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Data: The Era of Cross-Border E-Commerce

Steve Murphy by Steve Murphy
October 15, 2018
in Analysts Coverage, Merchant
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Swift Takes on Low-Value Cross-Border Payments

Swift Takes on Low-Value Cross-Border Payments

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The rise of e-commerce is no real surprise any longer, so it is really just a matter of time before it becomes the dominant form of buying, both retail and wholesale.  The global economy and communication revolution give rise to a new e-commerce order for merchants, where buyers are increasingly physically located outside of domestic borders, and preferred paying methods dictate broader merchant acceptance methods.  This article appearing in Payments Source outlines the challenge that merchants face in the world of retail e-commerce.

‘This month alone, First Data announced a deal with BlueSnap expanding global e-commerce options, Adobe announced plans to roll out Magento Payments globally through a partnership with Braintree and PayPal, and The Gap selected Adyen for cross-border e-commerce in Europe. A key element in each deal is support for local payment options for online purchases from foreign merchants.’ 

Generally speaking the same challenges hold for B2B e-commerce as well, which is that payment methods vary by market.  So if you are a North American merchant and someone from China is logged into your site wanting to buy an item, they will more typically prefer to use WeChat Pay more than a credit card (or even a debit card), which is how most NA merchants are set up already.  This could limit the sale or eliminate it altogether.   So the trend for opening up to more payment types is already underway.

‘There are about 300 significant payment methods in use around the world for e-commerce purchases, ranging from payment cards to bank transfer schemes to fast-growing digital wallets popular in Asia including Alipay and WeChat Pay, said Steve Villegas, a vice president at PPRO. The London-based firm provides white-label connections for 140 different local payment methods around the world to payment services providers and acquirers.’

This seems to be particularly troublesome for U.S. based e-commerce merchants, where 64% don’t accept cross border business, according to the article.  The writer also goes on to say that the U.S, is one of the top destination markets for online buyers, so the lack of acceptance and delivery capability is a naturally limiting factor.  However, it does seem to be changing.

‘Most U.S. e-commerce merchants don’t sell across borders, with only 36 percent currently supporting e-commerce outside the U.S., according to PPRO’s data. But changes are coming, with the U.S. poised to see 10 percent to 12 percent cross-border e-commerce growth in the next few years. Europe is on track for up to 15 percent e-commerce growth and parts of Asia will see 30 percent or more cross-border online shopping growth, PPRO said.’

Another interesting point is that most e-commerce activity continues to occur through computers rather than mobile devices, although variances exist. So it will be interesting to track developments, and especially how they may vary in the B2B e-commerce space going forward.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

Tags: BlueSnapCross-Border PaymentsFirstData
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