In 2019, eCommerce accounted for 14.1% of sales made worldwide.
By 2040, that number will be 95%, according to Nasdaq.
This prediction was made back in 2017, which means that we might get there sooner than expected due to the pandemic. We’ve already seen this acceleration happening in 2020, with global retail sales declining by 3%, but eCommerce sales increasing by 27%. For this reason, most experts believe that eCommerce will continue to be a dominant sales channel for both brands and businesses once the pandemic subsides.
What’s even more interesting is the fact that it’s cross-border commerce, not domestic eCommerce, that has grown the fastest. According to a McKinsey report, the second quarter of 2020 brought in huge growth in both shipment volumes and value of merchandise sold. Alas, the increase of cross border eCommerce also came with an increase of 6% to 10% in merchant payments’-acceptance costs (almost $15 billion more).
How can eCommerce companies take advantage of the boom of globalised commerce without drastically increasing cross-border payment costs? We look at a few payment opportunities for eCommerces looking to grow both domestically and internationally.
5 Payment Opportunities
1. Localization of Payment Methods
Not every country uses the same payment methods. Consumers want to use payment methods they are familiar with and will favour a merchant that offers their preferred payment method over one that doesn’t. Nigerians, for example, who are based in a country where over half of its adults are unbanked, will prefer paying with cash. Then we have the Swedish, based in a country that is planning on becoming 100% cashless by 2023, where cash will soon not be accepted as a payment method.
This doesn’t just mean offering the correct payment methods, but also understanding the underlying habits. For example, in Brazil, most people use credit cards, however these are not enabled for international transactions. This means most consumers will therefore prefer to use a local payment method over their credit card. What about Paypal? It also depends on the country. In Germany, for example, 32% of users prefer Paypal, while this is only true for 6% of the Spanish population. Implementing local payment methods or the most popular international payment offers a key payment opportunity for eCommerce companies that want to increase their conversion rates in other countries.
2. Providing an omnichannel payment experience
An omnichannel payment experience essentially means offering a consistent experience across, mobile, desktop and offline. Consumers all around the world are used to the likes of Google, Uber and Instagram that offer a seamless user experience and a very comfortable payment experience. These big tech companies are able to adapt to customer needs while offering a consistent experience across the board, blurring the lines between “online” and “instore”.
eCommerce companies can still offer an omnichannel experience without having to turn into the next Amazon. For example, click and collect, one-click purchases and QR code returns are all part of the omnichannel experience and are often only one integration away. With click and collect, consumers can purchase an item online and pick it up in-store, avoiding costly delivery fees. With one-click purchases, consumers can buy their product on one page, instead of having to check out through a separate “basket”. Not only do these tools offer consumers a better experience, but they allow eCommerce companies to gather much more actionable and comprehensive data on their customers’ habits.
3. Integrate with other company systems
Integrating a payment system within an eCommerce’s ERP or CRM may sound like a small step, but the benefits are often exponential since they have the capacity to drastically reduce many different manual processes. Here are some of the benefits of integrating a payment system:
- It saves time: integration means there’s less manual input and fewer Excel spreadsheets. All data can be automatically updated and less time is spent correcting human errors.
- More flexibility: merchants can partner with third parties that offer a modular solution that meets a specific demand. For example, partnering with a specific provider to offer a local payment method. This is a lot faster and more efficient than trying to build a solution from scratch and offers more control over services and data.
- Higher security: modular solutions that are designed for a specific task are a lot more secure and safe since they are built by specialised, licensed third parties. This reduces the risk of fraud and the cost of compliance.
- Better reporting: having all information on one dashboard makes it easier to be transparent, eliminate errors and helps merchants spot more opportunities for user personalisation.
4. Fraud prevention and risk management
With more digital consumerism comes a higher risk of becoming a victim of fraud. Whether it’s phishing, identity theft or a credit card fraud, fraud attacks effectively doubled in the first half of 2020. And consumers are aware: people are warier of sharing their personal details online now than ever.
To make matters more complicated, different countries face unique issues when it comes to online fraud. For example, in countries where credit cards are popular, such as the US and Brazil, merchants must offer a credit card chargeback solution. Consumers from countries that prioritise privacy, such as Germany and Switzerland, will prefer purchasing from a merchant that implements two-factor authentication when completing a payment.
Keeping up with compliance, new regulations and localising fraud solutions is time and money consuming. Merchants can circumvent the risk of fraud and build customer trust by partnering with a payment service provider that offers fraud management within their solution. These payment providers that specialise in modular solutions have the teams in place to offer robust KYC and AML, and can also offer much more detailed data analytics that enables continuous monitoring of customer transactions.
5. Providing tools for online conversion
The final step of the purchase - the checkout - is a key part of the buyer journey. As it’s often the case in the payments space, a great payments experience goes largely unnoticed, while a bad one might put the buyer off altogether. Focusing on offering the best possible experience can drastically increase online conversions. Here are some tools and tips for improving online conversions:
- Make sure the payment experience is fast and efficient.
- Reduce the number of abandoned carts by offering discounts.
- Use tools such as payment links, which offer a secure payment page for consumers.
- Host the entire payment experience on one page.
- Offer localised payment methods on checkout.
- Make sure the payment system can be integrated on various devices.
- Minimise the steps between order and payment.
- Add a customer loyalty programme with the option to save payment details for future use.
These tips can be implemented by using the correct tools that can help manage risk, handle payment data, embed payments forms and link loyalty to specific cards.
Merchants that are looking to expand internationally and are looking for payment solutions to help streamline their expansion should partner with an experienced payment provider that can help with all of the above points. At FinXP we offer a range of payment solutions such as an omnichannel payment gateway and IBAN payment accounts. Together, these are ideal for cross-border trading and allow merchants to handle all the main payment methods. Transaction fees are competitive, merchant accounts are a lot easier to open and multiple currencies can be accepted. With an established payment provider, merchants can take advantage of the cross border eCommerce boom without spending months building internal solutions.
Interested? Reach out to us on email@example.com to get started with an omnichannel payment gateway.
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