Imagine you want to purchase something from your favorite brand’s website but when you get to the checkout screen, the price is in a foreign currency and the only payment methods accepted are unfamiliar debit and credit cards or a bank transfer.
That is the reality for many international shoppers when trying to purchase online from American retailers. Often they can only pay in U.S. dollars, using only Visa, Mastercard, or PayPal. The result: a less than desirable customer experience and, ultimately, shopping cart abandonment.
Introducing localized payment methods
For one retailer we work with, the demographics of its shoppers in the UK and Germany were similar but sales conversions for German shoppers were two and a half times less than their British counterparts. Analysis of transaction data revealed that 75 percent of the company’s German shoppers were abandoning checkout at the payment page—even after they had already spent time filling in all the delivery details. The retailer offered the same payment methods for both the UK and German shoppers; however, these payment methods were not the preferred means of payment in Germany.
Once this retailer enabled the payment methods preferred by Germans—ELV (electronic direct debit from German banks), Sofort, GiroPay, and PayPal—conversion rates increased significantly and cart abandonment decreased dramatically. The introduction of country-specific payment methods almost doubled checkout sales figures for this company.
Not everyone uses Visa, Mastercard, or PayPal
Visa, Mastercard, and PayPal are accepted in many but not all countries, and, even when accepted, they are often not the most popular payment methods. In many places, restricting your shoppers to only these forms of payment may prevent many would-be consumers from clicking to buy.
Here are just a few examples, four of which comprise more than 40 percent of the world’s population:
Nearly half of all online credit card purchases are made in installments, which require connections with local Brazilian banks. Local cards—such as Aura, ELO, and HiperCard—and Boleto Bancário, a cash-based option similar to a bank transfer, account for nearly 30 percent of Brazilians’ ecommerce payments. (Source: Adyen, “The Payment Method Mix,” August 2013.)
Consumers overwhelmingly prefer to pay with local debit cards. The four largest debit card companies — AliPay, Tenpay, Union Pay, and 99bil — account for more than 85 percent of the market. (Source: Chinabriefing.com, June 4, 2014.)
Credit card payment market share ranks as one of the lowest in the world. Online banking, debit cards, e-wallets, and prepaid cards are the most popular methods for online payments in India, accounting for over 50 percent of the market. (Source: Adyen.)
Payment methods vary significantly. Although 80 percent of Danes prefer credit or debit card, only 32 percent of Swedes do so. Payment by invoice is very popular in both Sweden and Finland. (Source: PostNord, “Ecommerce in the Nordics 2014,” May 2014.)
Most consumers prefer bank transfers and e-wallets such as WebMoney over credit cards. By inserting cash into a host of widely available cash terminals, they can increase the value of their e-wallets for use in transactions. Another popular service, Qiwi Virtual Visa, lets customers deposit cash at Qiwi terminals and receive a text message with details that enable online purchases. (Source: Adyen.)
Payment is a core component of a successful global ecommerce experience. For many of your cross-border customers, providing localized payment methods is absolutely essential for a satisfactory ecommerce experience, and, therefore, critical for cross-border ecommerce success.
So when you are looking at partners who can provide payments capabilities, look for companies that understand your target market and the importance of localization. At a minimum, they should provide all the currencies and most popular methods of payments for your targeted customer base.
In addition, make sure the partner uses robust fraud detection and management technology. Ideally, this entity should absorb all the fraud risk if a customer uses a fraudulent card.
Furthermore, look for financial settlement policies that are retailer-friendly.
For example, can you receive settlements in your currency of choice? Can you receive next-day settlements or weekly settlements instead of monthly? Do you get regular, thorough reports that show, for instance, sales by product category, country, and payment type? Other helpful information includes data on fraud detection rates or shopping carts cancellations.
Remember, if you offer your cross-border customers locally preferred payment options, they will enjoy a much more positive shopping experience, be much more likely to click to buy, and be much more likely to return to your site. Ultimately, your brand will reach a larger global audience.
Ahmed Naiem is Chief Commercial Officer at global ecommerce and logistics management firm eShopWorld.