With the rapid increase in e-commerce given the pandemic, your bank’s business customers may be considering expanding their online efforts beyond U.S. borders to sell internationally. However, to successfully do that, they will need to take a close look at the mindset and expectations of future customers. Even the biggest corporations have made expensive mistakes by missing the mark.
This points to the significance of paying attention to regional preferences. For example, they will need to know if their product range fits the target groups that can be reached as well as which products, brands, designs or colors sell the fastest. The user experience is also important – their online store’s “look and feel” must meet the tastes and usage habits of the audiences.
Your customers particularly need to consider putting themselves in their prospective customers’ shoes when addressing payments. Who pays what, why and how? To what extent can experiences from one country be transferred to another? Where are the differences?
There are many considerations for international success, but let’s explore payments a bit further, as this is where banks can help influence their customers’ success globally.
In Europe, only Mastercard and Visa have a significant market share. American Express has achieved respectable successes in individual EU countries, for example, in Germany. However, Germans pay for about half of their online purchases via bank transfer, preferably on open invoice. In online trade, only twelve percent enter their credit card data directly; twice as many prefer to use an e-wallet such as PayPal.
The majority of Swiss prefer a domestic bank card. Austrians swear by the eps transfer, a national standard agreed upon by the country's banks. In the Netherlands, online transfer via the local provider iDeal dominates. In Belgium, the debit card Bancontact is key. If your customers want to succeed in Poland, they have to offer transfers via Przelewy24 or PayU. The French are very card-savvy but almost only use the Cartes Bancaires (credit and debit). And there is one country in the EU where it is typical to pay for online purchases in cash: Romania.
Handling payments can be very complex in China. Almost 80 percent of residents have been able to open a bank account starting at age 15, and online transfers with over 100 banks may need to be supported. Many Chinese also pay via credit card with China Union Pay, a state-controlled joint venture of a consortium of Chinese banks. In addition, the digital payment apps Alipay and WeChat Pay/TenPay play the key role here, particularly with young people.
Billions of people live in countries where it’s still not typical to have a bank account. 38 percent of the world's population still belongs to the "unbanked," who have to pay cash for everything but sometimes need things they cannot buy where they live or not at a fair price. In India and Latin America, almost every second person belongs to this group; in Indonesia, according to the World Bank, it is 51 percent of the 264 million inhabitants.
However, the rate of account-less persons is not a good indicator of the potential and dynamism of a market. In the top ten fastest-growing countries in B2C e-commerce, as determined by the British payment service provider PPRO Financial, Indonesia ranks first with 78 percent growth, followed by Mexico (+59 percent), the Philippines (+51 percent) and Colombia (+45 percent). India (+27 percent) shares 8th place with China. Distance selling is also growing strongly in Malaysia (+26 percent) and Argentina (+25 percent).
So How can Your Bank Help Customers get There From Here?
If your customers want to expand internationally online, they not only have to know which products customers in other countries like, but also how they shop and pay. Without familiarity and trust in the payment methods offered, the conversions will not happen.
Given the abundance of payment methods as noted above, technical infrastructures and regulatory conditions around the globe, it’s extremely challenging for U.S. banks to help their customers handle global payments on their own. Consider working with payment services providers who can act as a gateway between the U.S. and other markets – and, if needed, within regions in the markets your customers want to target. With the appropriate provider, banks will be better positioned to help their customers capture the potential e-commerce business that other countries offer — and further reinforce themselves as a valuable partner.
By Jed Danbury, Vice President, Computop