Entering the global arena of ecommerce is a complex undertaking that requires a complete reevaluation of major business functions, including how they are each impacted by expansion into international markets. While marketing, fulfillment, taxes and compliance are all major factors when creating a cross-border commerce strategy, some extra time and consideration should specifically be allotted for optimizing global payment strategies.
The following are the key elements in developing a strong cross-border payments strategy to maximize the speed and efficiency of going global.
Payment And Financing Options
Offering local buying experiences, including the currencies and financing options shoppers expect, is one component of expanding and competing with both local and other global vendors. By providing international customers with their preferred payment methods and giving them the ecommerce experiences they demand, brands are poised to achieve a better ROI.
This is compared to simply implementing a wide variety of payment choices without consideration of what shoppers want specific to their region. This has not gone unnoticed — for reference, in a 2021 survey (download required) of 137 online merchants, respondents supported an average of almost 11 currencies globally. Compared to the 6.1 currencies supported by merchants surveyed in 2016, efforts to localize the buying experience have almost doubled as merchants work to meet shopper demands.
To determine preferred methods, brands should make the effort to conduct sufficient market research, with the option to utilize IP address recognition software. Both can help you understand preferences and offer localized payment options that customers in new markets are looking for. This could be the difference between a lost sale and a converted customer. One survey in 2020 found that about 48% of shoppers surveyed abandoned a purchase because they could not use their preferred payment method to check out.
Consumers also have varied financing preferences in different markets; adjusting to country-specific pay periods, as an example, helps provide localized choices for customers buying based on their most recent (or upcoming) payday. Look at PayPal (a partner of Digital River): in the U.S., customers can opt into Pay in 4, compared to the U.K.’s option of Pay in 3 due to different paycheck cadence. Having clear and upfront messaging about the options available before customers reach the checkout page will help alleviate any buying pressures experienced, especially for purchases on the more expensive side.
Partnering With Experts
Brands that want to expand their global reach can also identify partners who have experience with navigating the nuances of global commerce. As cross-border ecommerce transactions, according to the 2021 survey mentioned above, can be 11% more friction-filled for consumers than domestic transactions, businesses must take the proper steps to mitigate inconveniences for consumers when purchasing globally.
Partnering with an expert can help lessen the stress of expanding into global markets. When it comes to selecting a payments system provider, look for one that has experience operating within each new market you would potentially want to enter.
Additionally, having a partner that already has firsthand knowledge of the quirks and challenges of these markets will help accelerate the time necessary to enter these areas and decrease some of the barriers to entry.
Optimizing Technology to Face Challenges
The world of payments is complex and only gets more complicated on a global scale. Some of the greatest challenges, for example, are false declines. These are defined as legitimate credit card purchases that are wrongly declined by the card issuer. Largely attributed to the rapid expansion of global ecommerce, it has become a growing problem for merchants and is projected to grow even more to a costly $443 billion by this year.
Having an in-country processor to route transactions can help avoid these types of declines — which can be damaging for businesses. One survey showed 39% of consumer respondents would not shop again with a merchant that falsely rejects their order. In some cases, technology can help payments systems mitigate some of these errors by using machine learning to route transactions intelligently to restrict the number of these instances. Other strategies like dynamic transaction routing and retry logic can also help merchants maximize the likelihood of authorized purchases by automatically routing payments in a way that limits false declines.
The bottom line? Global ecommerce grew at an unprecedented pace in 2020, as the pandemic forced retail shoppers to look online amid lockdowns. While 2021 has seen global ecommerce stabilize to a certain degree, cross-border purchases remain on an upward trajectory with sales estimated to reach $627 billion this year. Brands should make sure they’re not missing out on this lucrative opportunity by developing a strong cross-border strategy to capture these new markets and expand to new audiences. Having an optimized payments system and the right partners to support this global acceleration will ensure a smooth and confident expansion.
Interested in learning how Digital River can help your brand craft a strong cross-border payments strategy to increase global revenue? Connect with us today.