No matter where you are, eCommerce is a critical component of daily life. This ubiquity means it is crucial for businesses to acknowledge and adapt to the diverse needs of customers around the globe.
One essential adaptation involves the need for ecommerce businesses to support local currencies and alternative payment methods. However, many companies continue to underestimate the importance of localizing their payment methods. They do this to their detriment, but they do it because they don’t know how to resolve this issue or – put another way – how to realize this opportunity.
Working with in-market payment partners to ensure local authorizations will increase conversions and significantly improve the overall customer experience – and your bottom line.
Let's delve into some statistics that illustrate the negative impacts of off-shore payment processing on authorization and conversion rates.
1/ High Abandoned Cart Rates:
An alarming statistic from Baymard Institute shows that, as of 2023, the average global cart abandonment rate was a whopping 70.19%. Among the leading reasons for this were issues with payment, including the lack of local payment methods or difficulties in processing foreign currencies. Businesses without in-market partners to streamline these transactions were seen to have a higher rate of cart abandonment.
2/ Decreased Authorization Rates:
Research from Forrester highlights that cross-border payment transactions have a 15% lower authorization rate compared to domestic transactions. Off-shore payment processing often involves additional security checks, which increases the chance of a false decline, thereby reducing the authorization rate. With an in-market partner who understands the local payment ecosystem, you can significantly mitigate this issue.
3/ Diminished Conversion Rates:
According to Statista, 13% of global online shoppers abandoned a purchase because the website was not in their local language, which includes not offering prices in local currency. Simply put, this leads to a direct reduction in conversion rates and revenue.
4/ Preference for Local Payment Methods:
Data from MasterCard shows that over 20% of global consumers would abandon a purchase if their preferred payment method was not available. This percentage tends to be higher in markets where alternative payment methods, such as mobile payments, e-wallets, or local credit systems, are more prevalent – which stretches the abandonment rate to upwards of 45% of global consumers.
5/ High Costs of Cross-Border Transactions:
Cross-border transactions often entail higher fees, both for the retailer and the customer. A McKinsey report highlights that cross-border payments can be 2 to 3 times more expensive than domestic ones. These extra costs can deter customers from completing purchases, thereby negatively affecting conversion rates.
Your Course of Action
Addressing these challenges requires a clear strategy for integrating local currencies and alternative payment methods into your ecommerce platform. A Global Payment Orchestration Platform ensures you have in-market partners who can provide crucial insights into local customer preferences and behaviors, helping you streamline the payment process and ensure more seamless transactions.
At the end of the day, an ecommerce business's success in the global market is heavily dependent on its adaptability to local trends and preferences. By supporting local currencies and alternative payment methods, businesses can enhance the customer experience, improve authorization and conversion rates, and ultimately, drive growth.
All business is global.
It's time for ecommerce companies to think globally but transact locally.
It's not just a recommendation, but a necessity for survival and growth in today's global ecommerce ecosystem.
Jeff Katz
Chris Rechtsteiner : Nov 28, 2023 10:24:33 AM
