Kristin Savilia is CEO at JOOR.
The expanded global supply chain has created an inflection point for cross-border payments in the retail industry—making seamless digital payment processing a prerequisite for international commerce.
According to the 2023 edition of McKinsey Global Payments Report, Global payments revenue grew significantly for the second consecutive year, and the growth rate of e-transactions, especially over the past five years, was almost three times higher than overall payment revenue growth. Globally, the use of cash will drop by almost four percentage points in 2022, and in the US, credit cards have become ubiquitous, with 82% of the market choosing to transact by credit card, according to Federal Reserve.
Just as 10 years ago it seemed unthinkable that contactless payments would become spontaneous in the B2B world, business leaders who do not leverage integrated cross-border payment solutions in the next decade will likely struggle to compete. That said, businesses that adopt the right integrated global payment solutions can unlock increased performance, improve buyer satisfaction and maintain a competitive edge.
Without this type of technology, businesses could face unnecessary complexities and high costs with international transactions. In addition, shifting exchange rates make cross-border transactions unpredictable and costly, especially when it comes to returns. The loss of revenue is staggering. ONE PYMNTS Information Report“Cross-Border Selling and the Challenge of Failed Payments,” found that last year alone, US merchants suffered at least $3.8 billion in lost revenue from failed cross-border payments (p. 15).
I have often spoken about the countless benefits of digitization when it comes to all aspects of a business. Increased efficiency, reduced manual errors and reduced spend were all key elements of this and all apply to implementing a cross-border, integrated payment solution as well.
Enabling a cross-border payment solution can boost international growth at significantly lower costs and with minimized currency risk, simplifying and speeding up the payment process. Retail business owners can make the payment collection process more efficient, saving time so they can focus on growing their revenue. SMBs often have barriers when it comes to expanding internationally, and this removes that barrier.
Additional benefits include:
• Reduced risk: Research by Mastercard has shown that fraud is a major concern 41% of small and medium enterprises who have used online payment services, with 47% claiming problems with international payments. Offering cross-border credit card payments can help mitigate the risk of fraud.
POS breaches, supply chain vulnerabilities and data breaches are all on the rise. Embedded payment solutions can strengthen your security protocol as you no longer need to burden yourself with storing credit card information. The right cross-border payment solution will also eliminate currency risks.
• Alignment with buyer preferences: When was the last time you visited a business that only accepted cash? It is likely that several years, if not a decade, have passed. Retail buyers demand seamless, frictionless payment processes to stay loyal.
Just as consumers do not want to deal with expensive wire transfers in their business operations, neither do retail buyers. While credit cards are the norm in the US, every country is different and it’s important to give shoppers the flexibility to pay in the currency of their choice.
• Enabling predictability and regulatory preparedness: Each country can have different regulations and processing times, resulting in delays and major headaches. With a low fixed rate per transaction, business owners can eliminate unpredictable and constantly fluctuating foreign exchange fees.
Integrated payment solutions can also help retailers meet changing global standards. The G20 Roadmap to Strengthen Cross-Border Payments has published its aims to make cross-border payments “cheaper, faster, more transparent and more accessible” by 2027. Meanwhile, the Bank of England has estimated that the cross-border payments market could reach 250 trillion dollars until 2027.
How to choose a solution
Finding a payment solution that fits your business needs should be a comprehensive, multi-step process. First, it’s important to assess your current payment process and identify pain points. Ask yourself, in an ideal world, how would I improve this process? If your customer base is very international, it will likely benefit from accepting multiple currencies.
Additionally, 24/7 customer support can help build trust in the sensitive financial space, and ease of integration with current infrastructure can certainly influence the likelihood that new users will switch and improve their current workflows.
Implementing a seamless, integrated global payment solution is key to achieving global expansion goals. The sooner you identify and implement a solution that fits your business needs, the sooner you and your customers can start reaping the benefits.
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