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4 Tips To Consider When Selecting Cross-Border Payments System

By Ingenico ePayments

By Julian Wallis - Country Manager UK&I at Ingenico ePayments

Look around the globe and you’ll see cross-border payment volumes growing several times faster than domestic payments. The opportunities for online merchants to expand overseas have never been greater, but it’s important also to recognise the risks and local nuances that must be carefully navigated. Payments should be considered at every stage of the expansion programme. It’s important to offer customers a simple and familiar payment gateway, maintain security in a new fraud landscape and do business through newly emerging online channels. 

According to a recent Forrester report, global cross-border B2C ecommerce will more than double over the next five years, reaching USD $4.24 bn by 2021. This trend is apparent in all regions of the world; in Argentina, 40% of digital buyers made a cross-border transaction in 2015, compared to 45% in Brazil and 60% in Mexico and Canada.

Looking to the future, European cross-border ecommerce sales are projected to grow 27% YoY for the next three years, while in the US there will be 130 million cross-border shoppers, spending $300bn. Similar growth projections have been made for China, Japan and Australia, some of the world’s most developed ecommerce markets. 

Savvy shoppers are increasingly looking overseas for more competitive pricing and a broader range of goods and services. For many merchants struggling against a saturated domestic market, the factors pushing them overseas can be as compelling as the obvious pull factors attracting them into new markets. However, the process of taking your business overseas can present an unfathomable web of complexities. Payments technology is too often considered at the end of the international expansion strategy. To succeed cross-border, it is important to recognise that a solid and secure payments strategy is embedded in every step of the expansion plan, not just at the final step of the checkout.

Here are some tips for growing eCommerce faster in 2017.

1. Cut through complexities that close off potential markets

National ecommerce markets differ widely in terms of payment types, currencies and the complexity of regulations. In 2016, Ingenico ePayments conducted a survey of UK online retailers in partnership with Internet Retailing titled Passport to International Sales which found that one in ten retailers are totally dissatisfied with their international payments and that over two-thirds (69%) of respondents believe localisation is very important or vital to success. Localisation of the customer journey is essential but it’s also important to measure and benchmark your progress against the local standards and competitors. 

Localisation

Merchants must be sensitive to regional cultural nuances; localising payment options, currency and language is essential to building trust and increasing conversion. Popular payment methods vary hugely across the globe; in the Netherlands it’s iDeal, China is dominated by Alipay and UnionPay and in Latin America Pago Fácil and Boleto Bancário are popular. Make sure you support the most popular payment methods in each market and also consider invoice payments, deferred payments and bank transfers, which are widely used around certain parts of the globe.

The world’s four major currencies (the US dollar; the Euro; Sterling and Renminbi) cover a significant proportion of the globe but the local currency should always be a priory for retailers. Customers paying in a foreign currency won’t know how much they are really paying until they receive a bank statement that quantifies the exchange rate. Similarly, offering the local language and a secure, familiar-looking layout at the checkout will help clarify the process and build trust with the customer. Without these assurances, customers will not hesitate to abandon the transaction and may never return. 

Measure, learn, apply and repeat!

By understanding your data fully, you stand a much better chance of dismantling barriers to success. Benchmark your data in local markets and against local competitors. An 85% authorisation rate may be excellent in one country but poor in another. This understanding will bring your data to life and provide you with the invaluable information to guide your expansion project.

2. Check out at super speed 

No matter where you’re selling across the globe, a speedy checkout is always critical to boosting conversion - 25% of dropouts occur due to payment friction. Checkout friction can be caused by checkout ‘noise’ (such as distracting banner ads and upselling links) but in most cases it comes down to confusing, unfamiliar and time-consuming online processes.  

One clear solution is to offer an array of popular payment wallets that already store customer card details. For customers using PayPal, Apple Pay, Android Pay, Squirrel or Neteller, this is by far the easiest and most secure way to pay. For customers outside of the digital wallet, tokenisation is a useful solution for driving conversion while at the same time assisting with PCI compliance by reducing the scope. If customers don’t have to repeatedly enter their card details every time they shop, they’re much more likely to return to the site and complete more purchases.

Too many ecommerce sites also ignore the importance of a mobile-first payment page. Smartphones turn idle commuters into ideal customers – it’s never been so easy to browse through items and build a shopping cart but too often the checkout lets merchants down. Mobile phones represented 46% of global ecommerce traffic in Q2 2016 but just 27% of purchases, according to Criteo, indicating that conversion rates are suffering on mobile devices.  New and exciting mobile payment technologies are now coming to the fore and merchants that fall behind will be left on the shelf. 

3. Build a multichannel future 

Demand for a multichannel experience means consumers expect to be able to browse in-store but order online for convenience, or they may choose to click & collect if they’re not available to receive deliveries. eCommerce, mobile and contactless payments have made these new shopping behaviours quick and easy. Retailers need to meet demand by offering a flexible service that allows them to do business anytime, anyplace. A variety of touch points will also allow companies to gather comprehensive data and build a far deeper understanding of their customers’ preferences and behaviours, regardless of time or location.

New channels such as social media and ‘conversational commerce’ are now fast approaching. Already, 56% of consumers who follow brands on social media sites do so to view their products and 33% of ‘social shoppers’ use social media to browse for potential purchases. Although this trend is still in its infancy and volumes will take time to mature, it is clear that consumers are becoming increasingly comfortable with the idea of not only browsing on social media but also using it to buy. 

Merchants are already benefiting from social media commerce as a marketing tool but as millennials, who have truly embraced mobile technology, become the most influential customers in the ecommerce space, shopping via social media will become a critical new channel. It will be a few years before it becomes mainstream, but this is just one instance of how we must be thinking ahead and identifying future opportunities. 

4. Don’t tip the balance in fraudsters’ favour

As the global fraud landscape evolves with new threats and more aggressive strategies, online merchants are doing whatever they can to protect themselves. Juniper Research estimated in June 2016 that annual spending on online fraud detection solutions will rise by 30% over the next five years to hit USD $9.2 bn a year by 2020. Security is essential to protecting revenue and reputations, but the danger is that fraud measures will become counterproductive, turning away too many genuine customers on suspicion of fraud. Often, customers shopping from a different device, location or time of day are rejected by overly sensitive fraud rules, and may never return.

Take a business overseas and the risks multiply again. With different vulnerabilities in different territories, retailers must decide how best to manage fraud abroad and where to draw the line when it comes to understanding local custom and risk profiles. If retailers don’t have the right fraud checks in place before they start trading overseas, they risk costing themselves money and having chargebacks cut into profits.

Data analytics are essential for quickly identifying which chargebacks to challenge and which to accept, making the dispute process as effective as possible. PSPs that provide a dedicated team of fraud experts will allow merchants to leverage insights within different markets, creating the optimal balance between fraud protection and sales conversion, ultimately improving ROI and the bottom line. These services become even more important during peak sales periods. Ahead of promotional periods, payment gateways can prepare for increased demand and ensure that fraud rules are correctly configured, ensuring they do not to block legitimate transactions (false positives).

Go further, go faster 

All four corners of the globe are now connected in commerce by an intricate maze of payment pathways. It is a maze that requires scientific navigation based on a precise understanding of local trends. Merchants in a new market will typically invest huge efforts into bringing customers to their site and through to the checkout, but if the payment system is too cumbersome or unfamiliar they are likely to abandon the purchase. A tailored payment system, based on local knowledge, is critical to converting traffic into sales.