Fintech Emerging Markets: Frictionless Cross-Border Payments
With lockdowns pushing e-commerce forward, the payment ecosystem now includes many emerging markets that quickly embrace and adopt the new reality. The changing landscape, inclusive of this new customer base, has become a very lucrative source of growth for global merchants, who are presented with a massive opportunity to expand their business reach.
Why emerging markets?
The rapid growth of e-commerce has made many online sellers aware of billions of potential customers living outside the somewhat 'saturated' Western countries. Customers with disposable incomes are booming in Latin America, Central, and Eastern Europe, Africa, India, and Southeast Asia. Consumers in these regions are now discovering the wealth of goods available via e-commerce and are ready and eager to shop for international goods.
The increased usage of mobile phones, rising levels of internet access and quickly improving delivery infrastructure are helping both merchants and consumers to shop online.
While tapping into new markets is crucial for e-commerce merchants looking to expand their customer base, this proves to be a highly complicated and resource-intensive endeavor, that requires local market adaptation, local regulation and tax compliance, and an ongoing battle to keep up with constantly evolving payment preferences of local consumers.
Minimising Friction when going Cross-Border
All these friction points for expanding e-commerce businesses to new markets are encapsulated in one metric critical to any online retailer: approval rates. By far the biggest influencer on revenue growth and customer satisfaction when it comes to the checkout process, approval rates are more challenging to optimise in cross-border e-commerce, particularly when it comes to high-growth emerging markets. Focusing on ways to maximise approval rates by being, or acting, as local as possible should be a key objective for any internationally expanding e-commerce merchant.
Localisation is key to globalisation
It may seem like a conundrum, but as the world is becoming increasingly global, local preferences are becoming more pronounced and need constant attention and adoption from international merchants. Localisation means that merchants need to provide various local payment methods, usually not cards, to appeal to different customers in different regions. Providing localised payment options increases approval rates tremendously.
Alternative Payment Methods (APMs) are becoming increasingly more popular therefore merchants must consider adding these APMs, eWallets, and Buy-Now-Pay-Later solutions to their payment offering alongside traditional card-based payment methods.
The complexity of localisation
While we tend to categorize customers by region— LATAM, Southeast Asia, etc., we must not forget that each country has its unique payment preferences even in the same region. This is especially true in high-growth emerging markets. Even just in Europe alone, if one ventures outside the UK, France and Italy, for instance, to Central and Eastern Europe or even just Germany and the Nordics, diversity is so profound that when mapping each market’s payment landscape, one discovers that one must add tens of new payment methods to serve local customers appropriately and be able to compete with local merchants in these markets.
How to seamlessly localise payments
Expanding your cross-border reach can be a lucrative opportunity for additional growth but online businesses need to be aware of the challenges of such expansion and how to best navigate them successfully. There are different ways to localise your offering effectively. Many chose to build it market by market, but preferably, you would want to have an all-encompassing solution that is already catering to this diversity and complexity of local payment methods and regulations, one that dynamically changes and evolves your local market offering according to local market dynamics and your latest business objectives. The cherry on top would be to have added data analysis and performance reports that will give you a complete set of tools to stay ahead within this dynamic and challenging sphere of cross-border payments.
About the author: Mario Shiliashki is the CEO of the PayU Global Payments business across Latin America, Europe, Africa, and Southeast Asia. PayU is a leading provider of online payment and credit solutions to local and global e-commerce merchants in over 20 high-growth markets and is constantly on a quest to expand its offering locally and globally. Mario holds an MBA from Harvard Business School and a Bachelor of Science degree in Finance and Economics from Bryant University. Formerly Senior Vice President and Group Head of Global Emerging Payments at MasterCard.