How Local Payment Methods are changing the global ecommerce transaction landscape

But this potential can only be realised if LPMs are implemented successfully, both on the vendor side and within ecommerce businesses.  

Three key characteristics of successful LPM networks: 

1. Quality, not (just) quantity 

Many network vendors offer a wide variety of LPMs, but differences in connection methods can impact performance and so the network quality is just as important as the quantity of LPMs on offer. Merchants with subscription models, for example, are likely to seek out vendors that support recurring payments. Multi-factor authentication, essential for reducing chargebacks, will also be key to the successful implementation of LPM networks. Successful LPM networks must therefore focus not just on quantity of options, but quality of provision. 

2. Network depth 

The depth of networks will also have an impact – as the involvement of more intermediaries with each transaction brings with it an increased risk of failure or settlement delay. To meet customer expectations for convenient payments and to support ecommerce businesses during the shift to LPMs, vendors must account for the impact of legacy platforms on service quality.    

3. Tokenisation 

Tokenisation replaces sensitive data, like credit card numbers, with tokens. It is crucial for LPMs, particularly with recurring payments, as it affects data protection, fraud liability, and customer service quality. LPM vendors must look to add tokenisation capabilities to their networks and ensure they align with security and service goals. 

LPMs becoming essential to differentiation and scalability 

Payments are undergoing rapid and significant changes, requiring vendors and digital merchants to adapt. Worldwide, consumers are gravitating towards LPMs and challenging the dominance of card-based payments. LPMs offer the potential to speed up settlements, improve cost efficiency, and expand into new markets and regions. 

As global reliance on card-based payments decreases, LPMs will become essential for differentiation and scalability in ecommerce, and merchants will adapt what they look for vendors to provide – meaning payment providers will have to evolve themselves.