Cross Border Payment Mistakes To Avoid
For many online merchants the opportunity for e-commerce growth now lies in overseas markets. Many domestic markets (particularly in Europe) have matured with high Internet penetration and e-commerce rates. However, in overseas markets there may be opportunities to sell goods or services in e-commerce markets that not yet reached maturity, compete with domestic merchants, or sell products that are not available in that country.
Before launching on a new market it is worth considering the pitfalls that other online merchants have already succumbed to. Below we outline some of the most common cross border payment mistakes to avoid.
Thinking globalisation means standardisation
The most common mistake is to approach cross border e-commerce as a one-size-fits-all exercise and not consider the specific market and country requirements on a local level. Localisation of an e-commerce website goes beyond translating product pages and other content, instead it needs to delve deep into the specific needs of that market. Those needs and desires include everything from the types of goods the target customer will be interested in, to the style and tone of content and how the business communicates with them; and of course the currency and payment methods offered by the merchant.
Make ‘think globally, act locally’ your maxim and review all aspects of the online customer journey with this in mind.
Failing to optimise the payment gateway for cross border payment processing
Many merchants translate and localise the e-commerce website with product descriptions in the target language, shopping baskets, FAQs etc., but fail to localise the payment journey once the customer clicks ‘pay now’. Faced with a payment gateway page in a different language, pricing not in their local currency, and unfamiliar payment methods, this is a common reason for cart abandonment.
By working with a global payment service provider you can optimise the payment journey using tools such as dynamic currency conversion (DCC), which converts the cost of a transaction into the cardholders’ local currency but pays your business in your base currency. Foreign exchange rates are fixed at the point of sale.
Not using local payment methods
Another pitfall is to presume that customers in a new market will want to use the same payment methods as customers in your domestic market. Credit and debit card payments are popular in the UK and many European countries, but not all. Our advice is to offer the three most popular payment methods for each market; so that the majority of customers will find at least one trusted payment method they recognise and have experience of using.
For many markets and countries this means offering alternative payment methods (APM) such as direct debit, e-wallets, bank transfer, or digital currencies. To learn more about APMs download our whitepaper that provides an in depth exploration of the APM landscape including country preferences and penetration rates.
Ignoring ‘mobile first’
M-commerce (making online payments using a mobile device) is increasing globally. There are two main factors in m-commerce growth. In mature e-commerce markets growth has been achieved through online payments on desktop devices, and many consumers still prefer to use a desktop or laptop when making an online transaction.
However this is changing as consumers are gaining confidence in using mobile devices to purchase goods and other payments such as online banking. This is driven by improved security, mobile-friendly websites, and mobile technology such as banking apps, mobile wallets etc.
In less established markets, e-commerce growth is synonymous with m-commerce. This is especially true of emerging and developing markets, where Internet access is often solely available on smartphones. For example in India where 70% of Internet users exclusively access it on a mobile device.
As a result, when developing cross border e-commerce strategies knowing what device your customers are using is just as important as knowing what country they are resident in. Optimising your online customer journey for m-commerce goes further than having a mobile responsive website – one that scales to fit the device being used – but needs to be designed specifically for a friction free payment experience.
Not using dynamic payment tools for cross border e-commerce
There is a wealth of tools available to merchants that can improve the payment process and increase conversion. These include fraud detection and prevention solutions that can be optimised to provide additional security in high risk markets or for high risk transactions (such as payment by invoice which is popular in Germany). Conversely these can also be used to increase conversion for low risk transactions by streamlining these payments and removing some friction points. Intelligent tools can also be used to offer customers their preferred payment methods based on data provided by the customer, and to route transactions to the best acquirer for that market.
Your payment service provider can advise you on all aspects of payment processing, including optimising your organisation’s payment gateway for smooth, convenient and quick transactions, and advising your business on merchant accounts and acquiring services.
If you want to talk to a payments expert about any of the subjects covered in this article and for advice on cross border e-commerce, get in touch with our team. Call +44(0)8082564381 or email [email protected]