Cross-border e-commerce continues to grow across the EU. According to a report, the European cross-border market will grow to 220 billion euros by 2022. Fast growth in emerging markets, greater financial inclusion, and innovation in digital payments have greatly contributed to the rise of cross-border e-commerce.
For even the smallest business, in due course of time, cross-border growth becomes a matter of priority if they want to scale their business. But businesses that make or receive international payments also know that it can be quite challenging. Getting your cross-border payments right is crucial if you want to avoid negative impacts like late payments or payment fraud.
Most cross-border payments still rely on traditional legacy methods that are slow and inefficient. Moreover, the risk of payment fraud and the presence of different regulations across different countries is an ever-present reality. In addition to these, there are other areas that must be considered to ensure a smooth, fast, and secure cross-border payment experience.
In this article, we take a look at 3 mistakes that a business needs to avoid when doing business across borders.
3 Mistakes to Avoid in Cross-border Payments
1. Not offering local payments
Not offering some form of local payment option is one of the key mistakes to avoid when doing business across borders. Customers’ payment preferences vary from region to region. For example, shoppers in the Netherlands prefer IDEAL, while Giropay and PayPal are desired in Germany.
Merchants looking to expand in new markets need to fully understand the local payment preferences of each country they aim to enter. Not offering local payment methods lead to higher cart abandonment rates. So, while offering alternative payment options, make sure you have at least one local payment method to increase conversions.
Personalizing payments makes it easier to meet customers’ needs in a global marketplace. Working with a payments service provider who understands the local market can help you offer a secure and seamless shopping experience.
2. Ignoring the impact of FX
Foreign Exchange (FX) is another key challenge that you need to be aware of. High exchange rates along with other fees can become an unseen risk if you are unaware of the country-specific regulations.
And since it is the consumer who has to pay the extra cost, if you are unable to provide a detailed breakdown of what they are paying for, it can often lead to higher cart abandonment.
Working with a trusted payment service provider minimizes this risk to a great extent. Your service provider enables you to handle conversion rates better. They help you navigate the tricky areas of FX while ensuring your customers can pay using their preferred payment methods.
3. Not staying up to date on local trends and regulations
Whether it is your sales and marketing approach or your communications strategy, when working cross-border, you need to think local. Not staying up to date on local trends or not being aware of local rules and regulations is another key mistake that many businesses tend to make. For example, there are many rules to follow when doing business in Europe – PSD2, PCI DSS, or GDPR. Compliance is key.
Adopting a local approach to payments is therefore critical to know how potential customers like to do business. But localization isn’t as simple as it may seem. Many merchants struggle with vital questions like how to decide the best payment option for a specific country or whether to open a new local bank account. Working with a payment service provider can help you address these issues and comply with local laws.
Be it AI for fraud management, smart payment routing or payment automation, the right payment service provider can give you access to data-driven insights that help in better decision-making and offer a unique payment experience to customers.
Novalnet: Your Solution to Cross-Border Payment Problems
Choosing the right international payment processor is crucial for cross-border e-commerce. There are a number of factors that can either make or break your success as a global business. From helping you make payments in local currencies to helping you understand the norms and regulations of a region, a good PSP can offer you support in multiple ways.
As an international PSP with decades of experience in helping numerous brands process their payments across Europe, we work across different countries and have relationships with local banks and acquirers. We can help you accept payments seamlessly in 125+ currencies in 150+ country-specific payment methods. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get you up and running with your payments in a short time, and with zero hassle.
Wherever you are in Europe, we ensure that your payments are running smoothly at all times, round the clock.
To get the best solution for your payment needs, reach out to us today.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.