If you’re selling to international customers, you already know the importance of tailoring your offering to local markets. From website language to currency choice, every element of localisation that you undertake will impact your success in selling internationally. And the potential for success is significant – recent research suggests that global cross-border e-commerce is set to grow at twice the rate of domestic e-commerce every year until 20201. Just to put that into perspective, that’s an annual growth rate of 25% to $900 billion2.
Merchants wanting to expand their business into new global markets to sell cross border need to consider accepting local payment methods – or risk higher drop off rates from their customers
The role of payments in cross-border ecommerce
When it comes to cross-border ecommerce, the payment methods you offer to international customers are key. According to recent research, 47% of online shoppers have abandoned a purchase at checkout, with over 60% saying they did so either because their preferred payment method wasn’t available or the payment process was too complicated3. That’s a lot of unconverted orders and a great deal of untapped potential revenue.
We already know that the majority of web-based businesses accept credit and debit cards online, so what other payment types do international customers prefer? Well, around 50% of all online purchases worldwide are paid for with alternative payment methods at present, including real-time bank-transfers, prepaid vouchers, e-wallets, local cards, payment apps, cash-payments for online purchases, crypto-currencies, and payments via ATM machines4.
What’s more, new research strongly indicates that the use of alternative payment methods will continue to rise online, possibly even surpassing credit and debit cards5.
Market preferences and the evolution of payments
The payment preferences of customers varies dramatically depending on many factors, one being customers’ nationalities along with the payment trends of their peers. Customers in many parts of Western Europe and China are partial to digital payment systems (for example PayPal or AliPay). A recent report from Nielson estimates that a whopping 86% of Chinese respondents used e-wallets last year (primarily through online payment giant Alipay and WeChat Pay). While bank-transfer style payments prevail in Germany (with 68% of respondents) The Netherlands (56%), Italy (55%) all preferring digital payments over traditional card-based methods6 .
In developing markets – where credit card ownership is low – the trend shifts again. In the same Nielson report, cash on delivery is popular with shoppers – 57% of respondents in Poland and 59% in Saudi Arabia preferred this payment option to buy online last year. For either developed or developing markets, failure to offer locally preferred payment methods means you risk alienating large portions of your audience – and you may lose out on valuable revenue.
Technology and the evolution of payments
The payment and ecommerce industries are guided by ever-improving technology and changing customer preferences. As technology evolves, consumers move towards payments that are quick, convenient and keep their funds secure at all times.
Look at the growth of Alipay and WeChat Pay in China – both relatively new payment platforms – which together enabled US$2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase in the past four years7.
Another example is real time bank-transfer service iDEAL — which emerged in 2005 — and now has a 56% market share in the Netherlands8. Along with other players, such as SOFORT in Germany, this makes real time bank-transfers the single most common alternative online payment type in most countries.
Understanding your audience is crucial to your success when selling internationally. Offering relevant payment methods at checkout makes your business appear to be local, instills trust and creates a seamless payment experience for international customers.
How can Realex Payments help?
Alternative payments don’t need to be complex. As your business grows and expands to sell beyond borders, you need a payments partner that can help you adapt to local markets seamlessly and with confidence. To help businesses expand cross-border, Realex Payments has launched over 140 alternative payment methods to complement a multilingual checkout and worldwide coverage on the ground in 54 countries.
To find out more, visit www.realexpayments.com or phone +353 (0)1 702 2000 / +44 (0) 20 3026 9659 to talk to a member of our team.
1 & 2.Source: DHL The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity
3.Source: PPRO Crossing Borders: The Evolution of online payment methods (Report)
4.Source: Global Alternative Online Payment Methods: Full Year 2016
5.Source: YStats Global Alternative Online Payments, Second Half 2016
6.Source: Nielson: Global Connected Commerce Report 2016
7.Source: Social Networks, E-Commerce Platforms and the Growth of Digital Payment Ecosystems in China – What It Means for Other Countries (UN Report)