Offering Local Payments Is Merchants’ First Step Toward Expanding Overseas

Merchants are expanding their operations abroad on a grand scale, taking advantage of the eCommerce boom to market in new regions and demographics. While industry giants such as Alibaba and Amazon dominate most of the scene, the growing popularity of aggregated marketplaces has also allowed smaller businesses to harness international retail. Expanding abroad is no easy feat, however: In addition to navigating complex regulations surrounding cross-border shipping and payments, merchants also must be cognizant of the payment preferences of their potential clientele.

A recent report noted that consumers complete 77% of global eCommerce purchases using local payment methods, such as local cards or cash. Lacking an adequate selection of locally preferred payment methods can result in customer abandonment, with 44% of consumers in the United Kingdom saying they would forgo a purchase if their favorite payment method were unavailable. Payments orchestration systems can offer smaller merchants the ability to process these local payment methods, thus leveling the eCommerce playing field.

The “Payments Orchestration Tracker®” examines the latest developments in the payments orchestration field and why these services are necessary to meet customers’ evolving demands for local payment methods around the globe.

Around the Payments Orchestration Space

International commerce is key to unlocking new revenue streams, but enabling cross-border payments can be a major pain point. A recent PYMNTS study found that three-quarters of small to mid-sized businesses (SMBs) were dissatisfied with existing cross-border payment solutions, and 27% said cross-border payments’ complexity hindered their business growth. The primary challenge cited was a lack of the technical or human resources required to manage the digitization process independently. Payments orchestration systems are vital for managing these complex processes and can quickly yield substantial business growth.

Cart abandonment is a massive problem for eTailers, and a lack of local payment methods exacerbates this challenge. A recent PYMNTS study found that 41% of businesses that sell to the Asia-Pacific region without offering local payment options reported cart abandonment rates of more than 60%. Businesses offering local payment methods saw cart abandonment rates drop to 32%. Many companies presume to their detriment that the major card networks of North America and Europe are just as popular in Asia.

For more on these and other stories, visit the Tracker’s News and Trends section.

The Risks of Not Offering Local Payments

eCommerce merchants expanding abroad are often surprised at how global payment trends differ from what they see in the West. There is a remarkable array of local and alternative payment methods worldwide, each of which is some customers’ favorite. It can be difficult for merchants to provide this variety of payment types independently, but payments orchestration can unlock diverse payment systems.

To get the Insider POV, PYMNTS spoke with Andy McHale, senior director of product at Spreedly, and Adrian Burgess, head of strategic growth at PPRO, to find out merchants’ challenges and solutions for providing local payments to their customers.

Enabling Local Payment Methods via Payments Orchestration

Local and alternative payment methods — including digital wallets, online bank transfers, buy now, pay later (BNPL) and direct debit — are the most common means for consumers to purchase goods online. Shoppers in Europe, for example, annually spend more than $388 billion online using local payments, which are projected to account for 82% of global eCommerce spend by 2024. eTailers would be wise to cater to this local and alternative payments demand, but enabling this for customers can be a tall order.

To learn how merchants are implementing local payments with the help of payments orchestration systems, read the Tracker’s PYMNTS Intelligence.

About the Tracker

The “Payments Orchestration Tracker®,” a collaboration with Spreedly, examines the latest developments in the payments orchestration field and why these services are necessary to meet customers’ evolving demands for local payment methods around the globe.