Local payment methods
Cardflo enables merchants to accept local payment methods, crucial for global expansion. By offering payment options familiar to your international customers, you can significantly improve conversion rates and build trust.
Our platform provides access to a comprehensive suite of regional payment solutions.
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The overview
Local payment methods (LPMs), often referred to as alternative payment methods (APMs), encompass any transaction type that does not utilise a global card scheme such as Visa or Mastercard. These include domestic card schemes, digital wallets, bank transfers, buy-now-pay-later (BNPL) services, and cash-based vouchers.
Within the payments stack, LPMs are typically integrated via a gateway or a payment service provider (PSP) that manages the diverse technical specifications and settlement cycles inherent to regional infrastructures. For merchants targeting international markets, localising the checkout experience is a structural requirement.
Customers in various jurisdictions often prefer domestic systems, such as iDEAL in the Netherlands or Pix in Brazil, over traditional credit cards.
Efficiently managing these methods requires robust handling of local currency settlement, regional compliance rules, and specific refund behaviours unique to each system's underlying rails.
How it works
Method Selection and Configuration
The merchant identifies target regions and selects relevant payment methods through their PSP or gateway. This involves enabling specific providers within the payment orchestration layer to ensure the checkout displays appropriate options based on the customer's geographic location, determined by IP address or shipping details.
Redirection and Authorisation
When a customer selects a local method, the gateway initiates a request to the specific provider. In many cases, this involves a redirect to the provider's own interface, such as a banking portal or wallet app, where the user authorises the transfer using their credentials.
Asynchronous Status Updates
Unlike standard card authorisations that are often near-instantaneous, many local methods operate asynchronously. The payment system listens for a webhook or server-to-server notification from the local provider to confirm that the funds have been successfully pushed or transferred from the payer's account.
Reconciliation and Settlement
Once confirmed, the transaction enters the settlement phase. The PSP collects funds from the various local schemes, converts them to the merchant's base currency if necessary, and aggregates them for payout.
This process accounts for varying settlement windows, which can range from real-time to several days.
Why it matters
Conversion and Consumer Trust
Offering familiar payment options directly influences checkout completion rates. In many territories, consumers lack access to international credit cards or maintain a cultural preference for bank-led transfers and digital wallets.
Restricting payment options to global card schemes can result in high abandonment rates. By integrating local methods, merchants signal legitimacy and respect for regional consumer behaviour, which facilitates higher successful authorisation rates and reduces friction during the final stages of the purchasing journey.
Cost Optimisation and Regulation
Processing transactions via domestic rails often incurs lower fees than international card processing, which is subject to high cross-border interchange and scheme fees. Furthermore, certain regions have strict regulatory frameworks, such as PSD2 in Europe, that favour specific authentication flows.
Utilising local methods can help merchants navigate these requirements more effectively, minimising the risk of refusal due to non-compliance with regional security standards like Strong Customer Authentication (SCA).
Use cases
European E-commerce Expansion
Merchants entering the German or Dutch markets utilise Giropay or iDEAL to capture the significant segment of the population that prefers direct bank transfers over traditional credit card usage.
Latin American Market Entry
Retailers targeting Brazil implement Pix and Boleto Bancário to reach consumers who may not have a credit card or who prefer cash-based payment vouchers for online transactions.
Asian Mobile Wallet Growth
Companies scaling in Southeast Asia integrate digital wallets like Alipay or WeChat Pay to cater to mobile-first populations where credit card penetration remains lower than wallet adoption.
Global Subscription Services
SaaS providers use local direct debit schemes, such as SEPA in the Eurozone, to manage recurring billing with lower churn compared to expires or lost cards.
By the numbers
Industry data indicates this range for the share of online transactions conducted via local methods in several major European and Asian markets, highlighting the shift away from global cards.
Merchants often observe this level of increase in checkout conversion when introducing the primary local payment method in a new geographic territory, according to broader industry benchmarks.
Processing via domestic bank rails can reduce the total cost of acceptance by this margin compared to international credit card transactions subject to high cross-border fees.
Related terms
Talk to our team about a live rollout on your acquiring stack.
What you get with Local payment methods
- Integration of domestic bank transfer schemes across major European and Asian markets.
- Support for prominent regional digital wallets to facilitate mobile-centric commerce.
- Access to buy-now-pay-later services to align with regional consumer credit trends.
- Implementation of cash-based payment vouchers for regions with high unbanked populations.
- Automatic geographic detection to display relevant payment options at the point of checkout.
- Standardised reporting across diverse payment methods for simplified financial reconciliation.
- Support for local currency settlement to minimise merchant exposure to foreign exchange volatility.
- Compliance management for regional security protocols and mandatory authentication requirements.
- Unified API access to multiple regional providers through a single integration point.
- Reduced reliance on international card schemes to optimise transaction processing costs.
A short scoping call, then a written plan for your MIDs.
Questions about Local payment methods
How do local payment methods differ from traditional card processing in terms of settlement time?
Traditional card processing typically involves a standard settlement cycle, often two to three days, though this varies by acquirer. In contrast, local payment methods have highly variable settlement windows.
Some real-time bank transfers settle almost immediately, while others, like cash-based vouchers or certain domestic bank schemes, may take several business days to move from authorised to settled status.
Merchants should analyse the specific liquidity requirements of each method to ensure their cash flow management remains accurate and predictable.
What is the impact of local payment methods on chargeback and dispute management?
The dispute profile of local payment methods differs significantly from credit cards. Many bank-push payments and digital wallet transfers are inherently more secure and often do not carry the same chargeback rights as those provided by Visa or Mastercard.
For instance, once an iDEAL transaction is authorised, it is generally considered final with no mechanism for a consumer-initiated reversal. However, merchants must still provide a robust refund mechanism to maintain consumer trust and adhere to local consumer protection laws.
Are there specific technical requirements for integrating multiple regional payment options?
Integration complexity varies depending on the provider. A single API integration through a sophisticated PSP or gateway typically abstracts the underlying technical differences.
However, merchants must still configure their checkout UI to handle different data requirements. For example, a bank transfer might require a BIC or IBAN, while a wallet might require a mobile number.
Ensuring the front-end dynamically adapts to these requirements is essential for maintaining a functional user experience across different jurisdictions.
How does offering local payment methods assist with regulatory compliance in different jurisdictions?
Local methods are often built to be inherently compliant with regional laws. In the European Economic Area, many local bank-based methods are designed around PSD2 requirements, including native support for Strong Customer Authentication (SCA).
By using these methods, merchants can often bypass the complexities of 3D Secure implementation required for cards. Furthermore, domestic schemes are frequently regulated by local central banks, ensuring that the transaction flow adheres to specific national financial conduct and data privacy standards.
Can I settle funds in my home currency when using international local payment methods?
Yes, most global PSPs offer multi-currency settlement. If a customer pays in Brazilian Real via Pix, the processor can perform the currency conversion and deposit the proceeds in British Pounds or Euros into the merchant's account.
It is important to review the FX rates and conversion fees applied during this process, as these costs can vary. Some merchants prefer to maintain local currency accounts to avoid frequent conversion and to manage their own FX hedging strategies.
What is the role of a Merchant Category Code (MCC) when processing via local schemes?
While MCCs are primarily a card scheme construct used to categorise business types for risk and interchange purposes, many local payment providers also use similar classification systems.
The MCC can still influence how a transaction is treated by the underlying local bank or wallet, particularly regarding high-risk sectors or restricted goods.
Correct MCC alignment ensures that transactions are not blocked by the local provider's internal risk filters and that the merchant remains compliant with the provider's terms of service.
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