This posting appears in PaymentsSource and speaks to the dilemma facing online sellers vis-à-vis providing payments choices in local currency when trying to attract foreign customers. Although the piece focuses on retail e-commerce, obviously the challenges are consistent for a B2B e-commerce seller with cross border ambitions.
Global retail e-commerce is generally estimated at $1+ trillion at present, whereas the B2B e-commerce space at present is around $10-15 trillion globally, depending on how you count the market (i.e., marketplace only versus electronic connections in general). Let’s say about 10% is cross-border business. However, the full personal and commercial combined expenditure globally is closer to $180 trillion, and as spending and procurement continues to trend online, one can easily see the online imperative.
We covered some of the B2B opportunity in a member report. The retail side of providing proper ‘local’ payment choices is likely more compelling, since B2B commerce will have more specific terms and methods, with contracts stipulating this and that. The more instinctive buying habits of consumers requires considerations for getting them to make a choice and easily pay in a familiar way.
‘Although catering to local payment behaviors is a business imperative, it’s one of the more significant challenges a business can take on. Consumer behaviors can change as often as every six months…That leaves little room for error and requires meticulous data and strategies to identify and respond to trends… Adapting to changing consumer behaviors is an ongoing pursuit, and a manual approach isn’t an option. There’s no way for any one person to stay on top of payment trends in every region, let alone in every country.’
The posting was made by a senior at an APac fintech that specializes in creating such experiences, but any skepticism about another online marketing tactic for a sales pitch can be dismissed, since the points are quite valid.
One can also find an interesting study at the company’s website about cross-border e-commerce, which feeds this brief piece as well. Besides proper planning and infrastructure, the major point is the use of data, which is consistent with or themes for payments as well.
‘Given the mercurial nature of consumer behaviors, any payments strategy must begin with data. The right data tells businesses where they need to go, which APIs to leverage and where they should focus their A/B testing and payments implementations…Having the right locally relevant payment methods, and the right A/B testing data on the behavior or your users, allows businesses like yours to identify and optimize for trends, rather than letting those trends bounce off of you and benefit your competitors. In 2020 and beyond, adapting and localizing for local payment preferences will be the key to unlocking your global e-commerce potential in the most exciting markets in the world.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
