Cross-border transactions are becoming prevalent as global E-commerce is surging. With this in the backdrop, find out what customers are expecting from digital payment options.
It comes as no surprise to all, that E-commerce has emerged as a clear winner amidst the rampaging effects of the pandemic.
The digital push that was brought on by the pandemic shows a drastic shift in shopping habits — from physical retail stores to the more convenient options online.
Case in point: There were nearly 2.05 billion online shoppers in 2020.
As the rise in online shopping has surpassed levels not expected until 2025, what’s interesting here is that we’re seeing more takers for cross-border purchases.
For many businesses, dreams of global domination have now turned into a reality. According to reports by Worldpay from FIS, 55% of online shoppers worldwide have made a purchase from another country in 2020.
While E-commerce becomes a dominant form of purchase, and as digitization brings down the transaction costs, multiple projections and analysts are backing the idea that cross-border E-commerce will continue to witness explosive growth — defying all national constraints!
Going by the reports from Accenture — cross-border purchases make up 20% of all worldwide E-commerce sales and are expected to grow at 2x the rate of domestic E-commerce.
Source: Cross-Border Commerce Europe
It’s safe to say that going global has become a necessity!
If you ask me, the E-commerce revolution has flipped the script. Business owners who are no longer confined to national boundaries are picking global marketplaces to sell their products.
To cater to the global market successfully, merchants need to arm themselves with scalable E-commerce technology — that isn’t cost-prohibitive. What merchants need is; a strong technological foundation that does not limit out-of-the-box integrations, which cross-border E-commerce demands.
By bringing lucrative opportunities to the table, cross-border E-commerce is creating a level-playing field for both merchants and payment providers alike. There is a growing need for secure, reliable, and seamless systems to enable frictionless cross-border payments. Before we dive into the specifics, let’s look at what are the growth factors for cross-border E-commerce.
The reasons for the surge in cross-border E-commerce have been plenty! Overall, the increase in digital adoption has had sweeping effects on the retail world.
It’s evident that the cross-border E-commerce growth will continue long after the pandemic ends.
For shoppers, there’s little difference in switching from a local store to making a purchase online, from a country across the globe. Having said that, cross-border E-commerce sits on top of a myriad of challenges that needs to be overcome in a way that makes the entire experience seamless for the customer.
What we need to understand here is that — payment frictions that exist for local transactions will be amplified multifold when transacting internationally.
Cross-border transactions complexities include — data security, fraud, lack of transparency, foreign currency issues, and conversion costs.
With cross-border purchases becoming more of a commonplace in the consumer’s daily lives, we’re seeing an expected rise in new digital payment offerings.
From QR codes, cryptocurrencies to contactless payment options — cash-free alternatives have been on the rise. Emerging cashless payment options are the need of the hour for businesses that are looking to reduce cart abandonment rates, grow sales and build customer loyalty.
These digital payment options ensure that transactions are fast, secure, and transparent — removing the frictions of cross-border transactions to a great deal!
To put it simply — it’s time to leave traditional clearing rail advancements behind and look at leveraging technologies like blockchain, API connectivity, SWIFT GPI, and the likes of virtual accounts to enhance the cross-border payments experience.
As a decline in high street shopping promises growth opportunities for online retailers — the question we need to ask ourselves is; are all of us in the payments industry ready to take on the challenge of making cross-border payments more seamless?
The PwC Payments 2025 and Beyond report states that over 89% of financial firms expect continued growth in E-commerce purchases and 42% of them expect a rise in cross-border payments.
To wrap it up — while we have made great headway, it’s time for players in the financial industry to push further ahead in removing cross-border payment frictions and offering a seamless, secure checkout experience for cross-border purchases.
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Chief Executive Officer, Opus