Growth opportunities for e-commerce companies looking to go global in the next few years are huge, but many are daunted by the complexity of different online payment approaches used around the world, say international e-commerce payment experts.
It may be better to think small at first, said panelists during a discussion on cross-border payments at the Electronic Transactions Association's annual gathering last week in Las Vegas.
To name just a few ways payment systems vary from region to region: Brazil's "Boleto" service has consumers making international online purchases with cash by obtaining a voucher through a local bank branch or shop. In the Netherlands, the iDeal system of direct bank transfers is most popular for online purchases, and in Germany and Austria, it's common for consumers to receive goods they order online first, and pay later.
The dizzying array of options can scare off e-commerce companies that make the mistake of thinking they need to support this huge array of alternative payment methods, said Michael Doron, managing director of ACI Worldwide's Pay.On America subsidiary.
The reality is that going global with payments is often not as intimidating as it sounds, Doron said. While it's true that Pay.On offers support for more than 250 alternative payment methods, there are usually only a handful that any e-commerce merchant needs to focus on, based on the country and the merchandise and customer niche they're operating in, he explained.
"We recommend that companies entering new markets for cross-border payments through e-commerce sites start slow [with a few payment options] and build from there," Doron said. He noted that by doing a reasonable amount of their own research, e-commerce companies can find low-cost methods of establishing operations in new markets, and it's vital to get the right legal and tax advice from local experts.
E-commerce operators expanding into cross-border business also should find a payment processor that's willing to spend considerable time consulting on the best payment methods to use before launching their services, Doron said.
Alternatively, e-commerce companies can launch sales first in a country where credit cards are accepted, and gradually add on alternative payment types, said Robin Gandhi, head of partnerships for Amsterdam-based Adyen. "A company that already operates in the U.S. or the U.K. in e-commerce could branch out to Australia or Canada first with credit cards, and later move on to Asia or Brazil."
E-commerce merchants need to be aware of different types of fraud they might encounter working with new and unfamiliar payment types used in other countries, too, said Jeff Burke, senior vice president of global business development for Global Payments, which provides broad support for cross-border payments through its gateway.
"An e-commerce company that has a well-tuned fraud model in its home country may discover a different set of disputes and chargebacks when they start accepting payments in another country, which is why it's good to go slow when entering new markets," Burke said.
E-commerce companies that do their homework and team up with strong payment partners should be in a position to capture significant growth over the next few years as global e-commerce grows, said Simon Black, CEO of U.K.-based PPRO Group, which handles acquiring, issuing and processing for international e-commerce customers.
"Europeans are driving strong demand for e-commerce services from U.K., Europe and U.S.-based companies, but in the next five years I predict we will see immense demand for e-commerce goods from people in Asia, particularly China, Malaysia, Indonesia, Vietnam and Japan," Black said. "We're seeing an amazing shift in all these countries to e-commerce, which is a huge business opportunity for merchants willing to meet that demand."