The global payments ecosystem has long been dominated by a handful of credit card networks whose ubiquity and availability have enabled seamless cross-border commerce and helped businesses sell to customers all over the world. Visa and Mastercard process the overwhelming majority of global card transactions, creating an unprecedented concentration of payment infrastructure risk for businesses operating internationally.
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However, recent geopolitical tensions, sanctions, regional sovereignty initiatives, and growing concerns about dependence on foreign-owned financial infrastructure have prompted governments and businesses to reassess payment resiliency and explore alternatives. In Europe, for example, the European Payments Initiative continues to develop and expand the availability of Wero, an alternative card network now operational in Belgium, France, and Germany.
Diversifying payment strategies does not come without operational risks, technical complexities, and costs. Countries often have unique rules and regulations, and integrating each new payment method can drain internal resources. However, in an increasingly complex global economy, the ability to accept and process many different kinds of payment methods across multiple regions is a competitive necessity. Adopting a modern payment orchestration platform can alleviate much of this burden, giving global businesses the agility to quickly add new payment methods across geographies, all while maintaining compliance.
Why Businesses Should Protect Themselves from Potential Disruption
Global businesses would also be wise to proactively plan for this potential disruption by expanding the payment options they offer their customers. Here are four strategic reasons why global organizations should act now to begin diversifying their payment options:
- Reducing Reliance and Increasing Resiliency
Relying so heavily on two dominant card networks reduces resiliency and increases risk. If access to Visa or Mastercard is limited even temporarily, businesses risk immediate disruption, including subscription payment failure, delayed cash flow, failed recurring billing, supply chain interruptions, and customer dissatisfaction, all of which can lead to churn and lost revenue. By diversifying payment methods to include ACH or peer-to-peer apps like Venmo or CashApp, businesses can reduce dependency on any single provider and ensure revenue collection continuity.
- Preparing for Increased Payment Sovereignty
Individual countries and economic unions, like the EU, are eager to increase technical sovereignty and reduce reliance on technology infrastructure from other parts of the world. This includes establishing regional ownership and control of payment systems. Businesses that diversify payments will be better positioned to comply with new regulations and mitigate any business interruptions should new rules that enhance sovereignty and limit the use of global card networks emerge.
- Meeting Evolving Customer Preferences
Customer payment preferences and behaviors continue to shift and evolve. In some corners of the world, credit card usage has already seen notable declines in favor of any number of alternative payment schemes. By offering a broader mix of payment options that extend beyond traditional credit cards, global businesses can future-proof their operations, improve conversion rates, and deepen customer satisfaction and loyalty by offering the payment options buyers are likely to prefer.
For B2B businesses processing large volumes of transactions, card processing, interchange, and cross-border fees can erode margins and become one of the largest costs associated with accepting payments. In many markets, account-to-account payment methods can be significantly less expensive than card transactions, helping businesses reduce costs while preserving margins.
While the disruption of major card networks may or may not materialize, global businesses should not rest on their laurels waiting to find out. Acting now can turn payments uncertainty into a strategic business advantage.
Author Bio
Gavin Cicchinelli is President of BlueSnapa payments technology company and division of PayRoc, a leading payments platform and merchant acquirer.
