Signifyd: Optimising Payments for Cross-Border Expansion

In this deep-dive, we speak to Signifyd’s Amal Ahmed, about why businesses should optimsie their payments stack to successfully expand across borders

For many SMEs, expanding internationally is a no-brainer; it allows them to reach new markets and increase revenue significantly. 

However, payments often acts as a barrier for SMEs to do this successfully. Consumers in different markets have different payments preferences, so, for businesses, it’s important that their payments stack can cover all consumer demands. 

Successfully integrating these different stacks can, as far as Signifyd’s Director of Financial Services and EMEA Marketing, Amal Ahmed, believes, “make or break an international expansion mission”. 

At present, poor payment mixes cost merchants. This was particularly prevalent in 2021 when merchants unnecessarily spent a combined US$20.1bn because of incomplete stacks, according to the “451Nexus: Payments in the (New) Roaring Twenties” report.

Why optimsing payments stacks is a must 

With this in mind, it’s no wonder Ahmed calls payments stack optimisation “key”, and a trend merchants need to “embrace” if they are to succeed internationally. 

She adds: “Payments are a key part of the customer journey and can help improve your conversion rates significantly. Developing an understanding of each market’s payment trends will help you adapt and get on the good side of your new customers, thus securing more revenue.

“Adding new payment methods to your mix allows you to reach new pools of consumers you probably have not had access to previously.”

Of course, as a merchant, it is also important when expanding internationally to consider the increased fraud threat that comes with this. 

As Ahmed continues: “Using data and the knowledge of a rich commerce network will help you detect fraudulent orders and approve more good ones. 

“Partnering with a third-party provider can introduce you to machine-learning and order automation to take the toll off manual order review and assist you on your cross-border expansion journey, all while optimising your revenue.”

The payments landscape: Region-by-region

Of course, as aforementioned, the payments landscape differs from market to market. Here, Ahmed runs through what merchants should expect when looking to expand internationally, and the payments options they should provide. 

“In North America, while credit cards are the most preferred payment method as of 2021, another major player is emerging on the scene,” says Ahmed.  

“As the digital-first buyer is headlining the ecommerce landscape in the US, e-wallets are gaining momentum. By 2025, they are expected to exceed credit cards in popularity, rising from 38.2% in 2020 to 53.2%.

“In Canada, things are looking similar. While credit cards are the dominant force with a share of 50% in 2021, digital wallets follow them with a 22% share and are expected to increase as a result of the current ecommerce revolution.”

While e-wallets are overtaking credit cards in the US, the picture is different in Europe, where the dominant payment method is digital wallets. “The likes of PayPal and Alipay are used by 42% of shoppers,” notes Ahmed. 

“Other preferred payment methods include Visa and Mastercard (35% of buyers) followed by domestic bank credit and debit cards (24%). Nevertheless, there are certain discrepancies in the preferred payment methods in different regions.

“In Western Europe, for example, credit and debit cards are especially popular, however, there are some big differences among the countries. In the Netherlands, for instance, the national payment method iDEAL was a top choice with 53% of the Dutch using it in 2020.

“Eastern Europe depicts a different picture. Many countries are still relying on cash on delivery. In Slovakia, for example, two-thirds of payments are made this way.”

Amid a disparate Europe, China is itself currently riding the digital wave of a payments revolution. 

In fact, Ahmed believes China is at “the forefront of digital innovation”. She continues: “Digital wallets accounted for 72.1% of ecommerce purchases in China in 2021.

“The digital wallets that are mostly used there are tied with the online platforms running the cross-border ecommerce scene in the region, such as Alibaba’s Alipay and Tencent’s WeChat Pay. 

“By the end of 2021, Tmall Global, an Alibaba-backed cross-border shopping platform, had over one-third of all B2C cross-border ecommerce retailers.”

China’s march to a digital future couldn’t be more different from the LatAm market, where credit cards continue to reign supreme. 

“In 2021, they comprised 39.3% of the value of transactions across all Latin American markets,” says Ahmed. 

“In Mexico, 45% of transactions were made this way, while Brazil had 44.7% of usage, followed by debit cards (18.2%).

“However, a new trend is emerging in Mexico where digital wallets are gaining momentum. In 2021, they comprised a 27.7% share of all transactions. Some of the most popular e-wallets in the country are PayPal, Visa Checkout, Masterpass, and domestic player Mercado Pago.”

With different methods of payments dominating different markets, it’s evident that developing a “clear understanding of payments and their strategic place in cross-border expansion strategy is key,” as put by Ahmed. 

“After that, it’s crucial to optimise your payments stack based on the market you’re expanding into to see good results.”

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