Comment: International payments – One size does not fit all
When it comes to mastering international payments you will need a structured and holistic approach.
By Realex Payments
Internet connectivity supports truly global e-commerce transactions, with buyers and suppliers able to come together regardless of any geographical obstacles. Growing confidence in online payment systems, more efficient and reliable logistics, and lower international shipping costs will help cross-border purchases to top $100 billion this year.
One Size Does Not Fit All
International e-commerce is a complicated environment. Having a clear understanding of the various elements that influence online success is critical. Just as an awareness of local customs and business practices is important for any overseas expansion, it also needs to filter through to e-commerce strategy.
Businesses planning to expand their operations internationally need to do better than a ‘one-size-fits-all’ approach. Customers, whether they are individuals or businesses, want to feel understood. Knowing how people prefer to operate and catering to their needs will make a big difference when it comes to attracting traffic and securing conversions. For example, providing a range of appropriate and familiar payment options will help customers feel comfortable and secure when making cross-border purchases.
Developing an International Payments Strategy
When it comes to mastering international payments you will need a structured and holistic approach, built around 4 core areas…
1. Revenue Channels
Firstly, you will need to identify the channels through which you want to accept payments, whether it is via your website, call centre, IVR, recurring payment, m-commerce or social commerce. This may seem obvious, but many revenue opportunities are channel-dependent. Despite this, it is important to look at each channel independently when addressing issues such as privacy, fraud prevention and method of payment.
2. Localised Payment Methods
When entering a new market it is essential for online retailers to offer the payment services that local customers know, use, and trust, whether this is by card or an alternative payment method. However, there are hundreds of alternative payment methods to choose from. Accurate usage statistics are notoriously difficult to obtain, making service selection a real challenge. Setting up and managing these services can also be time-consuming and expensive – not to mention an unnecessary distraction from core business activities.
In Germany, for example, only 30% of all online purchases are made using a credit or debit card. Services like Sofortueberweisung and Giropay, two real-time bank transfer services, are popular alternatives. There is also evidence of low card penetration and a high prevalence of alternative, non-card payment services in other large, established online markets, such as Spain, Poland, Sweden and the Netherlands.
Given the complexity and variety of alternative payment methods, selecting a partner who understands all these methods in detail is critical to ensuring international success.
3. Controls
Next you will need to consider whether to price your goods in a local currency, or offer alternatives such as Dynamic Currency conversion, or even dynamic pricing. In addition, how your authorisations are routed and your funds settled need to be considered, along with the associated foreign exchange risks, processing costs and accounting implications.
When it comes to e-commerce, the major UK banks have international reach and will offer European or even global acquiring licenses. The introduction of the MasterCard Internet Gateway Service (MIGS) has further extended the global reach for some payment service providers, who now have access to a growing number of acquiring banks around the world. This enables merchants to process International payments in the customer’s country of origin, often reducing processing costs and transaction decline rates.
4. Hygiene Factors
Finally, do not overlook system uptime and customer service when selecting an international payments partner. Poor service will quickly damage your brand and send customers looking for an alternative. Make sure you have a responsive partner, who is available when needed and able to accommodate new requirements.
Realex Payments will be at the Retail Bulletin’s Multichannel Retailing Summit 2012. Sponsored by eDigitalResearch, the theme of the day is ‘Driving ROI through profitable, engaging, seamlessly integrated and consistent multichannel strategies’. Make sure you don’t miss this important event – click here for further details.
