Expanding into new markets is no small feat, but it is a worthy one.
Recent data from Statista reveals that retail e-commerce is projected to grow at a rate of 56% from now until 2026, reaching a total sales value of more than $8 trillion (USD) by the end of the forecast period. However, the landscape of global e-commerce is diverse and spread across many countries.
Expanding into new markets involves many moving pieces, from marketing and customer service to logistics and operations. With so much to manage, it can be easy to overlook a payments strategy.
Though a payments strategy can often end up on the back burner, a resilient payments infrastructure is actually the key to a successful expansion into new markets.
Payments Considerations When Expanding into New Markets
There are many reasons why a business may want to expand into new markets. For instance, one business may be widening its scope of services to attract more share in the current market while another business is expanding into international regions.
Regardless of which type of expansion you hope to achieve, developing a payments strategy that suits the needs of the specific markets you are expanding into is a crucial component.
With this in mind, here are three key considerations for your payments strategy as you plan to expand:
1. Offering a Wide Range of Payment Methods
The most important factor to consider is which payment methods you can offer to customers.
Traditional online businesses have historically only accepted debit or credit card payments. With the growing prevalence of online and digital payments, however, customers around the globe are more expectant of a wide range of payment methods being provided to them.
One of the most common ways for a lack of diverse payment methods to manifest is through abandoned shopping carts — a problem that costs e-commerce businesses roughly $18 billion in yearly sales.
Think of it like this: Your customer has selected the products or services they wish to purchase and proceeds to checkout, where they discover you do not offer their preferred payment method.
Maybe the customer has another payment method but they don’t want to use it, or maybe none of the payment methods you offer are viable options for this customer — either way, you have inadvertently created an unpleasant payment experience that is likely to turn that customer away from your business.
According to the Global Online Payment Methods 2022 report, the payment methods proven to be most popular worldwide include cards, digital wallets, and Buy Now Pay Later (BNPL) installment loans.
Other types of alternative payment methods to be aware of include money management platforms (like PayPal), mobile payments, and direct online bank transfers. Some regions even have their own localized payment methods, such as SEPA in Europe and Pix in Brazil.
2. Optimizing Transactional Efficiency
To achieve success in new regions, your payment strategy should prioritize optimized transactions.
When expanding into international territory, businesses must cooperate with the financial authorities in the regions they are operating in. This can present a regulatory and technical burden, as the business’s payment strategy must account for both new regulatory rules and how to connect with the right local financial authorities and local payment service providers.
If a business does not have a payment infrastructure that is robust enough to handle these new burdens, customers may face higher instances of false declines and low authorization rates.
This is yet another issue merchants and merchant aggregators must not ignore, as false declines cost merchants and issuers roughly $440 billion in 2021 alone, according to a 2022 PYMNTS report.
3. Enhancing the Customer Experience
The reality of today’s payments landscape is that customers have evolved to favor digital payments.
This includes not only offering alternative payment methods, but also building a localized payments infrastructure capable of meeting the digital and local expectations of customers.
For example, providing an embedded payments experience that simplifies the entire process is key. According to The 2022 McKinsey Global Payments Report, the next generation of embedded finance is empowered by a wider range of integrated digital interfaces that customers can interact with daily.
The report further states that:
“For consumers and businesses using these interfaces, acquiring financial services becomes a natural extension of a nonfinancial experience such as shopping online, scheduling employees to work shifts, or managing inventory.”
What this all reveals is that offering payment experiences that feel natural and intuitive to customers is essential for building long-term loyalty — something that is a vital puzzle piece when establishing an international business presence in new regions.
Final Thoughts: Payment Orchestration is the Key to Expansion
At Spreedly, our payment orchestration platform provides you with all the necessary components to establish an exceptional payment strategy for international expansion.
From optimized transactions that boost revenue through smart routing capabilities, to a vast payment ecosystem that enables you to connect to hundreds of different payment service providers, Spreedly has the powerful capabilities you need to enhance your approach to payments.
Don’t just take our word for it either — consider this quote from Spreedly customer and SeatGeek founder Russell D’Souza on how Spreedly helped enhance the company’s customer experience:
“With Spreedly, we’ve gained the ability to offer an outstanding experience to users who come back to SeatGeek after making a purchase. That’s the beauty of the two tap functionality . . . People don’t want to put their credit card information into their phones. It’s a huge deterrent, and so if we can make them do it only once, every subsequent purchase they make on SeatGeek—across any one of our partners—is dead simple.”
Plus, with Spreedly, you never have to worry about compliance. Our payment vault is PCI-compliant and we also offer added-value services, like Network Tokens, for added layers of security.
Get in touch with our sales team today to learn how we can support your global expansion goals.