Solving Payment Processing Challenges is Key to Global Ecommerce
By: Carl Venter
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Payment processing is one of the biggest challenges in overseas expansion.
This was originally posted on LinkedIn.
In ecommerce, if customers can’t find an easy way to buy your products, they won’t buy them at all. While this poses a challenge for web developers, UX designers, and marketing executives, at the point of purchase it all comes down to payment processing. And when brands look to expand in new international markets, challenges are often magnified. Before establishing new operations across borders, brands should consider the payments challenges involved and formulate a strategy that minimises disruptions and eliminates barriers for customers.
Challenges to international ecommerce
One of the biggest ways to lose sales in new international markets is to enter without insight into the preferred payment methods in that particular region. In many African markets, for example, people prefer to pay by text message. In some Asian markets, customers prefer apps like WeChat to conduct transactions, effectively turning the messaging system into their digital wallet.
If your ecommerce channel is not set up to accept these kinds of payment methods, expect higher instances of cart abandonment. To add insult to injury, you will make a poor first impression: not providing preferred payment options signals a lack of cultural understanding and consumers will be far less likely to want to develop a relationship with your brand.
Another major barrier to international sales is the array of local regulations. Things like taxes, fraud detection, local laws, and trade regulations all present challenges to companies looking to operate in new markets.
When you also consider the complexity of logistics and product security for those selling physical goods, the collective challenges to global ecommerce represent a significant risk.
Payment service providers
A major key to overcoming these obstacles is to partner with a payment service provider (PSP) that has the infrastructure and regional insight to properly manage your payment processes in the countries you wish to do business. Some PSPs have the ability to treat international transactions as local transactions leading to higher approval and conversion rates. Not all PSPs operate in every global market.
If you are a company that wants to branch out into a new market where your current PSP isn’t strong, you’ll have to develop new relationships with other PSPs. These kinds of changes can be costly and come with security concerns. This is why it’s crucial to understand the scope of your global growth efforts from the outset and choose a PSP that operates in as many markets as possible, offering terms that are conducive with your global strategy.
The rise of digital wallets
The next challenge on the horizon for international payments is the rise of digital wallets as consumers’ preferred payment method. Services like Apple Pay and other mobile-connected payment systems represent the next chapter of streamlined payment options. As global consumers adopt these services, it will be up to companies to design and market their payment processing services accordingly.
Successful companies will capitalise on early adoption and position themselves as leaders in technical innovation.
But as fast as these services are growing in popularity, we’re already seeing the next wave of innovation approaching. Companies have developed technology that allows people to pay with their fingerprint, something that would revolutionise the way payments are processed. These innovations represent as much of an IT challenge as they do a strategic challenge for brands to continually update their ecommerce experience.
While we live in a global society, many companies still underestimate the challenges that accompany global ecommerce. With strong cultural insight, the right payment service provider, and strategic foresight to incorporate new technologies into a brand’s ecommerce channels, companies can find significant opportunity while mitigating their financial risks.