The old saw about thinking globally but acting locally has never been more important than it is right now in the world of global payments.
And it’s easy when you do the math.
The digital-first economy has not been limited to the U.S. or EU; it has taken hold internationally. So, if merchants want to be where the growth is, they will have to master cross-border payments. And in this area, there is no shortage of complexity. Businesses outside of their domestic markets need partners that offer local payment processing, which speeds transactions for consumers and provides them greater flexibility in payments.
It has been a key focus of late for global commerce solutions provider Digital River, which understands partnerships’ effectiveness, having closed agreements with 43 technical and system integrator partners in 2020 — an increase of 290 percent over 2019. On top of that, the company rolled out a drop-in payment feature in January that allows companies to quickly begin taking and processing localized payment methods around the world on their websites without customization.
Digital River CEO Adam Coyle told PYMNTS’ Karen Webster that this type of collaborative back-end processing model is lowering the barriers — and the trepidation — often associated with global expansion and local payment processing.
“The real evolution we’re seeing is the opportunity to act like a local, not just on the consumer-facing ‘skin’ of the transaction, but also in the back-end through local fulfillment and local processing,” he said. “It’s not just working with a local processor but actually processing the transactions as a local merchant, which we know drives increased authorization rates, better sales and better conversions.”
Payments Are Key
Payments are at the very center of this back-end experience, Coyle said. The way he sees it, the payments experience doesn’t just consist of moving money from point A to point B. It’s a more holistic experience that incorporates pricing, payment channels and nuances such as gauging whether something like buy now, pay later is an appropriate option to offer in a specific market.
When a company gets all those components right, back-end becomes practically inconsequential to the consumer, he said. This makes them feel more confident with their transactions and helps squelch any doubts regarding the seller’s location or reliability. In fact, Coyle said he sees this holistic payment experience as central to the evolution of cross-border commerce as the sector grows.
“The value that can be driven off the payment and the transparency in the experience with the consumer is really the key,” he said. “So, I think you’re going to see a very exciting but almost opaque evolution in global cross-border eCommerce as we continue to refine the solution around the payment and the whole transaction. I think in five, 10 years, you’re not going to think, ‘I’m buying this from China.’ You’re going to think, ‘Hey, this is the product I need, and I’m just buying it.’ And it’ll be here in a day or two. And you’ll never have a worry.”
Cross-Border Payments Help Drive Businesses Forward
Coyle said he also believes that snapping the cross-border payments piece of a client’s puzzle into place helps businesses evolve successfully.
“It’s interesting,” he said. “The journey that we see a lot of merchants taking, particularly as they evolve in the cross-border world, is that they start with an ignorance-is-bliss strategy saying, ‘Hey, I’ve got these international customers. I’ll just ship stuff,’ and they’re not really worried about experience, and they’re not really worried about compliance. And as long as they can figure out how to get paid, then it’s OK.”
He said such merchants will then often step up to marketplaces such as Amazon, but that’s an expensive solution that not only causes them to lose control of their brands, but also stands in the way of building a deeper relationship with their consumers. It is better to work with third-party providers that understand a merchant’s goals and keep the decision-making and growth strategies on their side of the equation.
However, before more merchants take such a path, Coyle said he sees several friction points centered on accepting local payments as well as tax, fraud and compliance issues.
“We see a lot of inefficiencies and a lot of disconnects between those things because they’re using solutions that don’t talk to one another,” he said. “And that continues to be a source of friction for companies that are getting to success in the online global cross-border game. You reach a certain level where you’re not efficient anymore, particularly when you’re starting to think about expanding out of the first offshore market and into more onshore markets.”
Still, with companies like his and the partners that work with Digital River easing and integrating the back-end experience for merchants at all stages in their evolution, Coyle remains positive regarding the growth and consumer acceptance of global transacting.
“I mean, it’s exploding and bringing possibilities to merchants, even ones that are already established in cross-border sales, but also ones that haven’t really been thinking about it because they were too scared of the complexity,” he said.
How can a merchant know when the time is right to expand globally? Coyle said he believes that the process is an evolution, and one that’s not necessarily been as smooth as it should be.
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