Merchants everywhere are increasingly expanding beyond digital and social marketplace platforms to bring their goods and services to consumers directly. However, achieving global coverage while meeting local consumer expectations can be risky and expensive. A cross-border strategy must be intentional to optimize and scale, ideally taking in a 3-to-5-year view. Doing so requires a phased approach that evolves and becomes more efficient as a merchant’s sophistication level increases, allowing results to be measured and benchmarked. We call it “Land. Expand. Optimize.”
For illustration purposes, throughout this article we’ll follow “Jeans & Blingz,” a fictional seller of high-end jeans and accessories for women. The company is pivoting from being a primarily domestic online seller, to becoming an omnichannel retailer in select locales around the world. Here's a closer look at considerations including risk, expenses and scale along the company’s maturity curve, as well as best practices to help identify and evaluate the capabilities of processing partners.
Land: Create a localized commerce experience
Thanks to strong social media engagement, brand awareness for Jeans & Blingz has expanded beyond the merchant’s domiciled footprint. They’ve made the smart decision to virtually land in a couple of neighboring countries before going all-in with investments and resources. Their goal—or the goal of any business considering expansion—is to present customers with a localized experience that offers price transparency and consistency across the buying journey.
When it comes to payment acceptance during this initial expansion phase, it’s important to conduct research, study transaction history and customer analytics and survey consumers to understand market dynamics.
- Start local. Expand into areas that are closest, where consumers are already familiar with your goods and services, and where it is common to make purchases using the major card brands’ credit and debit cards.
- Give consumers the ability to pay in their native currency. A familiar experience converts more browsers to buyers.
>>> Best Practice: Find a partner that is a locally licensed acquirer, not just a processor connecting through another provider. This will help keep transaction costs lower and give you more control. Inquire about global reach, omnichannel capabilities, consolidated reporting, and real-time analytics in this phase so that you can prepare for future expansion.
Expand: Broaden the choice of payment methods
Jeans & Blingz is now growing in new markets; however, cart abandonment rates are higher than anticipated. Turns out that many customers don’t have their credit cards on hand when shopping on their mobile phones or computers, so they do not complete their purchase. The next logical step is to extend customers the convenience of making purchases with their choice of payment methods that are familiar to them. These may include local currencies; local debit schemes; digital wallets like PayPal and Apple Pay; pay by bank; buy now, pay later; and more. Offering a blend of payment methods makes the commerce experience more inclusive for customers, and improves conversion rates. Plus, acceptance costs for these methods are typically lower.
During this phase, companies should focus on implementing the right mix of payment options, so as not to disrupt back-office operations:
- Become a domiciled business in key markets. This delivers optimal interchange rates, improves approvals, optimizes taxes, and improves operations.
- More is not better. Trying to implement 20-30 local payment methods is difficult to manage and reconcile. Identify the most relevant payment method for your business and your customers.
- Make sure that the checkout process is not disjointed with too many steps and screens. A simple checkout process reduces cart abandonment and increases the chance of repeat purchases.
>>> Best Practice: Work with a partner that has the data and local expertise to recommend the optimal mix of payment methods based on country, vertical market, and other factors. Verify that their processing platform can support the top three local payment methods in any region you plan to enter.
>>> Best Practice: Make sure all transactions can be delivered through a single point of integration, while providing consolidated settlement and reporting. Choose a partner with a scalable platform that can quickly and efficiently bring on new payment schemes—say, real-time payments (RTP) in the U.S.—as they take hold in a market.
Optimize: Efficiently and effectively scale omnichannel experiences
Jeans & Blingz has achieved success in select markets around the world. They’ve built a loyal following of repeat shoppers who can easily make online purchases using their preferred payment methods and currencies. They’ve become sophisticated enough to warrant opening stores and seasonal pop-up shops in select locales. This is where the importance of efficiently scaling comes into focus. The goal is to optimize interchange, risk and foreign exchange exposure, for both online and in-store experiences.
This important phase drives scale. Grow smartly and efficiently by the controlling the costs and operational overhead of payment acceptance:
- Implement sophisticated currency conversion strategies such as rounding to the next whole number. Instead of presenting a USD 100 purchase as 2,054.26 Mexican pesos, display the price as 2,055 pesos. It makes more sense for the consumer and delivers better margins for the business.
- Do your homework. In-store, card-present commerce is a complex model. Make sure you can connect data and reporting across channels so you can implement practices like buy online, return to store.
- Incorporate network tokens in your eCommerce payment optimization strategy. This will boost authorization rates as much as 2%, lower interchange fees by up to 10 basis points, and significantly reduce fraud.
>>> Best Practice: Choose a partner with global reach that can scale at the speed of your business so that you don’t have to start, stop, pivot, and start over again. Be sure they understand local tax and regulatory impacts on payments as well as how to best manage and clear for the lowest interchange rates while mitigating chargebacks. Rules are often driven by local nuances, so a partner that works with local issuing banks garners deep insights that optimize transactions and improve approval rates.
>>> Best Practice: Work with a full-service acquirer who understands when to deploy network tokens and how to retry failed transactions and improve success rates. Make sure they can mitigate credit card declines with an authorization optimization solution.
>>> Best Practice: Do not wait until this stage of expansion to determine how to support an in-store channel. There is a short list of partners that can serve online and offline needs with acquiring experience and technology—including hardware—to help accept payments in person across a local, regional and global footprint.
To learn more about Payment Acceptance from Carat, contact our experts today.
