By Sam Ranieri, Founder & CEO of Reach

Businesses are no longer restricted by borders, and customers now expect to buy online with frictionless checkout experiences, built on speed and simplicity. 

Cross-border ecommerce became the defining retail trend of 2020 and 2021. In 2022, it’s set to surge to an estimated $3.56 trillion in payment flows, boosting trade, revenues, and opening new opportunities. But the strategies that worked for businesses just a few years ago are quickly becoming outdated – 2022 is ushering in Cross-Border Ecommerce 2.0, which demands even more agility, speed and insights to outperform the competition.

Effortless ecommerce is the number one objective for businesses in 2022 to ensure growth and access to new customers in different markets. But achieving it demands a new approach as the playing field fills up with more competitors, and the fight for consumers’ attention gets more ferocious. In mature markets like the US and UK, the online shopping space is saturated, leaving few opportunities to grow. That’s why in 2022, the quest for success will lead businesses to explore new markets to find their ideal customers.

But standing in the way are numerous barriers that businesses need to overcome. To sell internationally, businesses need to accept payments from anywhere in the world. They need access to foreign currency exchange, at prices which won’t eat into their profits. With differing regulation requirements across different markets, businesses must ensure they can be compliant with local laws. 

So, you’ve gone global – how do you stay global? Many businesses succeed at implementing cross-border payments but fail at managing them efficiently because they lack the expertise to optimize them. Transactions get declined needlessly, customers are left frustrated, and ultimately the business suffers through lost revenue.

Breaking down these barriers can seem like an impossible task for any business which doesn’t have the same resources and deep pockets of its larger multinational competitors. When you’re competing for the same customers as Amazon, the playing field can seem tipped against you.

How small businesses can level the playing field in 2022 

To overcome the challenge of accepting payments from around the world, it’s vital to capture as many transactions as possible. The good news is that it doesn’t have to be difficult. Smaller businesses now have a chance to offer the same levels of effortless ecommerce experiences to international shoppers in 2022 as their multinational rivals like Amazon. 

What’s more, the level of payment technology innovation and availability means that cross-border businesses can give international customers the same smooth, simple and effortless payment experience they’d get from their local businesses. Offering localized payment methods, currency and language at the checkout means the customer gets the same frictionless experience that they’d get at home. 

Instead of processing payments on a cross-border basis, merchants can tap into localized processing, and offer local payment methods in local pricing. When businesses offer customers their preferred payment method in their home currency, they’re more likely to complete payments at checkout. That helps to reduce cart abandonment rates, increase customer acquisition and gives a massive boost to the merchant’s bottom line. 

We’re likely to see many more small businesses make use of localized processing in 2022 as they seek to cut costs without harming their expansion efforts. By partnering with expert providers, merchants can tap into extensive global networks of acquiring banks to provide localized processing at much lower cost.

How businesses can navigate the FX minefield in 2022 and lock in the best rates 

It’s no surprise that customers are demanding to pay in their local currencies, but what is surprising is how many ecommerce businesses aren’t set up to offer it in the most cost-effective way. Borderless ecommerce requires optimized currency conversions to aid seamless payment flows. 

But very few companies can actively manage FX capabilities. With rapidly rising inflation being a major factor in 2022, it’s an example of companies are ill-prepared to manage the currency fluctuations this causes, eating into their profits.

Foreign currency conversion is notoriously volatile, impacted by policy changes, global trade flows and unforeseen market movements. Events like Covid-19 demonstrate how quickly currency rates can change. One currency’s loss is another’s gain, and small businesses stand to lose the most if they don’t have access to the best real-time FX rates.

Traditionally, when merchants wanted to expand into new markets, one option was to set up new entities in these markets, so that they could process local transactions. However, the costs involved, alongside additional legal and compliance demands, is too time-consuming and expensive to make it worthwhile. The other option is to process transactions on a cross-border basis, but this brings even more challenges in the form of FX conversion costs, and higher processing fees for cross-border transactions. Often, these higher costs are passed onto the customer.

When merchants have access to the most cost-effective wholesale FX rates through localized processing, not only do their shoppers enjoy lower prices, but merchants are also shielded from the risks of abrupt FX fluctuations which can eat into their bottom line. Above all, merchants can offer a consistent payment experience to their customers by making local pricing and currencies available, meaning higher checkout conversion rates.

Seamless API integration with the world’s most popular shopping sites

Another key trend for merchants to take note of in 2022 is the need to offer a consistent, uninterrupted checkout experience that reflects their brand identity at every step of the payment process. The checkout has become the most valuable real estate on a website, so the need for merchants to control their entire checkout process from end to end will be incredibly important in 2022.

In the past, merchants have typically partnered with several providers that offer an end-to-end hosted third-party checkout. This gives merchants the advantages of not having to deal with the complexities and hassles of maintaining and localizing the checkout by themselves. But by outsourcing their checkout, merchants lose control of their customer, and cede the power to improve their customer’s experience.

When the merchant’s customer is redirected to the third party’s checkout, valuable data analytics slip out of the merchant’s hands. The small gains of outsourcing are dwarfed by the losses of the customer’s payment journey, their buying behaviour, and the ability to find insights from these analytics. These insights could be used to make tweaks to the checkout, A/B testing and other optimizations that could dramatically increase conversions. Ultimately, in the 21st century, data is the new oil, and businesses that give this up will end up losing in the long run. 

But just as crucially, when merchants cede control of their checkout to a third party, they lose control of their brand identity. Third-party redirects don’t often match the look and feel of the merchant’s own site, creating confusion in the mind of the customer. And when that happens, customers are less likely to complete purchases at checkout. Giving a smooth, uninterrupted experience at every step is vital to capturing transactions.

With Reach, we take out the complexity of localizing the checkout and offer local acquiring through our Merchant of Record (MOR) model, but we allow the merchant to maintain complete control of the checkout through our seamless API and SDK integrations. In this way, the customer’s payment journey will never be disrupted by redirects to another site, and they get a simple, frictionless checkout experience with the continuity of the merchant’s branding and identity.

2022 can be the most successful year yet for small businesses

As the global economy continues to be fuelled by innovations in fintech and digital payments, it’s crucial that businesses take advantage of every opportunity that ecommerce platforms create for them. By partnering with expert and insightful payments specialists, who can seamlessly implement the elements needed for cross-border ecommerce, retailers can ensure that 2022 will be their most successful and profitable year yet.