A Guide to Local Payment Options for Global Business Expansion

Overview of Local Payment Options

Local payment options are methods that cater specifically to the preferences and infrastructure of a particular country or region. In addition to global payment methods such as major credit cards, local options include regional ewallets, bank transfers, mobile money systems and cash vouchers. These payment preferences reflect cultural characteristics like trust levels, individualism, collectivism and technology adoption patterns.

For example, Japan’s preference for cash payments connects to cultural concepts of trust and tangibility. In contrast, China’s embrace of mobile payments through platforms like Alipay and WeChat Pay reflects an openness to new technologies that provide clear convenience benefits.

Types of Local Payment Options

1. Digital wallets: Examples include Alipay and WeChat Pay in China, which dominate the market with over 80% of transactions. These platforms have integrated payments into daily digital life, offering numerous benefits for consumers and merchants.
2. Bank transfers: Systems like SEPA (Single Euro Payments Area) in Europe and Faster Payments (FPS) in the UK allow direct account-to-account payments. 
3. Cash vouchers: Options like OXXO in Mexico and Boleto Bancário in Brazil allow consumers without bank accounts to make online purchases using cash.
4. Buy Now Pay Later (BNPL) Services: Platforms such as Klarna and Afterpay are gaining popularity, especially in markets like Australia, where they represent a significant portion of online transactions.

These local payment options differ from traditional credit card payments in several ways:

• They often have lower transaction fees, benefiting both merchants and consumers.
• Many provide instant or near-instant settlement, improving cash flow for businesses.
• They frequently offer enhanced security features tailored to local preferences and regulations.
• Local methods often have deeper integration with other services, creating a more cohesive user experience.

These local payment options are important in specific regional contexts. 

Benefits of Integrating Local Payment Options

Integrating local payment options provides businesses with significant advantages, particularly in market penetration, customer satisfaction and conversion rates.

Market Penetration

Using local payment methods allows businesses to break down barriers to entry in international markets. In many regions, credit cards aren’t the primary method of payment and offering local options like Boleto Bancário in Brazil can lead to smoother transactions and increased adoption.

In Europe, SEPA transfers are popular for cross-border transactions and in LATAM, local options like PIX in Brazil and OXXO in Mexico are commonly used. With Rapyd, you can easily integrate these local payment methods, enabling businesses to offer smooth transactions and access unified markets with minimal friction. This flexibility accelerates regional expansion and improves market penetration.

Conversion Rates

Studies have shown that aligning payment methods with local preferences improves conversion rates. For example, Rapyd’s local acquiring capabilities in markets like the UK, EU, Israel and Singapore have been proven to increase authorisation rates and reduce payment failures. 

By integrating local payment options, businesses can overcome obstacles in international expansion, enhance customer experiences and improve conversion rates. As global eCommerce continues to grow, adapting to local payment preferences is important for thriving in diverse markets.

Key Considerations for Implementing Local Payment Options

When adding local payment options to your global strategy, several factors must be addressed to guarantee successful adoption. A common cause of cart abandonment is the lack of a preferred payment method. When businesses integrate payment methods that match local preferences, they significantly reduce the likelihood of cart abandonment during checkout.

Market Research and Selection

Before starting, conduct thorough research to understand the payment preferences of your target markets. Rather than offering every possible payment method, focus on the most popular options in each market to maximise impact and reduce complexity.

Payment solution providers like Rapyd can simplify this by offering a wide range of local payment methods across regions, allowing businesses to quickly adjust to local preferences without the need for multiple integrations.

Regulatory Compliance

Navigating regulatory requirements comes with using local payment methods. Key areas of compliance include:

• Payment licensing requirements
• Data protection laws (e.g., GDPR in Europe, LGPD in Brazil)
• Financial regulations (AML, KYC, CTF)
• Consumer protection standards

For example, the EU’s PSD2 demands Strong Customer Authentication (SCA) for electronic payments to enhance security and reduce fraud. SCA requires payment service providers to verify a customer’s identity.

Technical Infrastructure

Integrating local payment methods requires technical infrastructure that supports various payment protocols and security standards. Considerations include:

• API frameworks for connecting with local providers
• Security features like tokenisation and fraud detection
• Transaction processing capabilities (currency conversion, cross-border routing)

Rapyd’s API offers integration with local payment providers and supports a variety of payment methods, such as digital wallets, bank transfers and mobile money systems, all through a single API. This simplifies the integration process and supports secure, efficient transactions across markets.

Financial Operations

Adding local payment options introduces complexities such as:

Currency Conversion and Exchange Rate Fluctuations

Accepting payments in multiple currencies requires real-time currency conversion, exposing businesses to exchange rate fluctuations. This can impact the final amount received after conversion and may introduce additional fees or losses if rates shift between transaction initiation and settlement.

Settlement Processes Vary By Payment Method

Each payment method, whether it’s a credit card, debit card, ACH, digital wallet or international transfer, comes with its own settlement timeline and process. Settlement methods also differ in structure: gross settlement processes settle each transaction individually, while net settlement batches transactions and settles them periodically, a factor that can impact liquidity and reconciliation.

Reconciliation Systems for Diverse Payment Flows

With multiple local payment options, reconciliation becomes more complex. Each payment method generates its own data and settlement reports, which must be matched against sales and transaction records to ensure accuracy

The reconciliation process must account for fees, chargebacks, refunds, and the timing differences between when a transaction is authorized, settled, and when funds are actually available to the business

Regional Insights: Popular Local Payment Options Around the World

Diverse local payment options across major regions show how cultural factors shape consumer choices.

Asia-Pacific

Southeast Asia: Each country has developed unique local solutions, presenting APAC payment challenges for merchants trying to navigate this complex landscape:

• GrabPay and GCash dominate in the Philippines
• OVO and GoPay lead in Indonesia
• PromptPay has transformed Thailand’s payment ecosystem

Japan and South Korea: While credit cards remain popular, local solutions like Suica and LINE Pay in Japan and Kakao Pay in South Korea have gained significant market share.

Europe

Europe presents a unique payment ecosystem with both regional solutions and country-specific preferences:

Western Europe: Credit and debit cards dominate, with contactless adoption nearing universal levels. Bank transfers through systems like SEPA are widely used for larger transactions.

Northern Europe: Nordic countries lead in cashless adoption with solutions like Swish (Sweden), MobilePay (Denmark) and Vipps (Norway). These digital wallets have reshaped payments in the region.

Central and Eastern Europe: Cash still plays a significant role in many countries, while local payment schemes like BLIK in Poland have seen rapid adoption.

Latin America

Latin America demonstrates a mix of traditional and innovative payment methods:

Brazil: The PIX instant payment system has transformed the payment scene, while Boleto Bancário remains important for consumers without bank accounts.

Mexico: The CoDi (digital collection) system is gaining traction, while cash-based voucher systems like OXXO allow unbanked consumers to make online purchases.

Argentina and Colombia: Local payment solutions like Mercado Pago have been strongly adopted, while cash-based methods remain important due to economic volatility.

Africa and Middle East

Africa represents an innovative payment environment, driven by mobile money solutions:

Sub-Saharan Africa: Mobile money dominates, with M-Pesa leading in Kenya, Tanzania and beyond. Due to the prevalence of feature phones (basic mobile phones that support calls, SMS and sometimes limited apps, but not full smartphone capabilities), USSD-based payment systems remain central.

South Africa: Card payments maintain a stronger presence than in other African countries, while QR solutions like SnapScan have gained popularity.

Middle East: Card payments dominate in GCC countries, with high credit card penetration. Digital wallets are growing rapidly, especially in the UAE and Saudi Arabia, with local solutions like STC Pay gaining significant market share.

North America and Oceania

While these regions maintain strong card dominance, they’re seeing increased adoption of digital solutions:

United States and Canada: Credit and debit cards remain the primary payment method, but digital wallets (Apple Pay, Google Pay, PayPal) continue to gain market share.

Australia and New Zealand: Card payments dominate, but newer technologies are being rapidly adopted. Buy Now Pay Later services like Afterpay have seen significant uptake, especially in Australia.

Several key cultural dimensions shape payment preferences across regions:

• Trust and risk perception: Societies with high trust levels often readily embrace newer payment technologies. For example, Japan’s preference for cash payments is deeply connected to cultural concepts of trust and tangibility.
• Technology adoption patterns: Cultural attitudes toward innovation significantly impact payment method adoption. Early adopter cultures like South Korea and China embrace new payment technologies rapidly.
• Economic factors: Banking penetration, income levels and economic stability are central in shaping payment preferences. In volatile economies, consumers may prefer payment methods that provide stability.

By offering preferred local payment options, companies can remove barriers to purchase, build trust with consumers and improve their chances of success in new markets.

Challenges in Adopting Local Payment Options

Implementing local payment options presents significant hurdles for businesses aiming to expand their global reach. While the benefits are clear, the path to successful integration is multifaceted.

Financial Challenges

One of the most pressing issues is managing transaction fees. These fees can impact profit margins, with small businesses reporting this as a top payment challenge. The varying fee structures across payment processors and methods make cost management challenging.

Delayed payments can create cash flow problems, particularly for smaller enterprises with limited financial reserves. Not receiving payments quickly enough can severely impact business operations and growth potential.

Technical Challenges

Many businesses face a fragile payment infrastructure that cannot support the scale and complexity of modern digital commerce. Common issues include:

• Network congestion during peak transaction periods
• Single points of failure without adequate backup systems
• Lack of redundancy in critical payment pathways

Beyond these challenges, integrating multiple local payment systems into a single checkout process adds significant complexity and requires considerable time and resources. The payment ecosystem lacks standardisation, with hundreds of processors, gateways and formats operating simultaneously. This makes implementing comprehensive local payment options a demanding task.

A unified solution, like Rapyd, that supports credit cards alongside hundreds of local and alternative payment methods through a single integration can simplify this process and reduce operational burdens.

International Complexities

Managing multiple currencies presents challenges for businesses expanding into international markets. This requires:

• Real-time currency conversion capabilities
• Management of exchange rate fluctuations
• Reconciliation across different currency accounts

Cross-border transactions introduce additional layers of complexity, including:

• Handling multiple currencies with fluctuating exchange rates
• Navigating diverse shipping options to meet local expectations
• Complying with regional regulations that vary significantly

Security and Customer Experience Issues

As payment methods diversify, so do the potential vectors for fraud. Card-not-present fraud remains a significant challenge for businesses implementing local payment options.

Poor checkout experiences can create friction and reduce conversion rates. Common issues include long loading times during payment processing, confusing checkout flows and limited payment options that don’t match local preferences. With the right alternative online payment methods, businesses can overcome these challenges.

Strategies for Successful Integration of Local Payment Options

Businesses need strategic approaches to overcome challenges and maximise benefits when implementing local payment options. Here are key strategies for successful integration:

Partnership Approach

Partnering with global payment platforms that offer local solutions can significantly improve the integration process. Businesses face a choice between:

• Direct integration: Provides more control but increases technical complexity and time management and requires in-house expertise in local regulations.
• Partnership with payment aggregators: Enables faster market entry, but may have higher costs

Partnering with providers specialising in specific regional markets can be particularly valuable. Rapyd’s global payment platform allows businesses to integrate a wide range of local payment methods through a single solution. This helps businesses access local solutions without the need for multiple regional partnerships or complex integrations.

Technical Implementation

Robust payment architecture helps handling diverse local payment options. Considerations include:

• Implementing redundant systems and cloud-based infrastructure to eliminate single points of failure
• Utilising payment orchestration platforms that manage multiple processors through a single integration
• Opting for API-first payment providers to simplify integration

For instance, a cloud-based payment infrastructure can provide the scalability and reliability needed to handle peak transaction periods across different regions and payment methods.

Phased Implementation Strategy

A phased approach to implementation helps manage complexity and resources effectively:

1. Market prioritisation based on potential vs. complexity
2. Selection of the most impactful payment methods in each market
3. Regulatory gap analysis before market entry
4. Technical roadmapping
5. Localised testing

This strategy lets businesses focus on high-priority markets and payment methods, creating a manageable and effective rollout.

Ongoing Optimisation

Continuous monitoring, testing and optimisation of payment processes are essential for long-term success. Businesses should:

• Implement robust analytics to track payment success rates, abandonment points and processing costs
• Create KPIs for payment processing, including completion rates, processing times and cost per transaction
• Regularly review and adjust payment options based on performance data

Embrace Local Payment Options for Global Success

Expanding globally requires offering local payment options tailored to regional preferences. By embracing these differences, businesses can drive market penetration, improve customer satisfaction and increase conversion rates. Successful integration involves market research, smooth checkout experiences, and strategic partnerships with local providers.

Rapyd’s comprehensive solutions simplify the process, offering local card acceptance, global reach, and directly licensed card acquiring across the UK, Europe, Israel and Singapore, helping your business scale.