It’s a small world after all | Currencycloud

It’s a small world after all

Written by: Currencycloud
Published on: February 08, 2018

You don’t have to be big to sell on a global stage, but effective international payments are a must

Small businesses can make a surprisingly big dent in online commerce. Research has found that 13% of all small UK businesses sell via online marketplaces, generating £11bn in sales in 2016. That figure is expected to nearly double to £21.3bn by 2020.

Experts are calling it the ‘iStreet’ and claim that online marketplaces such as Amazon, Etsy and eBay are making it easy for sole traders or enthusiastic crafters to reach a worldwide audience.

Going through marketplaces has its benefits – primarily audience reach, outsourcing payments and easing the administration of listings. But charges can be hefty and it’s tricky to build a standalone brand. Increasingly, entrepreneurs and small businesses want to be able to sell direct.

Provided they can get the marketing right, this isn’t hard. The internet is largely borderless. As long as they balance shipping costs, customers are as willing to buy from an e-tailer on another continent as they are one with its HQ no more than 100 miles away. WorldAtlas noted, for example, that Swedes spend on average $1,446 online a year and that more than a quarter (26%) of them shop on foreign sites – mainly UK (32%) and German (28%).

The only sticking point is in payments behaviour. There is a tendency to assume that internet retail and credit card purchasing go hand-in-hand. But it is really not the case. Germany often operates on a third-party invoicing system; Brazil and Turkey use local credit cards, but pay in installments; while most consumers in India prefer to pay cash.

We can add to this the often surprising revelation that the VISA and MasterCard brands, while enormously popular worldwide, are not ubiquitous. The biggest example of this is China’s UnionPay – by far the most popular payments card for that country. Offline retailers already recognise its importance and many shops in tourist hubs such as Central London and Manhattan advertise that they accept UnionPay, to capture the valuable Chinese tourist budget.

With so many payment methods it can be hard for an e-tailer to decide how to accept payment. Every new payment type that is integrated heaps more cost on the small business.

There are two possible solutions. The first is to focus the business. While the whole world is the small business’s oyster, there are costs involved in targeting lots of different regions and not just payment ones. Just as a standard business considering global expansion would, look at two or three key regions where the customer base has the most potential and only target those.

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Then, offering single and targeted payment opportunities may establish a competitive advantage: “Now accepting Union Pay!” Allowing customers to use their usual payment type not only makes the business attractive to them from a convenience point of view, but it makes them feel special. The business has identified that these customers are important and is catering to them.

The second solution works best if the business wants to keep its international options open. Mangopay is one example of a back-end payments solution that helps e-tailers accept payments in multiple currencies, using several different payment behaviours including credit cards and bank transfers. It sits in the background running on an API, white-labelled to look like the store’s own checkout process. The retailer doesn’t need to adopt specialist payments technology, expertise or cost.

Shopping across borders will only grow. Juniper Research puts its compound annual growth rate at 17%, compared to the overall growth of ecommerce at only 12%. There are now few barriers to serving customers wherever they might be. Make sure payments isn’t one of them.

If you want to learn more about how to get started, get in touch to schedule a discovery call today.