You may be looking at possibilities overseas for growing your business. If you want to offer an online store for consumers abroad, it is essential to know the payment expectations, regulations and requirements of the local markets and prospective customers.
For example, a consumer in Germany expects to see a retailer with prices posted in Euros. In the UK, people assume an online shop will have prices in British Pounds. Any divergence from these expectations will make a prospect hesitate, and that increases the chance of the consumer leaving the website and going elsewhere for his or her purchase.
This also applies to the payment methods that customers expect to see at the checkout, because with the sensitive issue of payment, consumer trust will help influence the conversion rate. While credit cards and PayPal are accepted and used around much of the world, only offering these methods to international consumers will limit conversions. There are important payment methods specific to different countries which will be key to success. Let’s take a look at some of them.
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Domestic Payment Methods:
Western Europe
The German consumer expects options that include credit card, debit card and PayPal, as well as payment methods not used in the U.S., like Giropay or Elektronisches Lastschrift Verfahren (ELV) — Direct Debit. Also a key success factor in Germany is payment on invoice which comes with high default risks that need to be addressed correctly.
For business in Austria, the e-payment standard (EPS) has been utilized as a popular payment method for several years now. Another regular payment option used is the Maestro SecureCode. In the UK, the Maestro card is used by many consumers.
The French predominantly use one card, the Carte Bancaire or Carte Bleue, and that option needs to be available if an online retailer wants to sell successfully in France. If you want to do business in The Netherlands, the Dutch often use iDEAL online Internet payment method, with the remaining purchases made by credit cards and PayPal, and a small number by Lastschrift.
With regards to debit cards, online retailers can accept payments with Visa Electron via their normal Visa credit card agreement. For Maestro cards, which in Germany are known as girocards, the situation is more complicated. This internationally popular debit card may be used only with the MasterCard SecureCode password prompt. However, these are only used by banks in England, Austria, Spain and more recently Germany.
Eastern Europe And Asia
For business in Poland, consumers expect to see Prezelewy24 as a payment option. And when selling into Russia, the Qiwi e-wallet and kiosk cash payments are popular payment methods, as only 5% of the population has a bank account, and less have credit cards, doubting their security online. Qiwi enables accountholders to pay in cash by loading their accounts at terminals, participating ATMs or activated telephone contracts. Trustpay and a direct connection to a Russian acquirer, like UCS, is also important because U.S. acquirers only cover 50% of Russian credit cards. This is because they lack a license of either Visa or MasterCard in Russia.
Credit cards are not popular for buying online in the wide and varied market of China. Visa and MasterCard have no footprint there, and even the credit cards from China Union Pay (CUP) are not thriving either. If you want to be successful in China, consumers expect to see Alipay, which is an online payment platform with the biggest market share in China — currently more than 650 million registered users. Alipay accounts for more than 47% of all online transactions in the country. The second largest wallet provider in China, with 20% market share, is Tenpay. Tenpay is part of the Tencent Group which has been very successful in providing value-added Internet and telecom services like QQ.com or QQ Games. Given its origins, Tenpay is good for addressing younger people and the gaming community. There are other smaller wallet players such as CUP and 99bill, each of which covers market shares of around eight to 9%.
Fraud Prevention
Across the board, preventing payment-related fraud is key, regardless of geography and payment method — and is obviously important for a company conducting business from potentially the other side of the globe. The good news is that some payment methods have come a long way in preventing fraud and guaranteeing payments.
With PayPal, the global PayPal Seller Protection has been in place since 2010. It extends to international payments, making the method safe for use outside of the U.S. When the dealer submits the payment, and the shipping address is verified by PayPal, PayPal’s guarantee becomes unlimited for all payments worldwide. However, seller protection does not cover products such as intangible goods, tickets or services.
Credit card companies have also made great strides in this area – but only up to a point. Options like Verified by Visa and MasterCard SecureCode are widely used and accepted. However, Verified by Visa and MasterCard SecureCode only cover fraud if the unauthorized user misuses the credit card authorization within 7-14 days.
There are other ways to help minimize fraud and guarantee payments. Try to use local payment methods with payment guarantees for merchants in order to minimize the risk of payment default. Another way is to explore options with a Payment Service Provider (PSP). For example, there are some PSPs that can extend Verified by Visa and MasterCard SecureCode payment guarantees past 14 days.
If you are exploring options with PSPs, ask if they can incorporate credit card origin checks, GEO IP origin checks, device identification and velocity checks. These will help to prevent fraud in the payment process. Also, ensure you will be able to block specific credit cards and account numbers. In addition, some PSPs have integrated various credit bureaus into their solutions and can access international credit agencies for further details that can protect retailers from fraud.
Other Considerations:
Localization
In addition to offering local payment methods and preventing fraud, it is important to address local language, local culture and behaviors, and local currency if you want to sell into international markets online. An e-commerce site needs to be adapted for local audiences. For example, studies have shown that buyers prefer to purchase online from retailers that offer pricing in their local currency. In addition, for countries like China, appropriate adjustments must be made to address the local government/legal landscape.
Communication Channels And Marketing
Consider the right communication channels for foreign prospects. In countries with low broadband penetration, mobile shops and mobile payment options are vital success factors. Unlike in the U.S., having a “mobile shop” is considered a key success factor in China, for example. You will find other differences when conducting business in China as well. For instance, don’t expect Chinese consumers to respond quickly to e-mails – it could take weeks. Particularly for target groups under age 35, QQ instant messaging is more important than e-mail in this country.
In some countries, it may not be good enough to offer your own online store and marketing. You should consider creating a secondary web shop for special offers on malls like T-Mall in countries like China in order to spread your brand message. However, don’t just rely on malls because constant rebates would probably damage your brand. A good typical market entry strategy is to sell special offers on marketplaces but sell a broader range of products at normal prices in your own online store.
Delivery And Returns
Find out what expectations local consumers have regarding delivery and return policies, and set up the shipping processes accordingly. Check the local law on return policies, and establish refund processes for all of your payment methods.
Logistics, Tax And Tariffs
Other challenges that are easily resolved are logistics, tax regulation and tariff calculations. In order to save time and effort, businesses can work with full service providers like eShop World or Hermes. They provide tools and services that calculate duties and tariffs in an instant.
In Closing
While opening your business to overseas prospects raises the potential for more sales, it also increases the possibility for fraudulent behavior during the checkout process. Ensuring you have the right payment and fraud prevention solutions in place, coupled with the right approach to your website, communications, and shipping and return processes, will help to minimize your risk and increase your ability to transact effortlessly, and with confidence.
Ralf Gladis is the co-founder and CEO of Computop, Inc., a global payment service provider.
