Commentary

Jan. 17, 2019

By Steve Villegas, vp of partner management at PPRO

E-commerce continues to change the way we live, work and play, and much of the disruption taking place has somewhat paralyzed online merchants. Many U.S. online merchants, in particular, are immobilized at the thought of selling across local borders - distinctly fearing a combination of unforeseen scenarios from fraud to security concerns and constant chargebacks.

Frankly, they have it all wrong - and it’s hurting their chances in taking advantage of the abundance of e-commerce sales offered on a global scale.

Recent PPRO research reveals that in the United States only 11 percent of total e-commerce revenue came from cross-border sales in 2017 – a stark detriment considering the world’s admiration for American brands.

When it comes to expanding e-commerce business outside of local borders, there are many false facts floating around for online merchants. The truth is that there are many different payment options that specific global regions prefer. Many US-based online retailers are misinformed around local payment methods and the benefits they can bring to their business as well as global consumers.

It’s time to debunk these misconceptions.

Let’s share a few common myths in the current e-commerce climate and reveal the real truths behind them.

Myth 1: American merchants are reaching their full potential selling throughout the United States

Many U.S. based retailers are only selling to consumers within American borders. In fact, 64 percent of American merchants only sell to U.S. consumers.  This is causing American merchants to fall behind some of their global counterparts. Cross border sales represent 40.6 percent of all revenues in Western Europe and 34.7 percent in Asia.

Fact: Global markets present a great opportunity for U.S. merchants to expand.

Emerging global markets represent a great way for U.S. merchants to expand operations globally. According to PPRO, 64 percent of Canadian consumers shop cross border and this rises to 66 percent for Mexico.  Currently, only 36 percent of U.S. merchants sell cross-border. This figure should be much higher as U.S. merchants are ultimately leaving billions of dollars on the table. By 2021 U.S. cross-border e-commerce is expected to rise to $203 billion.

Myth 2: Offering credit card payment options is enough to reach global e-commerce shoppers.

Credit cards are a very popular payment method in the United States as 57 percent of all online purchases in the U.S. are paid by card.  Most American merchants offer them as their main payment method as US credit card penetration is 66 percent Just about every consumer has a credit card, so many merchants believe there is no reason to look to into other payment options.

Fact: Online merchants need to offer a variety of local payment methods to connect with global consumers.

Not every consumer uses the same payment method. In fact, different global markets have different ways that native consumers prefer to pay for goods. These are referred to as local payment methods or LPMs. LPMs are payment methods outside of traditional credit cards and brands that facilitate the needs of different geographies, cultures and domestic economies across the globe. LPMs tend to be market and geographically specific and are many times preferred by the majority in a specific region. For example, an American consumer and a shopper in the Netherlands will have vastly differently preferences when it comes to online payments. While Americans mainly prefer to pay with credit cards, 57 percent of purchases are paid as such, consumers in the Netherlands prefer to utilize online bank transfers like iDEAL. These payment preferences vary across different regions around the globe. In China, for instance, 49 percent of online payments are made by E-wallet, while 70 percent of online purchases in the Ukraine are handled with cash.

Myth 3: Global customers are only driven by competitive pricing.

A popular method of sales is offering the lowest price possible. Many online merchants believe that the only way to attract customers worldwide is through competitive pricing.

Fact:  Ease and convenience are just as important as competitive pricing.

While offering low prices is very vital to consumers who frequently shop online, ease and convenience of payments is just as important.  Global consumers want to pay for goods with methods they are most comfortable with – or they will go elsewhere. Almost 50 percent of consumers will end a transaction if their preferred payment method is not available. Offering local payment methods catered to the needs of global consumers will lead to higher sales conversions.

With 85 percent of the world’s spending power outside of local borders, U.S. merchants should look to scale their business models globally to reach a new wave of consumers. The global middle class is rising, and American good are in demand By offering locale payment methods, U.S. merchants can make global consumers feel more comfortable with transactions and in turn, reap the financial benefits.

Cover photo: iStock

Topics: Mobile Payments, Retail, Trends / Statistics

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Jan. 17, 2019

Fortumo, an Estonia-based digital enablement firm, has launched PayRead, a digital media platform that allows publishers to create a frictionless payment process using a mobile SIM card, eliminating the need to use paywalls, individual article signups and other time consuming processes.

The PayRead platform is integrated into the networks of 350 mobile operators and allows users to obtain a PIN code from their provider in order to register and pay for the service, according to a press release. Digital publishers often require long registration processes to access paywalls or pay for individual bundles. 

PayRead operates in more than 100 countries, with a reach of more than 3.1 billion consumers, and works with a wide variety of digital publishers, including Schibsted, Magster and Readwhere.

"We are indeed in discussions with a number of other digital publishers on implementing the solution, but too early to give any names publicly," said company spokesman Mattias Liivak in an email.

He said publishers can sell content via daily, weekly or monthly subscription, on an per article basis or using metered access, for example a 10- article bundle for one price.

PayRead also makes its messaging API available to publishers for the purpose of messaging customers as well as its reporting API to integrate transaction data.

Topics: Bill Payment, Direct Carrier Billing, In-App Payments, Mobile Marketing, Region: EMEA

Companies: Fortumo

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Jan. 17, 2019

Rap icon Snoop Dogg is an investor in Swedish fintech Klarna and has dropped a video to alert his millions of fans.

The hip hop superstar launched a one-minute video, The Coronation of Smooth Dogg, which will be used as the company's ad campaign on television and in movie theaters.

 "We are building strong momentum in the U.S. with both merchants and partners and continue to grow," Aoife Houlihan, vice president of communications at Klarna, told Mobile Payments Today in an email.

"The recent launch of our new offerings there of Pay Later and Slice it 4 have been received super positively and we are very much focused on [the] smoothest shopping experience and giving consumers flexibility and service at the till, which they have come to expect."

Houlihan said the company is not disclosing details regarding the amount of the investment.

Klarna, founded in Stockholm in 2005, offers e-commerce retailers the ability to offer installments, pay after delivery and operates a licensed bank. The company's other investors include Sequoia Capital, Bestseller, Permira, Visa and Atomico.

Topics: Financial News, Mobile Apps, Mobile Banking, POS, Region: EMEA

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Jan. 17, 2019

Heal, an app-based service that lets customers book physician house calls, named former Qualcomm Chairman and CEO Paul Jacobs as chairman, according to a press release.

Jacobs is also CEO of mobile technology startup Xcom, which he launched in 2018. Heal also named former Florida Gov. Jeb Bush, who is the chairman of Dock Square Capital, to the company's board of directors.

"Technology is the catalyst that eliminates stifling bureaucracy and enables timelier, more personal, more proactive care that lowers costs and improves outcomes," said Dr. Renee Dua, co-founder and chief medical officer at Heal, in the release. "Dr. Jacobs [a Phd] has led the global mobile revolution over the last two decades, and we're thrilled to have him lead our efforts to reboot the broken $4 trillion U.S. healthcare industry."

Heal lets customers to book on-demand house calls through a mobile app or its website anytime between 8 a.m. and 8 p.m., and operates 365 days a year. The company works with more than 100 major companies and is accepted by major insurance companies or can be paid in cash. The company operates in California, Atlanta and Northern Virginia/Washington D.C. area.

The firm has raised more than $69 million from investors including Jacobs, Bush, singer Lionel Richie and venture capital firms like Breyer Capital, IRA Capital and the Trans-Pacific Technology Fund.

Topics: In-App Payments, Mobile Apps

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