Selling online requires diverse, comprehensive payment approaches that fit each market in which merchants wish to transact.
Consumers in the U.S. tend to prefer credit cards, for example, while 71 percent of China’s eCommerce sales are conducted with digital wallets and 21 percent of online shoppers in Colombia pay with cash on delivery.
eTailers thus cannot take a one-size-fits-all strategy to offering seamless checkout experiences around the globe. Providing this convenience is critical during the coronavirus pandemic, which has seen shoppers going online to purchase items they need.
Merchants usually turn to payment service providers (PSPs) to enable various online payment capabilities so that their businesses can add options to their websites and support app checkouts in different markets. Each PSP typically provides a limited range of payment offerings, so merchants that integrate with only one PSP may be unable to provide localized payment mixes to all their international customers. Integrating with many different PSPs to reach that broader payments mix can be time consuming and costly, however.
This problem inspires some sellers to instead integrate with only a single payment orchestration platform (POP) to provide access to various PSPs as well as other payment support functions, including reconciliation, checkout optimization, payment routing and data analytics. POPs can also provide advice about the most appealing options and approaches in each market, helping eTailers make wise decisions about which new connections to add. This helps online businesses offer shoppers the experiences they demand, save internal efforts, minimize integration costs and invest more resources in their core businesses.
Consumers and merchants are particularly reliant on engaging with each other via eCommerce during the COVID-19 pandemic. Sellers that can create positive impressions therefore stand to convert new customers and create deeper relationships that will persist even after the crisis is over. Stay-at-home orders are persuading eCommerce holdouts to venture online, too, creating new customer bases. Merchants with locally tailored checkout experiences are best equipped to serve this new need. The merchants that permit easy shopping during such trying times will firmly prove themselves to existing customers.
Failing to meet customers’ needs both during and after the pandemic risks upsetting shoppers, which can harm international eTailers’ business operations. Shoppers are quick to walk away from online purchasing processes that do not please them, with U.S. companies seeing 71.9 percent of site visits resulting in customers leaving without buying the items in their carts in 2019. Businesses in Spain saw an 86.2 percent cart abandonment rate that year, while those in the Netherlands experienced a 65.5 percent abandonment rate. Merchants must thus ensure their payment offerings are convenient for different customer bases if they wish to reduce such numbers.
Attentiveness to local purchasing preferences can help merchants avoid stumbling blocks and continue selling worldwide during the pandemic. This month’s Deep Dive examines international shoppers’ online payment desires, and how global merchants can work with POPs to streamline their payment processes and improve checkout experiences.
Payment Method Access and Ease Across Markets
Helping customers complete online purchasing often hinges on providing the right options at checkout, and consumers who are already stressed by the pandemic may be intolerant of purchasing frictions.
A 2019 report examining online cart abandonment across 11 markets found shoppers gave up on purchases 20 percent of the time because the payment method they wanted to use was not available. The merchants experiencing cart abandonment here had done the hard work of identifying customers and maintaining their interest in products up to the point of sale (POS), only to lose out because the payment options provided were not suitable. Those businesses must then start over with new customers and hope that the same problem does not happen twice or revise their checkout offerings so unsatisfactory experiences do not cost them future sales.
Customers want to quickly and seamlessly order what they need and will likely not continue shopping with merchants that provide inconvenient experiences. This is particularly true during a crisis like the COVID-19 pandemic, which has many turning to websites to procure essential home goods, personal care items, groceries and educational materials. Being a trusted go-to supplier during both normal and emergency situations requires knowing what consumers need, how best to reach them and how they want to pay.
Merchants working to improve their payment experiences must be aware of the factors that contribute to consumers’ transaction preferences. Some shoppers only have access to certain mobile wallets or credit card brands and are thus unable to transact if the methods they use are not offered — a fact which could keep them from obtaining the goods and services they need. Just 30.1 percent of Brazilian adults over age 25 owned credit cards in 2017, for example, and another study found that only 25 percent of Mexican adults and 20 percent of Peruvian adults reported the same that year. All still need to be able to order without hassle, however. Consumers also need to know they can transact without worrying about fraud or costly currency conversions.
Security and Convenience Factors
Feeling safe and secure is crucial in any transaction, especially during a pandemic that is robbing individuals of normalcy and traditional support structures. Many consumers are also facing unemployment and other new financial hardships as a result of the COVID-19 pandemic and are concerned about their financial wellness and security.
All of these factors impact how consumers want to pay and why. A 2018 survey asking how they selected their preferred payment methods for cross-border online transactions found that security and convenience were the most important factors influencing customers’ choice. Forty-four percent of respondents would choose payment types they trust, while 36 percent would use methods that offer smooth payment experiences. Having a robust yet flexible payment system can help merchants provide safer shopping environments without sacrificing convenience and simplicity for online purchases.
Businesses can provide more convenient experiences by offering tailored payment options to each market. This is normally done by establishing connections to PSPs that operate in local markets and offer the payment methods preferred in specific regions. Businesses can easily connect to many PSPs at once by turning to POP providers, firms with global experiences that can enable merchants to quickly add and manage payment types without undergoing the involved process of integrating separately with each PSP.
POPs instead offer modular and open application programming interfaces (APIs) that businesses integrate with once, after which they can add new payment connections to their portfolios via the POPs. This streamlined process can be especially beneficial for cross-border merchants because it helps them easily integrate with payment providers from different markets and regions.
The routing capabilities provided by POPs also help merchants direct their transactions through the most beneficial payment providers. Payment routing eliminates declines associated with provider failures or outages. POPs can help merchants boost their payment acceptance rates by routing transactions through regional payment processing providers in appropriate markets. Improving the likelihood that transactions are accepted makes shopping attempts quicker and more successful for customers.
Global eCommerce is an important sector that will only become more crucial over time. Pleasing worldwide consumers requires convenient access to essential products, and payments are key to those experiences. Choosing partners that can address local markets’ transactional preferences will go a long way toward powering merchants’ international customer relationships.