Different places have completely different atmospheres and offer completely different shopping experiences as well. However, the one common thing in all the places around the world is the method for payment. If one walks around any local market of the world, you’ll find most people paying through cash, e-Wallets, phones, or local debit cards rather than using credit cards.
Not only does this happen in local markets but also international credit cards are not that common for making payments in developing countries. Moreover, shoppers who want to buy from international e-Commerce stores can do so only using local cards, e-Wallets, or cash. The reason for shoppers to shop across the border is to find products at a cheaper rate or they aren’t available in their local market. And for retailers, it is the best opportunity to enter into a new market and expand their eCommerce business. And the best thing is they can do so with low initial upfront investment.
In different emerging markets, the use of international credit cards tends to vary. For instance, 75% of the citizens of Brazil don’t own an international credit card. And in Argentina and Mexico, 67% and 60% don’t have access to international credit cards respectively.
Local Payments Opportunities
Latin America, Asia Pacific, Europe, the Middle East, and Africa pose the largest opportunity e-Commerce owners can leverage. In these emerging regions, eCommerce is forecasted to grow at a rate of 40-50% Year-On-Year in about the next 5 years. This could bring 2-3 billion mobile- & tech-savvy shoppers in these regions into the fold. Thus, these emerging markets are where rewarding opportunities lie, however, accessing these markets is a challenge.
To tap into this immense opportunity, most international brands like Uber, MailChimp, GoDaddy, TripAdvisor, etc. offer local payment methods to residents. Companies like Avast saw a 20% growth in their conversion rate and a 35% increase in yearly revenue after introducing the alternate local payment method while expanding their business to Latin America.
Another great example is the growth of Banggood in India. The monthly payment Banggood was processing before integrating the local payment processor was $300,000. And in just about 4 weeks, the total number of transactions across all payment methods Banggood was processing in India almost tripled. And in just two months, the total revenue for Banggood in India reached above $1,500,000 after integrating local payment processors.
This significant growth of Banggood in India reflects how much potential these emerging markets have. And offering various local payment options can help you expand your eCommerce business here.
Challenge you Face with Local Payments
The biggest challenge for international brands have to face while expanding into the emerging regions is up to 70% of the local residents don’t own international credit cards. Thanks to that, buying from such an eCommerce store becomes a complicated process.
What businesses have to do here is process payments using locally accepted methods, open a local entity, partner with local banks, comply and understand the taxes and payment regulations, make yourself aware of different payment cultures and methods, and also take care of many other things.
Setting up a local entity is an essential part of the business expansion and helps you to take the money out of that market you are processing payments. This is a necessity and you have to do it in all the countries you are planning to process payments. However, opening a local entity is not that easy and could take months or years. Moreover, many companies don’t have time and that much resources to handle it on their own. Thus, they need a better solution to make all things workout efficiently.
Local Payments Solution
Integrate local payment processors to save a significant amount of work you may have put in to establish a local entity. Research and choose a payment processor that offers fast entry to the market and can easily handle cross-border payments. It should be a simple and single API platform that can offer merchants to pay-in and pay-out meaning receiving payment and paying to partners.
A good local payment processor must take care of pay-in/pay-out transactions & currency conversions while paying taxes and reconciling them to you in the USA or EUR. It should support major payment types such as local cards, e-Wallets, bank transfers, cash payments, and others. Also, it needs to offer convenience for merchants to receive funds in their country of origin.
Get Your Big Break
A local payment processor can open new doors for international brands to sell products to emerging markets easily & safely by providing them apt tools for it. The technology behind the payment processor should be capable enough to handle almost all payment methods required by the e-Commerce business. It should combine the market expertise with the next-gen tools to eliminate any operational complications. Moreover, it should help merchants manage their cross-border payments effortlessly.
Another thing that the payment processor must support merchants to ramp-up fraud protection & get advice from market experts as well. This will help them to concentrate on their business’s growth rather than payment compliance.
Once the local payment options are available, many companies will see higher accessibility and profitability. Also, the emerging market hasn’t been saturated with lots of brands and competition. This provides you an opportunity to leap forward and establish a successful brand in emerging markets of developing countries.
As we discussed, the eCommerce markets in emerging countries have so much potential that international brands can leverage for their benefit. But to get into such markets and convince users to buy from you will require a little more effort from you. To overcome that, integrate local payment methods that residents trust and use on daily basis.
Need help to expand or set up your eCommerce business in emerging countries? M-Connect Media strives to provide you robust and effective eCommerce solutions for all your bespoke needs. We a team of dexterous developers with ironclad proficiency. Get in touch with our team or consult our experts to kick start your eCommerce development project.