Mike Shafro, Chief Executive Officer at xpate, discusses how merchants looking to make the most of cross-border ecommerce can optimise the payment experience for customers.
After a rocky start for cross-border ecommerce merchants in 2020 as the COVID-19 pandemic swept across the globe, the second quarter of the year saw a marked recovery with double-digit growth in cross-border shipment volumes and the value of merchandise sold, according to McKinsey & Company. The popularity of cross-border ecommerce continued to soar into 2021, with the UK showing a staggering 57% year-on-year rise in outbound ecommerce from the country and experiencing a growth of 42% compared to 2019 in just the peak month of November alone. If there is one thing that we can be certain of in 2021, it is that consumers have little preference over whether the ecommerce merchant they buy from is down the street or halfway across the continent.
This has numerous benefits for merchants, with the opportunity to reach new markets and customers simply too good to miss. However, while consumers are less concerned with where they are spending their money, the increasing use of ecommerce has created new differentiating factors for merchants. Customers are placing higher values on experience factors, such as the level of speed, convenience and value, creating an increasingly competitive marketplace. As a result, cross-border merchants that want to make the most of a global presence need to analyse their payment data to optimise conversions and ensure the entire customer experience is as seamless as possible.
The prospect of optimising your entire ecommerce process can be daunting, especially for smaller merchants that may be new to the ecommerce market and lack the resources or expertise to know what to change and why. Fortunately, there are a number of steps that you can take to boost your cross-border ecommerce performance, starting with…
Staying on top of the relevant regulation requirements
Cross-border merchants in Europe should already be aware of the Strong Customer Authentication (SCA) requirements under PSD2. But it’s understandable that regulations can get a little confusing, so let’s break this down.
SCA requirements mean that every online transaction over €30 in the European Economic Area (EEA) requires two-factor authentication. If you’re a European business selling goods and services to other countries within the EEA, then SCA is something you need to take seriously.
Ultimately, SCA aims to reduce the amount of fraud for Card-Not-Present (CNP) purchases online by verifying a user’s identity more accurately. However, all those extra steps in the payment process can create friction for customers, with measures such as One Time Passcodes adding additional time and effort into the purchase process. These steps can even cause consumers to abandon a purchase altogether, especially if they aren’t used to the process.
Card schemes are already working to solve some of the friction issues caused by SCA by implementing new versions of the 3D Secure technology. The new system, 3DS 2.0, utilises a tenfold increase in the data shared between merchant and issuer to streamline the payment process, with the new system also helping to drive down fraud levels.
These new systems can provide demonstrable benefits to merchants, improving conversions and helping to create a ‘frictionless flow’ for payments. It’s important to make sure you’re working with your payment services provider to implement these systems into your ecommerce operation, allowing you to reap the benefits of an easier payment flow and provide a better experience for your customers.
Speak your customers’ language
To compete effectively on the global stage, merchants need to be aware that consumers in different regions have different payment preferences. For example, in the Netherlands, 59% of ecommerce transactions are made with payment transfer app iDEAL. Whereas in Italy, Paypal and the prepaid card service Postepay are the first and second most popular payment methods for online purchases, respectively.
What this means is that online merchants need to ensure their payment process is targeting the regions and markets they’re attempting to move into. Otherwise, it’s highly likely that customers will abandon their carts – ultimately, customers want to feel confident in the payment process, and a lack of familiarity undermines confidence.
To avoid these issues, it’s important to ensure that you’re working with the right partner. A good payment services provider will be able to help merchants understand each region’s preferences and implement the appropriate payments methods. Whether you’re expanding into Europe, the Middle East or Asia, you should strategise with your payments provider in advance to determine what payment methods and what currencies are correct for each of your markets.
It’s also important to think about your customers language in the literal sense. Your ecommerce site needs to be accessible for your customers across the globe, so providing local translations is essential. Similarly to how customers want confidence in the payment process they’re using, they also want confidence in the merchant they’re purchasing from; think about it, when was the last time you bought from a merchant with a website you couldn’t understand?
Optimise the payment experience for mobile
Did you know that the highest rates of cart abandonment are on mobile (86.65%)? That’s a lot of profit merchants are missing out on by not optimising their ecommerce sites for mobile, especially when you consider that global ecommerce sales are predicted to be worth $3.56 trillion in 2021.
Crucial to reducing these high abandonment rates is optimising the mobile payment process by designing payment pages with mobile in mind from the very start. Customers should be able to easily enter their debit or credit card details into the form on a mobile device without having to tackle poor elements such as oversized forms, which can put them off purchasing. Look to stress test your ecommerce platform, making sure the form fields appear properly on a mobile device or ensuring that the numerical pad pops up when entering the card number or CVC. It’s also a good idea to examine whether you can enable tokenisation for mobile payments, so that customers don’t keep having to manually enter their details again for repeat purchases.
Merchants also need to think about accepting payments through mobile wallets such as Apple Pay and Google Pay, and e-wallets like PayPal. As these methods are specifically designed for the mobile experience and offer high levels of security that customers trust, it’s well worth ensuring customers can use them.
Again, a great payment services provider will be able to help merchants optimise their payment process for mobile to make sure they’re maximising conversions on that channel.
Consumers are keen, but they want the experience they’re accustomed to
Ultimately, the opportunities available to merchants who embrace the cross-border commerce experience are huge. But it’s crucial they remember that consumers have high expectations, wherever they shop and whoever they shop with.
However, by staying on top of regulations, localising their ecommerce payment process, and optimising the customer experience for mobile, merchants can ensure they’re not unnecessarily missing out on sales.
Learn more about xpate’s all-in-one payments platform here.
Mike has nearly a decade of extensive experience in the fintech and ecommerce sectors, along with several years of entrepreneurship. He founded his current company, xpate, to create a more unified, modern payment experience – and one which leaves a positive impression on the user. Xpate does this by providing one place where its users can manage all of their accounts together with innovative drag-and-drop, gesture-based technology. This makes every interaction simple, whether it’s setup, onboarding, conducting a transaction, or reviewing a payment flow.
Mike’s passion for ecommerce bloomed during his first job with ECOMMPAY. After joining the company in 2013, he quickly developed an interest in both the practical and technical side of ecommerce. Through a particular focus on regulations and licensing, Mike was able to help ECOMMPAY obtain its UK license with the Financial Conduct Authority (FCA). He then went on to begin advising banks and ecommerce enterprises on how to improve their digital processes. His focused knowledge in this area saw him appointed personal Ecommerce Advisor to Jurijs Adamovics, Chairman of the Board of Directors at Industra Bank, earlier this year.
As a young and successful entrepreneur with expertise extending across risk management, internet acquiring services, financial restructuring, financial analysis, corporate advisory, mergers and acquisitions, and valuations, Mike is an established thought leader in the fintech industry. He has featured in several global publications and is a keen and considered industry spokesperson.