What merchants expanding into MENA need to know
How payments drive success and failure for brands entering new markets
Selling online means you’re open for business 24 hours a day to customers worldwide. What’s more, because ecommerce shrinks time, distance and effort, it’s a win-win proposition for both customers and your business.
Customers aren’t restricted by what’s available in stores locally. Shopping online gives them access to more choice with maximum convenience — and maybe better quality and lower prices, too.
So, it’s no surprise that by 2022, up to 20% of e-commerce sales will be cross-border, valued at around $625 billion, according to research firm Forrester.
This is a huge opportunity for you to use ecommerce to expand into new markets. It’s quicker, easier and more cost-effective than opening physical stores everywhere you want to trade. That’s the theory, at least.
In practice, there’s a problem. Your ambitions may be global. And the internet may be a global platform. But — and it’s a fairly big ‘but’ — there’s no global way to pay.
Local payment powers global growth
On the contrary, payment habits are strongly local. They’ve developed over time and are formed by various factors. Many of these are cultural, some political or economic, others to do with technology or infrastructure. Payment preferences differ within countries as much as between them.
Generalizing for the sake of brevity, bank transfers are a popular way to pay online in Europe because of the high number of banked customers. Latin America has a high unbanked population, so e-cash is widespread through services like Boleto and OXXO. E-wallets, like Alipay, are popular in Asia. And mobile wallets are widespread in Africa with solutions like M-Pesa and Orange Money.
Letting customers pay their way, wherever they are, keeps things simple and convenient. After all, if customers are used to paying a certain way, why ask them to do anything different when shopping with you? Our research shows that not offering a customer’s preferred payment option was the biggest conversion killer. 56% of consumers said that if they couldn’t use their payment method of choice, it would permanently put them off shopping on a site.
Local payments are sometimes known as alternative payment methods, or APMs for short, but this is a misnomer. In some markets, the alternatives are mainstream; they’re the de facto way to pay online.
In the Netherlands, consumers make 60% of their online purchases using the local bank transfer payment iDEAL. And 57% of German consumers prefer to use PayPal when they shop online. Selling online to the Dutch or Germans without iDEAL or PayPal is just leaving money on the table.
When payment becomes painful
If offering local payment methods is simpler for customers, better for conversion and cheaper for you, why isn’t everyone doing it?
The short answer is: because it’s hard.
Simplifying payment choice on the customer-facing front-end pushes the complexity into the back-end. You and your payment providers may have to wrestle with different integrations for each local payment method.
This frequently also means separate contracts, separate project plans, separate settlement dates and individual reporting. For each payment method in each new market. Ouch!
Payment doesn’t have to be that painful. Some payment providers allow you to diversify into new markets quickly and easily with the same features wherever you grow. A global template gives you the flexibility to turn on additional sales channels, currencies, or value-added services as and when you need them.
Letting customers pay their way, wherever they are, keeps things simple and convenient.
Again, the ‘global template’ is a misnomer because the payment types will likely be local.
One integration with various API calls should mean you can automatically accept the most popular local payment methods. That’s all major international debit and credit cards and local schemes, such as Bancontact, Carte Bleue and Multibanco.
Then there are digital wallets, such as Apple Pay and Google Pay, plus a range of bank transfer methods — such as giropay, iDEAL, Przelewy24 — cash-on-delivery payments and buy-now-pay-later options, such as Klarna.
The antidote to payment pain
There is no winner-takes-all payment method. No global way to pay. The future of payment is payments. So, the key to success in new markets is allowing any customer to pay how they want. This means your payment solution must allow comprehensive, customizable payments as you expand into new markets or sectors.
In practical terms, this means having a solution that doesn’t require heavy resources to implement, maintain or enhance. A solution that makes it easy to build on and manage over time as new payment methods emerge and business or customer needs change.
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