Many businesses today see selling products in new markets as a growth opportunity. Appealing to a wider array of customers within the U.S. or even as far as the European Union or East Asia can help merchants reach new customers and potentially increase their revenues.
Expanding into a new market — even one as geographically close as Mexico, for example — would present a number of logistical hurdles that many businesses may not be equipped to handle. Credit and debit card penetration in markets like Mexico is still low compared to the U.S. For example, so many of Mexico’s consumers who might be interested in purchasing their products may not have credit or debit cards to pay for their purchases.
A business expanding into Mexico would then be faced with the question of which payment methods it should adopt to cater to its Mexican customers. It would also have to find a way to ensure that its payments processes are compliant with the country’s regulatory requirements and that the process accounts for the cost of foreign exchange (FX) rates. The business would also need to address all these issues without sacrificing its user experiences, ensuring that its Mexican consumers can shop and pay on its sites with the same degree of ease, speed and convenience as its U.S. customers.
This is a set of logistical difficulties with which eCommerce marketplaces like eBay are all too familiar. PYMNTS recently spoke with Keala Gaines, eBay’s head of global payments services, to understand how the platform’s payments strategy has changed over the years as well as to understand the role payments has played in helping it grow from a small operation to serving business and consumers across 100 countries with 27 international sites.
“I think a key differentiating point for eBay as a platform is the extensibility of how easy it is for a seller to list and expose [his or her] inventory to buyers around the globe,” she said.
Ensuring seamless payments between buyers and sellers is a core part of that experience. This allows merchants to focus on selling products without worrying about having the payments acceptance capabilities of their own.
“Sellers should be able to focus on making sure that they have the right inventory at the right price, and they’re getting as many eyeballs on their inventory as possible,” said Gaines.
This means eBay has had to continuously change its payments operations to adjust to shifting market preferences both at home and abroad, leading to a dynamic payments orchestration strategy that accounts for shifting market dynamics.
Global Reach, Local Payments Solutions
EBay made its first foray into cross-border commerce in 1999, when it launched sites in both Germany and the United Kingdom. This not only marked the platform’s first exposure to consumers outside the U.S., but also the first time it adopted a payments solution for the express purpose of serving an international clientele. This meant allowing German consumers buying from merchants on eBay’s platform to pay using direct debit payments, for example, which transfer funds directly from their bank accounts.
The company has had to take a very different approach to localizing its payments for other international markets, such as South America. Card penetration in South America is still relatively low and consumers have a stronger preference for cash compared to North America and Western Europe. It is not uncommon for consumers in these markets to pay for eCommerce purchases in cash. This system of cash-based eCommerce purchases — “Boleto” in Portuguese-speaking Brazil and “Boleta” in Spanish-speaking South American countries — allows consumers to pay for goods purchased online by printing out their payment information and submitting cash payments to their local general stores, bank branches or other brick-and-mortar locations.
“Historically, we have been, of course, limited in our ability to accept those if they don’t ride commercial rails, so they would have needed to eventually translate into card rails or a PayPal form of payment, something along those lines,” Gaines said.
This means that payments made in South America must go through the extra step of being transferred into an account, in addition to having to be made in cash at a brick-and-mortar location. This underscores the nuances that must be taken into account when tailoring payments experiences to local audiences.
Strategizing, Adapting, Growing
A dynamic payments orchestration strategy not only addresses the need to accept varied payment options across borders, but also the need to adjust the strategy as businesses — and their surrounding markets — evolve. It is for this reason that eBay’s own payments offerings have changed as it has expanded overseas.
“The ability to service things like Apple Pay and Google Pay in the U.S. … obviously, 10 years ago, those weren’t something that we needed to consider, so I think the world is changing. It’s changing really quickly,” said Gaines.
The platform has had to add several new payment options to its platform during the 25 years since its 1995 founding, including digital wallets and PayPal, which became its primary payment service provider (PSP) in 2003. The next step in the evolution of the eCommerce platform’s payments strategy is set to occur in July, when it will drop PayPal as its back-end PSP in favor of another provider, which could help support more than 200 different payment options from around the globe.
Gaines hopes the move will help eBay provide its merchants with more flexible payment services that match their local users’ preferences. The goal is to aid their merchants by enabling customers to pay using methods they are comfortable and familiar with.
“Our payment strategy is, you know, a big part of that flexibility, and being able to serve our sellers with a more seamless experience and give buyers more relevant choice is scaling globally,” she said.
Gaines also pointed out that managing working relationships with many payments providers at a time is par for the course in the world of eCommerce, and something that can be challenging for merchants to handle, which can get in the way of their ability to scale their businesses. Developing a comprehensive payments orchestration strategy can thus help businesses overcome the logistical challenges that come with expanding into new markets.
As reported by PYMNTS, the COVID-19 pandemic is driving more consumers online to shop and pay, and their rapidly changing shopping habits are forcing merchants, too, to rethink their digital strategies.