There are roughly 200 different types of electronic payment methods around the world. They’re frequently called alternative payment methods, or different method payment choices. They’re also frequently regional, and vary in popularity from one country to another.
For subscription-based businesses, it’s important to remember that many payment methods are not necessarily suited for recurring payments. Many payment methods are one-time — the simplest example of this being cash.
Outside of regional popularity, the two most important criteria to look for in assessing global payment methods for a subscription based business are push versus pull, and one-time versus recurring.
If you’re a vendor, push means that your customer has to actively send you the money. You have to request it, and your customer has to make the effort to put forward a discrete payment.
Examples of common push payment methods are cash, wire transfer, any of the coupon payment methods like Boleto in Brazil or BBR in Switzerland. A check could also be considered an example of a push payment method. Generally speaking, one-time payment methods are push payments.
In a pull payment method, the merchant can actually actively withdraw the money themselves. Examples of pull payments are credit cards, bank transfers, or PayPal. Agreements need to be put in place first, but a merchant has all the information and agency it needs to actively withdraw the money from a customer account.
The most important payment methods for subscription-based businesses are recurring pull payments. And the good news here is that when you look at the most popular global payment methods (particularly in e-commerce), credit cards rise to the top.
Credit cards are a pull payment method, and they’re also good for recurring payments. Once a customer gives you a credit card number, you can keep pulling from that card on a recurring basis.
Another example of a broadly popular recurring pull payment method is a bank transfer, which is admittedly very broad category of payment methods, but the general idea is that the customer gives you their bank account information, and you’re able to through a secure network connection to pull money from their account. Most of the time you’re able to do that on a recurring basis.
Specific examples of bank transfer payment method types include ACH, Automated Clearing House Transactions here in the U.S.; PAD or Preauthorized Debits in Canada; SEPA, Single Euro Payments Area in Europe; UK Direct Debit in the UK; and Australia and New Zealand both have direct debit schemes. Most countries have a direct debit bank transfer scheme.
The caveat with bank payments is that there are all types – while they’re popular because everyone has a bank, these plans tend to vary by country. As a vendor who supports bank transfers, you have to specify which countries and which types.
The third most most important global payment method to consider is an ewallet, which basically a tokenized artificial payment method. There’s an alternative payment method that sits behind it (such as a credit card or a bank transfer), but the company hosting the ewallet handles all the complexity and security and conducts the transaction.
PayPal is by far the most popular global e-wallet. While their ecommerce reach rarely exceeds twenty percent of a give local market, they’re essentially in every country and have a proven track record. But other rising contenders include Google Wallet, Amazon Payments and Apple Pay, which are all expanding their ecommerce reach.
In summary, the three most important payment methods to consider for subscription-based businesses are credit cards, bank transfers, and (for now) PayPal. Beyond the big three, you need to focus on which methods are most important to your regional market (In China, for example, Alipay is a dominant ecommerce payment method).
For more information on the kinds of global payment types that Zuora supports, please visit here.