Keys to Successful International eCommerce
Over the past decade, the world has increasingly become a global marketplace. Consumers around the globe have access to products that in the past would have been available only locally or regionally. It is now taken for granted that a teenager in St. Louis can effortlessly find and buy a T-shirt from a designer in Tokyo, and an art lover in London can purchase a limited edition watercolor print from an artist in Seattle.
In an article published in February 2014, eMarketer forecasted that B2C eCommerce sales worldwide will hit $2.350 trillion in 2017 with a CAGR of 17.4% from 2012 – 2017.
What can retailers do to enhance the shopping experience they offer to international customers? An Internet Retailer survey provides some insights. Respondents were asked to select the major challenges of selling online overseas. Their top six responses:
- Customer service and returns
- Fraud management
- Legal and regulatory concerns
- Ability of the customer to see the final cost in local currency
- Language translation
- Payment type preferences
Four of these six issues (fraud management, regulatory compliance, local currency and payment preferences) are payment related. Merchants often focus on website usability and order fulfillment logistics when they evaluate ways to improve their online business and optimize it for global success. However, payment acceptance is clearly a critical factor in building a more favorable consumer experience, especially when selling to international consumers.
In order to successfully attract and retain international customers, online retailers must address the following concerns:
Fraud Detection and Handling
Electronic payment fraud can be costly, and it can damage your reputation with customers.
Studies show that eCommerce payment fraud is more prevalent in international transactions than those that originate in the United States.
The best way to protect your business against payment fraud is to work with a payment processor that offers robust fraud management capabilities, including the ability to conduct risk scoring on foreign transactions.
Legal and Regulatory Issues
Merchants must comply with local regulations in the countries in which they do business, including laws relating to transaction reporting, processing payments, handling returns and collecting value-added taxes (VAT). These regulations vary widely from country to country.
It is not practical for a merchant to become an expert in the commercial regulations for every country in which it might conduct business. As a result, most international merchants rely on global payment processors that are capable of processing payments from all over the world.
Without a single-source payment processor experienced in each country’s regulations and idiosyncrasies, the merchant’s primary alternative is to establish individual relationships with local processors in each country where it accepts orders. This latter approach significantly expands the complexity of international payment acceptance and processing.
One of the best ways to encourage international customers to shop at your site is to offer them pricing and payment choices in their local currencies. There are a couple of ways to do this:
- Currency conversion displays the exchange rate at checkout and gives international shoppers the option to “lock in” the sale amount in a home currency. By accepting this option, conversion-rate guesswork is eliminated. The shopper knows the conversion rate immediately instead of when the card statement arrives weeks later. Complete transaction details are shown on the electronic receipt in both U.S. dollars and the local currency.
- Global pricing catalogs present items in the shopper’s local currency throughout the site. From the shopper’s perspective, it’s as though he or she is shopping at a site in the home country. The selected currency is presented through the entire shopping experience, not just the checkout process.
This approach gives merchants increased control over the customer’s website experience. The merchant can choose which countries and currencies to support, set prices according to local market demand, and run targeted sales and promotions. The result can often be lower shopping-cart abandonment rates, improved customer satisfaction and increased sales.
Accepting payments in a particular country usually means that a merchant must deal with several different acquirers or banks, resulting in multiple integrations, contracts, prices and points of failure that can add complexity and distractions to international expansion efforts. Through strong bank-acquiring networks that establish the necessary local bank sponsorships, some payment processors can make it relatively simple for merchants to consolidate their card processing to a single provider and minimize the effort required to establish a payment presence in the local country. Utilizing global acquiring services enables merchants to take advantage of the Internet to open new markets while freeing them from the specialized and complex burdens of international payment processing.
This is the second article in a First Data series about payment-related strategies that can enhance a merchant’s online services, open new markets and help increase profits.