PwC predicts that revenues from the global sharing economy will reach $335 billion by 2025, presenting an irresistible opportunity for marketplaces to expand into new geographies.
But contrary to popular belief, introducing a marketplace into a new country goes far beyond deciding to sell and ship across country lines. Local regulations, payment methods, and customer experience preferences all play a pivotal role in the growth and success of an international business.
Before your global expansion, pay close attention to the following:
1) Know your customers and how they pay.
Understanding and delivering on your customers’ payment preferences and needs can help you grow customer trust and adoption. By offering your customers familiar payment methods, you’ll make it more convenient for customers to purchase through your marketplace and help reduce the 13 percent in cart abandonment that sellers experience when offering unfamiliar currencies to buyers.
The State of Online Banking recently reported that European shoppers are reluctant to buy from a foreign website for fear of fraud, but over half of them would be more likely to shop from a foreign website if it didn’t force them to provide their payment card details to an unknown international merchant.
Learning how your buyers prefer to pay can help you prevent losing a sale. Check out more information about international payment methods here.
2) Accept Alternative Payment Methods.
Despite the way the name sounds, Alternative Payment Methods (“APMs”) are actually becoming a popular way to transact. They are referred to as “alternative” because they provide a different option than paying by credit card.
APMs can include bank transfers, e-wallets and pre-paid cards, which are growing in popularity due to the added layer of trust they deliver.
APMs such as Sofort, GiroPay, and iDEAL are largely popular in Europe, with 13 out of 36 of countries preferring bank transfer payments over credit and debit card payments, according to Worldpay. Additionally, pre-paid cards are increasing in popularity with buyers who don’t want to incur debt, but rather pay with existing funds.
For more details about alternative payment methods, read this.
3) Be transparent with your customers.
Customers want to know what they are paying for and don’t want any nasty surprises. Providing customers with information up-front helps them become more comfortable and more likely to purchase.
Offer your customers the option of viewing prices in their local currency so they know what to expect. Be sure to consider providing multi-currency options that allow buyers to view and pay one price, including any foreign exchange fees and conversion rates. This will ensure that what they agree to pay is what appears on their statement. Using the same price throughout the transaction from viewing, purchase, statement and even returns – makes the process easy and transparent for the buyer.
As an added benefit, sellers should receive funds in their home currency, regardless of how the buyer pays. This creates a win-win for your marketplace, buyers and sellers.
4) Secure the appropriate licenses and adhere to local regulations.
Accepting and disbursing payments over state lines and globally often requires certain licenses, as well as compliance with local and international regulations. Make sure you have the appropriate licenses and standards in place to meet these requirements. Failure to do so can result in fines and loss of business.
Work with a payment provider that is familiar with domestic and global payments, processing, and payouts to help ensure that you are meeting compliance requirements without having to do all the heavy lifting. Marketplaces that want to make payments to their sellers may need money transmission licenses and obtaining these licenses is a timely and expensive process which may require proof of insurance, financial statements, minimum net worth requirements and up to two years of waiting.
Having an experienced payments provider can help you start processing global payments quickly, simplify your payment operations, provide the efficiency and cost savings of having one partner instead of several.
5) Provide global customer support.
Currency is not the only global variable. Reaching customers with their preferred languages is also important for a global customer experience. When it comes to payments and language, most customers will feel more comfortable and confident working with someone who not only supports their payment preferences, but can converse in their preferred language.
If you’re selling internationally, it’s important to provide your customers with customer service and support in their preferred language whenever possible. Providing personalized language support can give your customers the extra peace of mind of knowing you understand their needs.
6) Consider your sellers.
If you have sellers from different countries and geographies, it’s important to know that sellers want to be paid in the local currency, want to accept card payments at the lowest possible costs and need business and banking relationships in the countries where they do business.
Working with a payment facilitator (“PayFac”) that operates in multiple countries can help you manage payments to your sellers and could help lower rates. In general, cross country/geography transactions have higher interchange fees (fees charged by card issuers such as Visa, Mastercard, Discover and American Express) than in-country/geography transactions.
If you run a marketplace domiciled in both the U.S. and U.K and have buyers and sellers both in the U.S. and U.K., there are several different combinations of payment acceptance, settlement and payout. By maximizing domestic scenarios, sellers can minimize international transaction costs.
There is certainly a learning curve when it comes to global expansion and you can never know too much about your customer and their behaviors. When you research heavily and use deep knowledge of each geography to tailor your practices to each demographic, you are well on your way to building a global empire.
By Keith Lam, Senior Director of Product Marketing at Yapstone