24 January 2018
Andy McDonald


Andy McDonald - ACI Worldwide

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Key Considerations for Payment Providers in a Cross-Border World

11 September 2017  |  7613 views  |  0

While there’s no template that works for all businesses when it comes to cross-border eCommerce strategy, there are certain key themes that seem to crop up again and again when discussing with colleagues, partners and clients. I want to share these – given the continuing interest in cross-border expansion – and the implications from a payments perspective – amongst both retailers and payments providers.

Determining whether a cross-border strategy is a good fit for the business

There’s a desire to expand beyond domestic markets to secure new revenue streams, as global eCommerce has exploded and the world has effectively shrunk. Payment providers (PSPs, as well as ISOs and MSPs in the U.S.) must work on many fronts simultaneously; regulatory and compliance issues, technical connectivity to local acquirers, and enabling locally-preferred alternative payment methods. This varies on a country-by-country basis, and sometimes also between market verticals. Merchants, meanwhile, need a clear strategy of how they will carve out market share. If selling physical goods, they need to consider how to handle warehousing, shipping, and other logistics. Local shopping habits also need to be taken into account. Technology has made it possible to reach consumers in far-flung corners of the globe, but payments businesses and merchants need to think critically about cross-border strategy and whether it best serves their overall business strategy.

Payment strategy is at the core of cross-border eCommerce strategy

Shoppers want to pay with their preferred payment method, but this does not mean integrating every esoteric payment method under the sun. Rather, it’s about being strategic about what payment methods are enabled on each channel. as mobile and desktop often require different approaches.

In the U.S., despite the developments around the ACH network, credit cards are still well entrenched. But in many global markets, so-called alternative payment methods are the incumbents. In the Netherlands, for example, iDEAL (online bank transfer) has had more than 50% share of all online payments for several years.

In the DACH region (Germany, Austria and Switzerland), there is an expectation of ordering now and paying later. Offering payment by open invoice and direct debit involves risk for the merchant, but the fact that two-thirds of all shoppers have broken off the purchase process because these preferred methods were not available, indicates just how important it is cater to local expectations. Payment providers also need to think beyond relevant payment methods for each market, and support in-app payments via mobile SDKs, as well as enabling one-click checkout and recurring billing.

Safety first

The diversity of payment methods on a global scale also requires a tailored approach to risk management. In the U.S., chargeback management solutions help companies manage fraud and avoid penalties from card schemes. But in Germany, where 29% of online purchases are completed by open invoice (compared with just 10 percent for credit cards) and accepting this payment method can increase conversions and drive revenue, it is necessary to work with local partners to mitigate the risk of payment default.PayProtect is one service tailored to the needs of the German eCommerce market, performing an invisible background risk check to determine in advance whether a shopper should be offered open invoice or direct debit payments when they reach the checkout. A flexible fraud protection system is needed, so that risk strategy can be customized according not only to payment method, but also channel, country and delivery method. 

It takes two (or more) to do the cross-border tango

China is the international market that many payment businesses are eyeballing, but the regulatory environment presents challenges in moving money in and out of the country. However, the key to understanding the regulatory landscape in China is understanding not just the language, but also the culture. Not something that happens overnight.

As a consequence, rapid international expansion requires local partners with local knowledge. Brazil, the biggest market in Latin America and another popular choice for U.S. businesses, is a perfect example. The regulatory environment – in particular local taxation laws – is complicated, so local expertise helps to turn opportunity into profit.

Keep an open mind (and be willing to work with open technology)

Global eCommerce is moving fast, and the underlying payment technology needs to enable, and not restrict, companies that want to keep pace. The speed of innovation has left some payment providers with legacy systems that are costly and time-intensive to upgrade. RESTful API architecture has become the standard-bearer for greater technological openness, as it allows for innovation and individualised solutions. While this is applicable to payments generally, it is particularly pertinent when operating in multiple international markets.


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job title Vice President, Merchant Payments
location Oxfordshire
member since 2017
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I am helping ACI Worldwide grow its ecommerce payments in Europe and manage a team of payments and fraud professionals across this region.

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