As merchants expand into new markets, offering local and alternative payment methods (APMs) becomes critical to customer experience and conversion. However, integrating these options across countries is far from simple.
This post dives into the key challenges merchants face when supporting local/APMs globally and explores viable solutions—including merchantMerchant merchant An individual or business that accepts payments in exchange for goods or services. of record (MoR) models, local acquirers, and orchestration layers.
💡 Why Offer Local Payment Methods?
| Benefit | Impact on Business |
|---|---|
| Higher Conversions | Local methods often outperform cards in key markets |
| Customer Trust | Familiar checkout builds confidence |
| Reduced FraudFraud fraud Criminal deception involving unauthorized payments or use of financial credentials. | Local rails often have built-in authenticationAuthentication authentication A security process used to verify the identity of the user or cardholder. May involve passwords, biometrics, OTPs (one-time passwords), or 3-D Secure. layers (e.g., UPI PIN) |
| Regulatory Acceptance | Governments prefer merchants using in-country schemes |
| Lower MDRs | WalletsWallets wallets See Digital Wallets. and RTPs often cheaper than international card rails |
⚠️ Key Integration Challenges
1. 🏛️ Regulatory & Licensing
- Some countries require local licensing or entity setup to offer domestic payments (e.g., Indonesia, Vietnam).
- Data localization laws may mandate processing to happen in-country (e.g., India, China).
- BNPL providers and wallets may require direct approval or onboarding flow.
2. 💳 Lack of Local Acquirers
- In markets like Singapore, there’s often no local acquirerAcquirer acquirer A financial institution or payment processor that manages the merchant account, enabling businesses to accept card payments. Acquirers receive all transactions from the merchant and route them to the appropriate issuing bank. for certain APMs.
- Global acquirers may not support regional APMs (e.g., iDEAL, BLIK, ShopeePay).
- Risk of foreign exchange fees and low acceptance rates for out-of-country acquiring.
3. 🧩 Technical Fragmentation
| Factor | Challenge |
|---|---|
| APIs | No unified API across wallets or real-time rails |
| Authentication | Methods vary widely (QR, 2FA, app-based approval) |
| Refunds/Reversals | No standard for disputes, refunds, or failed payments |
4. 🧾 Tax & Compliance Complexities
- GST/VAT obligations differ per country—filing becomes a full-time job.
- Local tax IDs and reporting are required for settlementSettlement settlement The process of transferring funds from the issuer to the acquirer. or refunds.
- ChargebackChargeback chargeback A dispute raised by the cardholder that results in reversal of a transaction. Can lead to penalties for merchants. laws or consumer protection acts may apply to APMs.
5. 💰 Reconciliation & Settlement
| Problem | Outcome |
|---|---|
| Different settlement cycles | UPI may settle instantly, Paytm daily, PayPal weekly |
| Currency mismatches | Cross-border payments create FX spreads and reconciliation challenges |
| No centralized reporting | Makes accounting and auditing complex |
🛠️ Merchant of Record (MoR) Model: Simplifying Global Acceptance
The MoR model solves many of the above challenges by outsourcing:
| What MoR Handles | Benefits |
|---|---|
| Compliance & Licensing | You don’t need to register a local entity |
| Payment Acceptance | MoR integrates and supports APMs across multiple countries |
| FX & Tax Handling | MoR acts as local seller, handling tax, FX, and consumer refunds |
| Unified Reporting | One settlement and reporting file, even across 10+ countries |
Examples of MoR Providers:
| Provider | Focus Regions | URL |
|---|---|---|
| Stripe Atlas + Connect | Global (US Entity + PSP infra) | stripe.com/atlas |
| Paddle | Software/Digital goods | paddle.com |
| Reach | Retail, eCommerceeCommerce ecommerce Commercial transactions conducted electronically on the internet. Includes digital payments, shopping carts, and fraud prevention. | withreach.com |
| Digital River | EU, US, Asia | digitalriver.com |
| Payoneer MoR | Asia, Freelancers | payoneer.com |
🔄 Other Integration Strategies
1. 🌐 Local Acquiring Setup
| Requirement | Notes |
|---|---|
| Local entity | Often mandatory for onboarding |
| Bank account in-country | Needed for settlement in local currency |
| Integration | Direct or via local PSP |
| Use Case | Large merchants with significant volume (e.g., ShopeePay in SEA) |
2. 🧠 PSP Orchestration or Aggregators
Use global PSPs with APM plugins or modular orchestration:
| Provider | Features | URL |
|---|---|---|
| Checkout.com | Multi-country acquiring + APM support | checkout.com |
| Rapyd | Global wallet, bank rails, FX | rapyd.net |
| Adyen | One API for global acquiring, APMs, FX | adyen.com |
| PPRO | APM aggregator – plugin model | ppro.com |
| Assembly Payments | Australia/NZ wallet & PayTo infrastructure | assemblypayments.com |
🧭 Choosing the Right Integration Model
| Merchant Type | Recommended Model |
|---|---|
| Small/startup | MoR or PSP with local rails |
| Global SaaS | MoR with tax & compliance |
| Large eCom retailerRetailer retailer A merchant that sells goods or services directly to consumers. | Hybrid: PSP + local acquiring |
| Digital goods in SEA | MoR or wallet-focused PSP |
✅ Conclusion
Supporting local payment methods is no longer optional—it’s critical for success in global markets. But integration is not plug-and-play.
Merchants must weigh options like:
- Setting up local acquiring
- Using MoR partners
- Partnering with modular PSPs
With the right strategy, you can turn complex payment landscapes into a competitive advantage.
Vibhu Arya is a fintechFintech fintech
Short for financial technology, refers to tech-enabled innovation in financial services. and payments expert with 15+ years of experience simplifying how money moves across digital and retail ecosystems. He’s led strategy and partnerships at Citibank, Adyen, and IKEA, and helped scale fintech startups (Snapdeal, iPaylinks) to $1B+ valuations. Vibhu’s expertise spans cards, crypto, cross-border, and real-time payments. He is the founder of PaymentsPedia.com, where he writes about the future of payments.
📧 vibhu@paymentspedia.com | LinkedIn