Currency volatility is putting cross-border payments in a bind

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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.

Customers also have real concerns about foreign exchange rates and the risks associated with dealing in local currencies. Businesses have to ensure they're not losing money on the exchange, and volatility in the local market could upset their earnings or pricing structures in those areas.

Infrastructure presents another challenge. It's costly to integrate local payment methods, and some card networks are available only to companies with local bank accounts and pipelines. International businesses must choose whether to establish local entities in order to implement domestically preferred payment options or simply offer fewer payment methods, therefore missing out on some percentage of the market.

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.

Historically, e-commerce companies took two approaches, if they chose to engage beyond simply offering credit cards and PayPal. One was to integrate a handful of the most popular payment options internationally and exclude the rest, serving just a small part of the addressable market in each country.

Second, they were forced to invest the rest of their engineering and other resources in their core platforms, rather than the “adjacency” of payments, which meant they missed out on substantial revenue-generating opportunities, growth in new areas, and ultimately have been closed out in large markets like Southeast Asia, where both Alibaba and Amazon are spending substantially to buy their way back into the market.

Once a company has the right payment platform partnerships in place, it can develop a dynamic ecommerce strategy that drills into local preferences and monitors performance in each market. It can also allow businesses to tailor web and in-app experiences to local markets, addressing their needs by showing prices in their local currencies and offering the best mix of local payment methods for both their buyers and sellers.

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.

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