According to Statista, by 2030, the global B2C cross-border eCommerce market is expected to reach $7.9 trillion. It’s clear that cross-border eCommerce is growing. And the appeal of expanding business online was heard loud and clear for example at the recent Payment Leaders’ Summit in Miami, at which many retailers were expressing interest in approaching other markets.
But there were also concerns they raised around the prospect of expanding cross-border. This article discusses five key considerations and includes recommendations to help retailers effectively transact online in other geographies.
Cost Questions
It should come as no surprise that cost is a key factor when it comes to expanding a business across borders, including regarding the payments piece of the process. If a business uses its existing acquirer in the UK to process card payments in a different geographic market, with no legal entity in that market, they will pay a higher fee to them for the effort of processing cross-border without a specific acquiring license in that market. So, using a local acquirer for payments processing in the market in which a retailer wants to sell online is the more cost-effective option due to a variety of reasons, including a better conversion rate and lower risk leading to the ability to provide customers the fee for local transactions which is lower than the one for cross-border transactions.
Local Acquiring and Local Payment Methods
Managing multiple acquirers, each which could have different fees, tools, and support structures, adds further complexity for retailers wanting to serve customers in these different markets.
To avoid the hassle of accepting transactions from different sources, connecting to multiple APIs, and reconciling the payments, businesses should look for providers that offer one platform that provides connections to the relevant local acquirers in the markets in which they want to sell, married with the local payment methods the customers in those markets desire, to reap the benefits that local acquiring provides, including stronger fraud prevention.
Reducing Complexity
On the topic of complexity, establishing relationships with banks in each of the desired markets and setting up local acquiring systems in those markets can be very complicated and take a lot of time. And once those systems are put in place, they need to be consistently monitored and maintained to ensure they are running optimally and are compliant with changing regulations – particularly given the evolving payments landscape and requirements of different markets.
When expanding online, businesses should look for payment solutions providers that offer one cohesive, consistently up-to-date, highly secure platform that can process transactions in those markets with the necessary payment methods, as well as be able to shift and syndicate payment volumes as appropriate.
Payment Orchestration
Dynamic transaction routing optimizes transaction paths to different acquirers in real-time, delivering many benefits and making it critical in today’s eCommerce landscape. It’s especially important when online businesses are considering selling cross-border. As retailers grow and enter new markets online, the need for payment processing becomes more complex. These changing requirements can be easily met by dynamic transaction routing, which provides the flexibility and scalability to readily handle higher transaction volumes and adjust to new geographies.
Why? The technology uses real-time data and sophisticated algorithms to dynamically route transactions through the best paths, accounting for various factors like performance metrics, payment method, currency, and location.
Static payment routing techniques, which rely on preset rules and fixed pathways, won’t work optimally for selling outside of the UK (or even inside, for that matter). Dynamic transaction routing adjusts to the distinctive conditions of every transaction, guaranteeing ideal performance and bolstering the probability of a successful outcome, regardless of the market.
Single Point of Contact
Businesses want a single point of contact for their cross-border (and domestic) payment-related questions and concerns. This is something that we heard many times over at the Payment Leaders’ Summit. This is especially important when dealing with different markets and time zones. If retailers have to jump through hoops to reach someone, they may take their business elsewhere. For transacting globally, a single point of contact is highly beneficial.
In Closing
Opportunities for online growth outside of the UK abound. To take full advantage of them requires the right payment processing solution and partner. Businesses should seek out ones that can successfully address the points above to help ensure they can transact cross-border with confidence.