Online retail sales are projected to reach $5.8 trillion by 20241 – and as increasingly more online shoppers make purchases from international websites2, retailers are hard-pressed to consider global markets within their business model.
Bank of America Merchant Services, alongside its solution partner, BlueSnap3, recently hosted an educational webinar for companies looking to sell products online in other countries. These are the four main points our experts highlighted during the webinar:
More international consumers are shopping on foreign websites each year, but half of the leading U.S. online retailers don’t currently ship outside North America4 – meaning retailers are turning away a significant amount of potential business. Tapping into this untapped market is key to gaining market share and profit.
When surveyed about why they have yet to expand internationally, retailers mostly cite concerns about fraud and global payment processing. And with good reason; cross-border orders require more sophisticated eCommerce systems than domestic orders because of policy considerations and risks related to international transactions.4 Fortunately, retailers can integrate global payment platforms to help solve for these concerns.
A major challenge of selling to customers in different countries is meeting a variety of payment expectations. Consumers want to make purchases in their local currency with payment methods that are familiar to them, whether that means using cards, bank transfers, e-wallets or one of the growing number of alternative payment methods.
“We call them alternative payment methods (APM), but they’re really the dominant payment tender used by consumers in foreign markets,” says David Ades, executive vice president, general manager and head of North America sales at Bank of America Merchant Services. Alipay, WeChat Pay, Mobile Pay and more already account for the majority of global online retail payments.5
With hundreds of APMs and currencies already available, retailers must focus on accepting those that are most prevalent in the markets they wish to target. For example, in Sweden about 40% of all eCommerce sales are made through the APM Klarna.6 If a business wants to develop a consumer base in this region, accepting Klarna is crucial.
Customizing the payment experience to each region doesn’t just improve the customer experience, it can greatly impact sales as well. Data shows local payments increase conversions by up to 6% and provides retailers with the highest probability that the transaction will authorize and process, and not be flagged for fraud.7
Of course, operating in many different countries and accepting a multitude of currencies and payment options carries the possibility for increased levels of fraud. As the payment is being transmitted, a fully integrated global eCommerce solution will automatically enact velocity checks and behavioral analytics to confirm the legitimacy of the payment and source.
For example, a business could implement fraud protection rules that flag purchases over a certain amount, or multiple purchases made in the same day. Artificially intelligent algorithms can customize to a business’ patterns to recognize the types of payments considered routine, and reject transactions deemed outside the norm.
This form of real-time fraud scoring, alongside rules-based authorization and machine learning, can help reduce a business’ overall exposure and cost of fraud without compromising accuracy or optimization rates.
The more information a business has, the better it can optimize the user experience in foreign markets. As with any market, new global customer bases must be scrutinized to identify unneeded costs and areas of opportunity.
Consolidated reporting can help companies analyze payment trends including checkout and payment conversion rates by location and payment type, and provide a complete view of the purchase process from gateway to settlement. It can also help keep tabs on interchange rate management, card network advocacy, payment routing optimization and processing costs. Real-time access to such data, including funding, disputes and fees, can further drive business decisions.
Today 62% of retailers use multiple payment processors to address their global needs.7 As a result, their internal teams are challenged to reconcile data from separate systems. With multiple platforms come more friction points as companies face the prospect of building different processes around each APM and currency, including integrating fraud mitigation add-ons specific to each region in which they do business.
Integrated eCommerce solutions can help minimize the friction caused by multiple platforms. These solutions help companies build a payment infrastructure that accepts the currencies and APMs most relevant to their global goals. What’s more, they simplify processing by offering one API, one settlement contract and one financial statement.
“To unlock their growth potential, retailers must combine a global strategy with a local approach,” says Derrick Carpenter, executive vice president of integrated payments, digital commerce and marketing at Bank of America Merchant Services. “An optimized payment solution should provide the necessary framework for companies to do business in the countries of their choosing without the difficulty of dealing with multiple integration and connection points.”
Global eCommerce, already a potent force for businesses, will only grow more prevalent over the coming years. As it virtually eliminates borders between retailers and consumers, expanding digital commerce is a requirement for business growth. Says Ades, “The companies that get a foot in the door now are the ones that will benefit most down the road.”