The cross-border payments space underwent a digital shift during the pandemic. Consumers turned to online channels out of necessity, sparking a surge in digital profiles and eCommerce transactions. As a result, 81% of merchants who enabled cross-border payment methods on their sales platforms saw a subsequent rise in their consumer counts.
However, cross-border payments technology is not as straight forward as other payment platforms, as retailers must consider the different payment preferences and currencies of each region they serve. This often leaves consumers unhappy with the time it takes to send and receive payments for products and services, potentially damaging the brand’s reputation and jeopardizing the opportunity for repeat business. Businesses can reduce or mitigate such risks by investing in the payments technology that is most popular in the geographical locations they plan to serve. For example, Chinese consumers prefer to pay using AliPay or WeChat Pay, while U.K. consumers strongly prefer debit or credit cards.
In the latest “Cross-Border Retail Payments Tracker®,” PYMNTS examines how international retailers can use localized payment methods as a way to attract a broader audience and boost revenue streams.
Around the Cross-Border Retail Space
Cross-border eCommerce sales are rising and showing no signs of slowing. A recent report found that cross-border sales are anticipated to reach $1.2 trillion in spending globally by 2022. The European market is particularly hot, with its countries accounting for $340 billion of the world’s cross-border spending. The recent cross-border successes are sparking merchants’ interest in direct-to-consumer (D2C) sales as a way to expand their businesses into other regions. Researchers conclude that domestic merchants must incorporate international shipping and sales into their processes or risk stunting future growth.
Foreign exchange (FX) is a major pain point for global retailers, especially as cross-border businesses gain momentum in eCommerce. Merchants must adhere to the constantly fluctuating exchange rates of their buyers’ currency while mitigating FX risks. Larger organizations often have in-house staff to address such concerns, but small- to medium-sized businesses (SMBs) may not have access to resources and tools to safeguard their revenues from the impacts of FX. Many SMBs are hiring outside partners to assist them in traversing such challenges, while industry analysts discuss cryptocurrency as a possible solution.
For more on these and other stories, visit the Tracker’s News and Trends.
Voda Swimwear on How Localized Payment Options Boost Cross-Border eCommerce Sales
The evolution of the cross-border eCommerce payments space in the past 21 months is nothing short of incredible. COVID-19 restrictions and the subsequent acceleration of digitization increased users’ comfort level with overseas transactions. Yulia Drummond, CEO of Voda Swimwear, explained that businesses who want to be successful in this space must incorporate technology that enables them to sell products across various regions and countries. With more than 200 different payment types available on the market, however, companies face challenges when choosing which payment methods are right for them.
To learn more about why localized payment methods are critical to the success of cross-border merchants, visit the Tracker’s Feature Story.
Deep Dive: Cross-Border eCommerce Boosts the Global Economy
The cross-border eCommerce market witnessed rapid growth during the pandemic. As more users grew accustomed to making transactions online, the demand for speedier and more secure services followed suit. However, this is a big ask for a market notoriously recognized for its friction-filled services, with more than one-third of customers complaining about slow cross-border transaction times. Seventy-three percent of those same respondents said faster payment completion would sway them to use such services, solidifying the need for rapid innovation of the cross-border payments space. The first step for merchants is to educate themselves on the payment preferences of each region they serve to offer customized solutions that make the payment experience more seamless and accessible for the customer.
To learn more about how localized payment options can help boost merchants’ conversion rates, visit the Tracker’s Deep Dive.
About the Tracker