While most U.S. consumers use credit cards regularly, the reality is different in Asia, where online shoppers often opt for alternative forms of payment like China’s UnionPay and South Korea’s Naver Pay. However, L2’s Insight Report: Online Payments shows that global brands have been slow to adapt to those local options – losing out on potential revenue.
In China, where WeChat’s payment service Tenpay accounts for one in five third-party online payments, only 6% of global Index brands offer the payment option. In contrast, all department stores with significant market share offer Tenpay on their e-commerce sites, in addition to other popular payment methods like UnionPay and 99Pay. WeChat is far ahead of other platforms in terms of creating an online commerce ecosystem, making this a significant misstep.
The story is the same in South Korea, where cumbersome payment security measures aided in the spread of homegrown payment systems like Naver Pay and Kakaopay as well as mobile systems that invoice online purchases through monthly phone bills. However, as elsewhere in Asia, Index brands have yet to adapt to these local offerings. None integrate Naver Pay, and only 13% offer mobile payment options.
In Japan, where credit infrastructure is more developed, most shoppers use credit cards. But 28% do not use digital payments at all, preferring to pay for items in person. This led to the development of services like Konbini, which lets customers pay for online orders at local convenience stores. Yet just one in four global Index brands offers this option. Meanwhile, it is offered by all seven department stores with significant local market share – suggesting once again that global brands are losing out to local players.