eCommerce and International Senior Segment Manager at Barclaycard examines the issues of cross-border payment.
THERE'S NO denying the fact that cross-border ecommerce (CBEC) – is a massive opportunity for growth for retailers. In fact, the combined global market value now exceeds $1 trillion, with no signs of slowing down.
The reasons for this are well-known: as well as the availability of goods at lower prices outside the consumer’s domestic country, and a greater availability of different brands and products, the rapid rise in internet usage, alongside the increasing use of mobile devices in emerging markets – is also driving growth. Combined with improved payment options and more sophisticated shipping choices, it’s easy to see how CBEC is becoming increasingly important to all retailers.
When it comes to CBEC, mobile shopping in particular is responsible for a considerable increase in transaction volumes. While the United States may have the largest volume of mobile sales (estimated at more than $88bn (£60bn) in 2016, according to Internet Retailer, it’s widely acknowledged that the real growth in mobile commerce comes from China, Latin America and Europe. M-commerce growth in China, for example, is forecast by Ibid to be over 200% this year.
The UK online market is poised to take advantage of this growth. Some ecommerce sites are highly developed, with globally recognised brands offering either localised versions of domestic websites, or the capability to accept numerous currencies – via different payment methods – on their UK site. While these are great building blocks for attracting and servicing international customers, the majority of online retailers can do more to attract international shoppers, and convert them into paying customers.
As shoppers become more accustomed to the online payment options and customer experiences they have in their home country, they may have a different set of expectations after landing on your UK homepage. Take a shopper from the US, for example, where m-commerce continues to grow in popularity, with more shopping done through apps than through browsers.
However, these shoppers are not browsing mobile optimised websites; rather, they are downloading retailer apps as a much quicker, more convenient way to shop. Practically speaking, this means they no longer have to fill out a payment page – instead, a thumbprint can authorise the transaction. This simplifies the whole payment process into a singular action.
And it’s not just the US shopper, Chinese and Latin American consumers are increasingly bypassing the desktop site in favour of an app, giving them the freedom to shop and pay wherever they are, whenever they want, quickly and easily.
When these types of international consumers land on a UK site, their expectations may not match what retailers can offer. According to a recent report from Barclays, while 44% of retailers expect desktop sales to decline over the next five years, 70% didn’t offer either a mobile-optimised website, or a mobile app. Retailers will need to invest more in mobile solutions in response to shifting consumer behaviour in the UK – however, for the US shopper accustomed to a quick, slick and painless shopping experience, the lack of not just an app, but a coherent mobile experience, may be reason enough to click away from your site.
For UK retailers, the lesson is clear: the international consumer will look for the same mobile experience they have with their domestic merchant on your site, and in order to meet that expectation, a mobile optimised site is a minimum.
Once UK businesses nail the basics, they can build in other features that both match customer demands and increase their bottom line. One example is accepting any of the multitude of different currencies that can be used for online payment, which is especially important as online shoppers often tend to prefer to have the option of paying in their own currency. Geo-locating shoppers via their mobile, and then dynamically serving up the local currency gives the shopper not only the confidence to pay, but also a better customer experience as they speed through a faster checkout.
A multicurrency settlement solution and multi-lingual payment pages allow merchants to display a range of different domestic currencies on their product pages, as well as the ability to accept many different payment methods, including PayPal and iDEAL.
"US, Chinese and Latin American consumers are increasingly bypassing the desktop site in favour of an app"
Security is also an ever-present concern, not just for cross border merchants, but for all online retailers – and for good reason. Current estimates indicate there are 2,000 cyberattacks every day worldwide, costing the global economy about £300bn a year, according to Google and McAfee. For a number of merchants, Internet Authentication, or 3D Secure (3DS), can sometimes be seen as a barrier to conversion, with customers expected to remember yet another password, using language that is not that easy to understand – and by no means mobile friendly.
Developing economies in Latin America, Asia and even Europe, such as Romania, have less well established fraud prevention capability, and therefore online fraud is at higher levels than more established online markets, such as the US and UK. For online retailers to have confidence accepting transactions from these markets, they have to understand what the patterns of consumer behaviour are that are hitting their website and then tailor the dynamic capabilities of 3D Secure appropriately.
A number of factors can trigger 3D Secure, ranging from the relatively simple such as where the transaction originated, what the value of the transaction is, and where the purchasing card was issued - to the complex, such as a combination of these, and more.
What is clear, however, is that a simple ‘one size fits all’, where the default settings are left in place, are no longer appropriate for the sophisticated international shopper.
UK retailers have real challenges to meet if they want to attract and retain cross-border shoppers in today’s interconnected world. The good news is, none of these challenges are insurmountable, and indeed overcoming them can drive substantial benefit for merchants. By first catering for the global growth of m-commerce through a mobile-optimised site – or even better, a dedicated app – UK retailers will have mastered the basics. Layer on top the capability to accept multiple payment options and intelligent 3DS systems, and the merchant will be well on their way to international success.
Customer experience is key in CBEC, so ensuring an on-the-go customer halfway around the world can pay for their goods as smoothly and quickly as possible while on a bus, or tram – or simply sat having a coffee – will pay dividends.