With the business-to-business e-commerce landscape becoming increasingly competitive, businesses are constantly looking for new ways to stay ahead of the competition and attract new global partnerships. E-commerce has evolved significantly since the first online transaction more than 20 years ago. With the internet knowing no global boundaries, the possibilities and reach for merchants are endless.
While this might sound like an immense opportunity for merchants, many could, in fact, be shooting themselves in the foot when it comes to converting potentially lucrative buyers into loyal customers by failing to provide preferred payment options. This is especially pertinent for manufacturers, wholesalers and distributors selling through e-commerce. Frost & Sullivan has projected that B2B e-commerce will hit $6.7 trillion in sales worldwide by 2020.
In comparison to 10 years ago, we are now spoiled for choice when it comes to how we pay for goods and services on an international scale. Yet, rather than taking advantage of the borderless opportunity global e-commerce presents, many online businesses are unwittingly creating barriers to sales from overseas buyers by not offering them the payment options they prefer. Therefore, manufacturers, wholesalers and distributors are wasting the money they’re investing to attract potential customers to their websites.
Payments are as diverse as languages and cultures themselves. In an era of personalized customer experience, online businesses cannot afford to lose valuable international reach to competitors.
While many claim to be aware of the need to accommodate cultural differences in terms of localization and product offerings, there seems to be a general lack of knowledge and awareness of differing payment preferences. Even for those companies claiming to have such knowledge, many perceive high levels of red tape and charges associated with the adoption of alternative payment methods outside of the United States. This misconception is often the main reason holding many back from integrating country-specific payment preferences.
Only 18% of the world’s population, however, use credit cards. To facilitate an international market, merchants must offer a payment option just as specific to a market as they would with languages. Most countries across Europe, Asia and Latin America prefer alternative means, be it iDEAL in the Netherlands, SOFORT in Germany, Alipay in China or Boleto Bancario in Brazil.
Most of these are actually so-called “push payments” initiated by the payer, and therefore do not carry the chargeback risk of “pull payments” initiated by the payee, like credit cards or direct debits. .. In the e-commerce world, and especially for cross-border, where sellers do not know their customers that well, it is particularly important that the payees can be sure that payments cannot be reversed by the payer. The higher the amount, the more important this aspect becomes, hence very relevant for B2B.
Another “cost of risk” saving element of push payments is the fact that payees do not have to collect and safely store their customer’s payment details. With ever-strengthening data privacy regulations, such as the European Union’s new General Data Protection Regulation and cross-border data transfer restrictions, the cost of handling confidential customer data is increasing and the fines for failing to protect it are skyrocketing. Combined with the strong growth of cybercrime, it is a big relief for payees if they don’t need to get customer card or bank account numbers. And it is an equally big relief for payers if they don’t have to give such data out, keeping them far less exposed to fraud.
MyBank, another example of such an alternative push payment method that operates across several countries in Europe, captures a high share of the B2B payment market exactly for such reasons. Most alternative payments are cheaper than cards anyway, but even for those that are not, the premium is easily offset by their relatively low risk and reduced losses related to fraud.
Aside from additional costs, merchants often worry that adopting additional payment methods will put a strain on valuable resources for country-specific research, technical integration and maintenance. But new payment systems are making such chores far simpler than in the past.
By offering specific payment methods to each country and target customer, and maintaining the loyalty of customers, online businesses have the chance to flourish on an international scale.
Ralf Ohlhausen is director of business development at PPRO Group, a provider of electronic payment technology and services. A veteran of e-commerce, financial services, mobile telecommunications and information technology, he is former president of the European operations of SafetyPay and has served in management positions at companies including O2, British Telecom, Digicel and Mannesmann-Kienzle. Ohlhausen is also a member of the Euro Retail Payments Board of the European Central Bank, representing the interests of the Electronic Money Association.Favorite