2020 saw an unprecedented rise in digitisation across all industries as a result of the Covid-19 outbreak: e-commerce especially, skyrocketed, as everyone began buying things throughout lockdown when confined to their homes. However, one issue that arose is the lack of clarity on digital payment solutions when e-commerce was sold abroad. What became evident, was from supporting payments made in local currencies to catering to regional payments methods like e-wallets to succeed globally, local solutions were needed.
One company that have seen the importance of further improving local tech to enable global success are Rapyd. Rapyd provide an API-based “fintech-as-a-service” platform covering payments, banking services, fraud protection and more, and raised $300 million in funding at the start of 2021. Rapyd’s Chief Marketing Officer, Marc Winitz, who has an extensive history in global marketing and sales, believed that a payment system that included new market integration, diverse customer bases, and comply with local regulations would help businesses become a global success.
Here he shares his views on how businesses must adopt a new payment system in order to find global success.
Cross-border e-commerce surged in 2020, as the shift to digital transactions amid the covid-19 pandemic expanded the horizons of retailers and consumers alike.
As a World Bank analysis laid out, this phenomenon has given rise to greater demand for the digital payments solutions necessary to power cross-border sales. From supporting payments in local currencies to catering to regional preferences for alternative methods like e-wallets, succeeding globally requires thinking and executing locally.
While actually integrating localised capabilities isn’t as easy as that sounds, it’s very achievable and something businesses need to have some understanding of if they want to expand globally. Merchants that are equipped with the right payment technology and careful attention to local legislative and regulatory issues can succeed if they know where to focus their attention and resources. Here’s what retailers, banks, marketplaces and other fintech application providers should know about achieving cross-border success in 2021.
Navigating National Differences and New Technologies
Just as in-depth market research and cultural understanding is essential to penetrating domestic markets, it’s essential for brands to conduct their due diligence on payment preferences and customs in each region as well as the local markets they actually want to work in.
Take Asia, for example. Whereas credit card adoption has lagged in the region and much of the population remains unbanked, it’s a different story when it comes to mobile penetration – which goes a long way toward explaining why 46% of the region’s 1.8 billion online shoppers report that they regularly make payments using e-wallets like Alipay and GrabPay, or local wallets like GoPay in Indonesia, wherein this market, with a similar in population to the United States, there are some 50 ewallets alone. In Latin America – where 207 million people were unbanked as of 2017 – e-wallets have been steadily gaining popularity, a trend accelerated by the pandemic. Even markets that have been more receptive to credit and debit cards, like Europe, have seen mobile wallets gain steam. Bank transfers are also highly popular in Europe, accounting for 59% of transactions in the Netherlands, 28% in Germany, and 20% in Sweden, according to the WorldPay Global Payments Report 2020.
Given the global payments landscape and, for example, the major effort it takes to get online customers to a point of conversion at the checkout stage of the buying process, retailers can’t afford not to support payment methods like bank transfers and e-wallets for accepting payments, along with continued cash and local or international card acceptance to avoid alienating local customers who may prefer more these methods. This same idea holds true for other applications beyond e-commerce, as well.
With that in mind, what should businesses look for when embedding global payments and fintech capabilities into their businesses processes? Seamless API integrations, licensing and technical know-how, and a robust digital infrastructure are musts – and with a payments platform that succeeds on these fronts, retailers can focus on what truly matters: growing their global footprint and meeting customers’ needs. Fintech-as-a-service (FaaS) platforms that move beyond basic banking capabilities and can support the movement of money efficiently and effectively between accounts are driving huge growth in e-commerce, but also other applications like marketplaces, banking and B2B applications.
Knowing the Lay of the Land
As the number of transactions, customers and payment methods used online and in-store increases, merchants need to protect their businesses and their customers not only with secure payment processing but with a thorough understanding of the regulations that affect them the most.
This understanding starts with a commitment to knowing the payment processing compliance standards they are obliged to adhere to in each region. With a comprehensive FaaS solution, retailers can eliminate the headaches that can come with trying to make sense of varying regulatory policies across multiple international markets. Seeking out partners whose solutions ensure compliance by design is therefore critical.
The New Global Normal
While it remains to be seen when most of the world will have exited the coronavirus crisis, one thing is clear: e-commerce, marketplace platforms and fintechs providing financial services are only expanding, and cross-border transactions will continue to offer businesses of various stripes a promising pathway to expanding their reach and tapping into new revenue opportunities.
In the quest for global growth, technological hurdles and regulatory mazes shouldn’t stand in the way. Despite the inherent challenges involved, assembling a payment system designed to support new market integration, diverse customer bases, and local regulatory compliance will enable businesses to eliminate geographic constraints and excel on the global stage.
