There has never been a better time for cross-border commerce. In fact, the second quarter of 2020 saw double-digit growth in cross-border shipment volumes and the value of merchandise sold, according to McKinsey & Company. This is despite a less profitable start to the year as news of the pandemic and the initial lockdown temporarily halted progress.
But this pick-up in trade thankfully wasn’t short lived, as cross-border commerce continued to rocket into 2021. The UK, for example, saw a staggering 57% year-on-year rise in outbound commerce and experienced a growth of 42% in November alone compared to the same month in 2019.This tells us that, thanks to the urgent digitalisation accelerated by events across the globe over the past 12 months, today’s consumer is just as happy to buy from a merchant halfway around the world, as they are from one based in their local town.
This has, in turn, created a happy state of affairs for ecommerce merchants; with consumers willing to spend cross-border, merchants have unprecedented opportunities to reach new markets and customers. But there is, of course, a downside. With consumers more willing than ever to shop across borders, the amount of competition for online merchants has also skyrocketed. This change in consumer behaviour has resulted in new, higher expectations of the shopping experience. Consumers now consider experience factors, such as the level of speed, convenience, and value, as more than important than ever, creating new challenges for merchants across the globe.
What this means is that cross-border merchants that want to make the most of a global presence need to optimise their conversions by analysing their payment data and create a seamless experience that keeps customers returning.
Of course, the prospect of this for many merchants, especially those that are new to the ecommerce market, can seem overwhelming. Ultimately, many merchants lack the resources and expertise to know what to change and why. However, there are steps merchants can take to start improving their cross-border ecommerce performance straight away.
Get fluent in their language
Of course, this doesn’t mean literally. But to compete effectively in a global market, merchants need to be aware that consumers in different regions have different payment preferences. For example, in the Netherlands, 59% of ecommerce transactions are made with payment transfer app iDEAL. Whereas in Italy, Paypal and the prepaid card service Postepay are the first and second most popular payment methods for online purchases, respectively.
As a result, online merchants need to ensure they are accurately targeting the regions they’re attempting to move into. This is because, when faced with unfamiliar payment methods and currencies, consumers tend to abandon their carts. This is because a lack of familiarity undermines their confidence in the payment process.
On a similar note, merchants need to think about their customers’ languages. Ultimately, if they can’t understand your ecommerce site, then it is not accessible at the most basic level. As a result, providing local translations is essential.
Staying on top of the relevant regulation requirements
Cross-border merchants in Europe should already be aware of the Strong Customer Authentication (SCA) requirements under PSD2. But with so many regulations, and so much of it written in acronyms, understanding it all can get your head in a spin. So, let’s start at the beginning.
SCA requirements mean that every online transaction over €30 in the European Economic Area (EEA) requires two-factor authentication. If you’re a European business selling goods and services to other countries within the EEA, then SCA is something you need to make sure you are compliant with.
The point of SCA is to reduce the amount of fraud for Card-Not-Present (CNP) purchases online by verifying a user’s identity more accurately. However, all those extra steps in the payment process can create extra friction during the payment process, with measures such as One Time Passcodes adding additional time and effort. These steps can even cause consumers to abandon a purchase altogether, especially if they aren’t used to the process.
The good news is, card schemes are already working to solve some of the friction issues caused by SCA by implementing new versions of the 3D Secure technology. The new system, 3DS 2.0, utilises a tenfold increase in the data shared between merchant and issuer to streamline the payment process, with the new system also helping to drive down fraud levels.
These new systems can provide demonstrable benefits to merchants, improving conversions and helping to create a ‘frictionless flow’ for payments.
Optimise the payment experience for mobile
Ultimately, merchants are missing out on a lot of profit by not optimising their ecommerce site for mobile. This is because the highest rates of cart abandonment are on mobile (86.65%). This is a hugely significant amount, especially when you consider that global mcommerce sales are predicted to be worth $3.56 trillion in 2021.
When paying on mobile, customers should be able to easily enter their debit or credit card details into the form on a mobile device without having to tackle poor elements such as oversized forms, which can put them off purchasing. That’s why it’s so crucial to design payment pages with mobile in mind from the very start, to reduce potential abandonment rates.
Further to this, merchants should look to stress test their ecommerce platform, making sure the form fields appear properly on a mobile device or that the numerical pad pops up when entering the card number or CVC. It’s also a good idea to examine whether you can enable tokenisation for mobile payments, so that customers don’t keep having to manually enter their details again for repeat purchases.
And to optimise the mobile experience even more, merchants should consider accepting payments through mobile wallets such as Apple Pay and Google Pay, and e-wallets like PayPal. As these methods are specifically designed for the mobile experience and offer high levels of security that customers trust. So, it’s really important you’re providing these options for those customers who prefer them.
A simple solution
To avoid all these issues, merchants should ensure they’re working with an experienced payments partner. A good payment services provider will be able to help merchants implement these systems into their ecommerce operations.
So, whether you’re expanding into Europe, the Middle East or Asia, a payments partner will be able to determine in advance which payment methods and what currencies are most appropriate and enable merchants to reap the benefits of an optimised payment flow, therefore providing a better customer experience and maximising conversions.
Creating a payment experience to remember
Since the onset of the pandemic, digitalisation has opened the doors for cross-border commerce of all sizes. And the opportunities available to merchants who embrace this are huge. But they must remember that these opportunities are available to all merchants, therefore the online marketplace is crowded. As a result, they need to provide a competitive experience.
However, by localising their ecommerce payment process, staying on top of regulations, and optimising their site for mobile, merchants can maximise their sales no matter where they are.
