Digitizing payments can rescue business' stalled expansion plans
The COVID-19 pandemic has thrown a wrench into many businesses’ plans for expansion. Among those who have bucked the trend, however, there’s a common thread: robust digital capabilities that have enabled companies to continue serving customers and deftly adjust.
Digitization is about far more than new offerings or service expansions, it’s also a vital part of business continuity.
Take payments. American companies vying to win international business must grapple with foreign payment systems that are more varied and complex than in the U.S., involving a multitude of local currencies and preferred payment methods. The growing popularity of digital payment services — which vary by both type and penetration across different markets, i.e., the 2.5 billion adults globally who remain unbanked — only adds to the complexity.
To succeed beyond the border U.S. businesses must think about more than just credit cards and major international tools. They need to get local.
In a competitive market where consumers have a plethora of options, addressing local payment preferences has become a central part of the user experience. Ensuring that customers can seamlessly complete a transaction is part of a winning customer experience, which according to Gartner is the primary basis on which businesses compete.
Meeting this basic expectation will require catering to the growing share of global customers who are unbanked, underbanked or simply prefer alternative payment methods (APMs) like bank transfers and e-wallets.
Latin American countries like Mexico and Brazil — which have higher-than-average internet penetration but unbanked populations of 42 million, 33% of the population, and 55 million, 26% of the population, respectively — are prime opportunities for businesses offering digital transactions with ready to pay (RTP) networks. In Europe, the use of e-wallet services has surged, with usage doubling in the first three months of 2020 compared to the first quarter of 2019. APMs have had high penetration in Asia for years, with hundreds of available methods accounting for country and regional preferences.
Adoption is only slated to further increase by 2022, with e-wallets projected to account for half of global e-commerce sales. As digital payment options become more attractive to consumers, APMs will be a requirement for any global business. The alternative? Bleeding revenue to the competition. One recent survey found that a fifth of digital shoppers worldwide would not proceed with an online purchase if their preferred payment method is unavailable.
Simply put, businesses must embrace a “cards-plus” payments strategy that not only supports debit and credit cards, but can operate seamlessly with APMs, from currencies and e-wallets to increasingly popular RTP networks and banks bank transfers. Failing to provide solutions for the hundreds of local methods that are utilized by the 4.5 billion people worldwide without credit cards is not a recipe for success.
Despite the challenges of cross-border expansion and assembling a payment system capable of servicing new markets, new regions can help businesses diversify their customer base and solidify revenue streams. Global expansion is challenging even under the best of circumstances — but payments don’t have to be.