There is a lot to consider, for both merchants and payment providers, before taking the big step of taking a domestic business global. It is necessary to work on many fronts simultaneously, and there’s no set recipe for success. But the following five aspects are those that I believe are most critical to success when formulating a cross-border eCommerce strategy.
Establishing the ‘right to win’
Payment providers expanding cross-border need to establish the “right to win” – in other words, possess the right set of technological tools, form the right strategic partnerships, and execute with the right timing. For example, many Northern European countries are very pro-business and have simplified bureaucratic processes. They may not have the raw growth potential of China or Latin America, but for North American businesses it provides a good starting point for establishing an international presence. Those payment providers that do have the “right to win” and can support their merchants stand to reduce attrition, win new business, and establish their global competitiveness.
The right payment setup in every region
It is much more important to offer the right payment methods for a given market, rather than an exhaustive list of options, therefore payment setup in each country needs to be carefully considered. European players may be aware of the “must haves” – such as iDEAL in the Netherlands, or SOFORT Überweisung in Germany – but for North American companies expanding into Europe these locally-preferred payments are absolutely critical. This also goes the other way. Expanding into the card-dominated and cost-conscious U.S. market requires a fine-tuned acquiring strategy, and technical connectivity to the right processors. This complexity is amplified when expanding into several markets simultaneously, and development and integration processes can strain resources. A single technical integration to a global payment network (such as PAY.ON’s) is one way to address this particular challenge.
Tailored fraud solutions for global markets
The diversity of payment methods globally also requires a tailored approach to risk management. In Germany, 28% of online purchases are completed by open invoice, but “buy now, pay later” increases risk for merchants. Local partners such as PayProtect help to manage this risk. These partners are especially beneficial for players that want to compete in Central Europe.
Depending on the business case, specialist fraud management providers such as ReD Shield should become a central part of a cross-border eCommerce strategy. Configuring the right fraud prevention tools for each market is a necessary complement to the right payment setup, but beyond that, expert risk analyst is necessary to fine-tune fraud settings and maximize conversions.
Partner for success
Rapid international expansion requires knowledgeable local partners. Brazil, the biggest market in Latin America, provides the perfect example. Complex taxation laws and a labyrinthine regulatory environment (Brazil ranks 120 out of 189 economies on the ‘Ease of Doing Business Index’) have meant that collecting PSPs, such as allpago, have carved out a niche as specialist partners who can turn opportunity into profit. Local acquiring also helps put international merchants on equal footing with domestic competitors, as they benefit from optimized pricing, a reduction in foreign exchange fees, and higher card authorization rates. In the ‘build versus buy’ argument, we are increasingly seeing the ‘buy’ argument win out because of the reduced time to market and the benefits of specialization resulting from effective strategic partnerships.
Be prepared to ‘open up’
Being ‘open’ means being willing to constantly adapt and evolve. Global eCommerce is moving fast and the underlying payment technology needs to support, and not restrict, companies that want to keep pace. Some payment providers are stuck with closed legacy systems, but RESTful API architecture is quickly becoming the industry norm, as it allows for greater innovation and individualized solutions. There is also a trend toward more open business practices, which brings us back to partnering for success. This is the driving force behind PAY.ON’s own open payment platform technology, developed to help payment providers overcome the complexities of international expansion.