When developing a game or an ecommerce platform for a new market, we always wonder which payment method works best. Will they accept Visa? What conditions apply to SMS payments? What are the restrictions and laws by country? Thanks to new technologies and the growth of digital transactions, specialized companies now operate in this sector. As a result, integrating payment gateways into our platform has become relatively straightforward. In this article, I will define each payment method along with its pros and cons. I will also discuss which markets they suit best and why.
Payment Methods
Credit/Debit Cards
Credit and debit cards rank as the most popular payment methods worldwide. Their main advantages include ease of use and relatively low fees. However, not everyone owns a credit card, especially among younger audiences. Another issue involves chargebacks, which apply only to credit cards rather than debit cards. When a user cancels a credit card payment, it creates an extra cost for the business. A single chargeback can cost around $50.
Bank Transfers
The platform generates an invoice with a unique identifier for the user. The user must then pay through online banking or at a physical branch. This method works particularly well in certain European countries. In Germany, for instance, it remains highly popular through providers like Sofort. However, the main drawback lies in the friction it creates. Requiring users to complete several steps means many abandon the process. Furthermore, bank transfers do not support recurring payments. This makes them unsuitable for subscription-based models.
Digital and Mobile Solutions
Electronic Wallets (eWallets)
Electronic wallets represent another widely popular payment method. They work through a virtual account for storing and transferring money. PayPal stands out as the most recognized eWallet globally. However, many others exist, such as Moneybookers, Paymentwall, and Clickandpay. Thanks to the wide range of options, we can choose the wallet with the best rates for our market. Users need a valid card linked to their virtual wallet. Therefore, eWallets share many of the same advantages and drawbacks described above.
Mobile/Phone Payments
Mobile payments function as a platform in their own right. As a result, we can find several subcategories within this method:
- Premium SMS: The user sends a Premium SMS to complete the purchase. Prices and regulations vary by country and operator. This method can significantly boost conversion rates. Nevertheless, fees prove extremely high, reaching nearly 50% with some carriers.
- Carrier Billing: This method shares the same pros and cons as Premium SMS. Instead of sending a text, the charge appears on the user’s carrier bill.
- Mobile eWallets: These apps link to a credit card for processing payments. They avoid carrier fees, yet feel more cumbersome for users. Fees typically range between 10% and 20%.
- Phone Call: Similar to carrier billing, this method uses landline premium numbers. The user dials a number and receives a code to complete the transaction. It helps users without internet access, though this scenario is increasingly rare.
Physical and Alternative Options
Prepaid Cards
Prepaid cards are unique physical cards with a set monetary value. They are typically designed for single use. They serve as the ideal option for gift-giving. Users can purchase them at stores designated by the provider. To complete a transaction, the user enters the card code on the platform. Therefore, prepaid cards work perfectly for younger audiences, especially during holidays. The main drawback is that fees range between 20% and 40% due to manufacturing and distribution costs.
Vouchers or Coupons
These methods emerged to eliminate the costs of prepaid cards. The user buys a voucher with a unique code at a physical store. Then they enter it on the platform to finish the transaction. Since costs only involve generating a printed receipt, fees drop to between 10% and 20%. In addition, vouchers prove ideal for users without bank accounts or credit cards. This makes them especially effective in markets with limited banking access.
Below, I share an interesting infographic from gamesmaketer.com showing the Top 5 most popular payment methods used by gamers per country.