Ecommerce is growing steadily as a proportion of global retail sales, from 7.5% in 2015 to a projected 22% in 2023.
With such a vast online opportunity, businesses are thinking digital-first, but also cross-border by default. However, cross-border ecommerce expansion is not without its challenges, especially when it comes to payments.
Here we take a look at the main payment challenges you might encounter when supporting your company’s expansion into new markets.
1. Understanding the local market
Selling online means that you’re open for business 24 hours a day to customers all around the world. So, it’s easy to see why ecommerce seems a natural route to market for ambitious companies looking to grow.
But one of the barriers to cross-border growth is payment. Business goals and online sales may be global, yet payment remains a resolutely local affair. It’s no exaggeration to say that there are more local payment methods worldwide than trading days in a year.
Local or alternative payment methods include everything from cards and bank transfers to e-wallets and mobile wallets, cash-based payments and buy-now-pay-later options. And with local payment methods being the default way to pay in many markets, you need to understand which ones best fit your business and customers.
Understanding the local payment landscape isn’t straightforward. Nuances in the way people pay aren’t always clear at first glance. And that’s why the world’s most progressive markets partner with payment experts that have deep local knowledge in the markets they operate in.
2. Getting paid efficiently
International expansion can increase payment complexity. Think about it this way: if you add 12 different payment partners into your tech stack, that’s 12 separate contracts, integrations and project plans. And that’s even before you get paid.
You may have 12 different settlement dates. And have to agree on processing and settlement pairs for each local currency you accept, 12 times over. It’s no wonder that getting paid can quickly become unwieldy and inefficient.
It's a big problem. 72% of businesses aren’t receiving their preferred settlement currency. And 71% aren’t receiving their preferred settlement frequency, according to our research. That’s a pretty significant blow to treasury and liquidity management, especially in these straightened times.
3. Managing fraud risk
Fraud is a growing risk no matter what market your business is operating in. But there are markets where the risk of fraud — both friendly and deliberate — intensifies significantly and becomes a real challenge to overcome.
While you can’t expect to eliminate the risk, you need to think carefully about the safeguards you have in place to mitigate its impact. And balance these against the impact false declines may have on customer experience.
It’s a tricky balancing act. Your decisions will need to consider many factors, including each market’s unique risk profile, your sales volume and ambitions in the market. And you need granular data into your payment flows to make informed decisions.
4. Keeping ahead of regulatory change
Staying on top of these changes in just one market is challenging. And that complexity skyrockets the more markets you do business in. As a result, keeping up, let alone staying ahead of regulatory changes, is a full-time job.
But it’s non-negotiable, and falling foul of the rules can have a severe impact on your business in the shape of fines and penalties — or worse. Therefore, payment pros must find a way to stay compliant in an efficient and scalable way, so it doesn’t consume all your budget and resources.
5. Using data effectively
Data is the new oil. Yet unrefined oil has little value. You need to turn into something else — gas, chemicals, plastics — to be useful or profitable. It’s the same with data. You need to interpret and take action on your payments data to resolve issues or unlock additional value. Only then can data power better business decisions.
Part of the challenge is capturing the right data at the right level of detail. Not all payment providers can offer granular data: every transaction by every customer in every market. 65% of businesses we surveyed in recent research don’t receive detailed raw response codes on failed payments. But this is what’s needed to make smarter decisions to boost business growth.
You need to be able to access data easily and have full control over how you use it. Then you can refine it to be useful and profitable. Yet 41% of businesses do not receive any actionable analytics with their payments data.
And when you’re operating in multiple markets, you need a complete picture of how money flows through your business, from payments in, to payments out, so that you can fix problems — perhaps even preempt them.
Doing so will help you uncover new value more readily. And join up financial silos to improve liquidity and working capital efficiencies — that, if left unattended, can cause significant loss to your business.