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GUEST COMMENT How to handle cross-border digital payments

Payments is now an international affair

Cross-border commerce has become commonplace in the world of retail. As of 2018,23% of digital salesin Europe were cross-border, amounting to €95 billion.

Trading abroad is an incredibly appealing perspective for ambitious retailers who are already nailing their local sales, as it can lead to the business quickly doubling or tripling in size.

From a customer perspective, purchasing from one’s favourite online stores overseas has become a mainstream practice, thanks to big industry players, such as Amazon, which enable quick and convenient deliveries worldwide, meaning there is little difference between shopping locally or internationally in terms of experience.

Yet, expanding into new regions is not as easy as setting up new web stores in different languages: each country comes with its own currency, taxes, laws and regulations – not to mention customer preferences.

Retailers don’t have a choice but to consider these aspects when devising a payment strategy before growing their international operations. Let’s take a look at how merchants can refine the payment experience and win the cross-border commerce game.

Focus on the experience

Today’s savvy retailers know that creating a seamless and compelling buying journey is an inescapable duty for those seeking success. They also know that the shopping experience knows no boundaries: it extends across all the geographies a merchant trades in. The name of the game is therefore localisation. Because a one-size-fits-all approach won’t work.

This matters from the beginning of a buying journey right to the end, take for example the checkout.

Retailers can’t afford to design a sub-par checkout page for their international sites and they must leverage modern payment technologies to ensure their cross-border expansion is successful.

Every country is different when it comes to online payments, merchants must gather insight on how their new customers want to pay and what the most popular and available methods of online payments are in their region.

Credit cards are no longer the only or even the most popular option – alternative payment methods are rapidly gaining market share. If sellers fail to keep up with these local trends and don’t implement the preferred payment methods for each international site, they will have a hard time converting browsers into buyers.

Admittedly, managing many different payment options can be a pain. However, to make life easier, retailers can sell via a platform that supports multiple payment methods. Moreover, they can partner up with payment providers with cross-border capabilities, able to take payments in various currencies and identify the most suitable options for each region.

Stay safe

Fear is the sworn enemy of growth and innovation. In fact, many retailers often shy away from selling into new markets because they associate it with an increased risk of fraud. Likewise, shoppers may be hesitant when purchasing from international sites, careful not to surrender their funds and personal details to an unknown and untrusted retailer based miles and miles away.

Unsurprisingly, research shows that 36% shoppers abandon their carts due to payment security concerns. Consequently, excessively cautious merchants may resort to designing clunky checkout pages with a view to discouraging fraudsters, requiring customers to input lots of additional information, pass one or more CAPTCHAs, and go through similar tedious steps, just to make a purchase.

All this friction during the buying process is a known conversion barrier. Of the shoppers who abandon their carts, more than one in four cite a long or complicated checkout process as a reason they didn’t buy, causing a conundrum for retailers. The more difficulties customers encounter on the way to the buy button, they less likely they are to click it.

So how can vendors protect themselves and thier customers from fraud when shopping on their site, while preserving the seamlessness of the transaction? For starters, they can look to implement easy and intuitive authentication methods such as push notifications and SMS-shared codes. Sellers should also consider deploying smart fraud detection solutions which leverage artificial intelligence to flag questionable transactions and suspicious reseller activity. The aim is to avoid saying no to legitimate transactions and improve the checkout experience for all international shoppers.

Play by the rules

One of the most challenging aspects of cross-border commerce is keeping up and complying with local payment regulations. Each region has different rules for sales and use taxes, and requirements for digital merchants are rapidly evolving.

Naturally, there are value-added taxes (VAT) and goods and services taxes (GST) to think about. Another area to be mindful of is currency conversion: at the moment, payments in EU currencies that are not euros may still be subject to a currency conversion fee – however, some virtual banks offer cards that allow users to convert to a different currency with no additional charges.

To navigate the many minefields connected to international eCommerce, merchants shouldn’t underestimate the value of a knowledgeable ally: it would be wise to team up with experienced tax advisor with a thorough understanding of the market with its rules and practices.

As well as this, technology is a crucial component. Merchants should ensure their payment solution is able to automatically collect tax, charge the correct amount based on local rules, and update itself continually as these change.

Expanding into new markets can be an exciting new chapter for a retail brand and it may be tempting to jump right into the mix and worry about details such as payments and regulations later. This approach, however, can lead to costly mistakes.

Unsuitable payment options may put off shoppers and cause them to turn to local competitors; and unsafe websites or clunky checkout pages with convoluted authentication processes can have a similar effect.

Finally, payment settings that don’t comply with local regulations will land retailers in considerable trouble. However, with sufficient planning and the right technology on their side, vendors can smoothly manage their payments to satisfy their global customers and drive cross-border success.

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