and resource. Working with a global payments network that provides advice on the best local payments options and makes deployment easy, is a fast and proven way to move with the payments times in every part of the world. 

As ecommerce merchants search for ways to attract new customers and grow their businesses, they should look to the Crow and the Pitcher for inspiration. Sticking with card-based payments alone won’t help them to reach customers, but by carefully selecting local payments methods and dropping them into the mix, merchants can benefit from the rising tide of ecommerce around the world and forge lasting relationships with a broader demographic of customers who want to buy global but pay local.