Putting payments first: Why going global means thinking local
By Andy Barker, senior director strategy and growth, Magento Commerce
Merchants today think big. They've moved beyond the four walls of their shops to embrace the digital era and in the process have discovered that commerce is borderless. Industry giants from Amazon to Alibaba have set a new precedent for scale and merchants feel the pressure to reach new customers. To compete, many look to go global.
Yet introducing a product to a new market and getting customers to pay for it are two different stories. The stakes are high. Think about it – payments are the final step in any transaction and the last impression left on a customer, especially if it's less than stellar. Nonetheless, many brands continue to offer payment experiences that are out of sync with their target audience. The result can be the difference between a customer coming back for more or looking to your nearest competitor.
It comes down to the fact that commerce has evolved, and so too must payments. Regions adopt new technologies at varied paces. Innovations are championed by a slew of providers and are all subject to different regulations. With new payment technologies emerging every day, the one-size-fits-all paradigm of the past just doesn't cut it.
It's not earth shattering, but it's forgotten all too often at the expense of millions of dollars in product left in shopping carts for eternity: to nail payments and grow a global business, merchants must build payments strategies around their local customers' unique needs.
Don't buy the hype
Merchants are inundated with choices when they create customer experiences. In an effort to attract new audiences, brands often turn to the hottest payments tools – from Google Wallet to Apple Pay – hoping these innovations will give them an edge. But customers are unlikely to adopt new tools simply because they're the "next big thing" – especially if it falls outside of the channels they know and prefer.
Brands must look beyond the "cool" factor and take a step back to ask themselves hard questions. How do customers prefer to pay in each local market? What do their past relationships with mobile devices, banks and credit look like? The businesses that truly compete on the global stage answer these questions and develop sophisticated, localized payments strategies in response.
Prior to entering any new market, merchants can avoid dangerous generalizations and flashy tech pitfalls by studying the nuances of their customers region by region. For example, Asia has been ahead on mobile for a long time, but every APAC country goes about payments differently. In Singapore, merchant bank accounts can be set up in a day. In Indonesia, the process takes weeks or several months. Merchants need to stop looking for the panacea and instead identify the best set of local solutions to complement the needs and expectations of their customers.
Know your buyers
As mobile adoption grows around the globe, ancillary local factors drive both cashless and bankless payments norms. Take the rapid demonetization of India. In this primarily cash-based society, only 2% of the entire country paid taxes last year. The government is thus taking steps to redirect funds through its regulated banking systems. Simultaneously, the general population in India has grown increasingly mobile-savvy: last year, India had the second highest number of mobile subscribers of any country worldwide. The result? A payments environment ripe for mobile innovation.
And e-commerce players have been quick to hop on the cashless payments bandwagon with digital wallets from Flipkart Money to Paytm – the stickiness of these innovations reflects the perfect storm of India's mobile-driven society and the government-shaped regulatory environment that pushes transactions online. Any new merchants must get onboard or they'll be left behind.
Elsewhere, many merchants fail to consider population density as a key payments factor. Japan's population tops 126 million, with the majority situated in urban regions. As commute times and lines at shopping centers grow, a premium is placed on convenience. If folks are going to be stuck on the train for an extra hour, they'll want to make up for lost time elsewhere. This may look like ordering groceries on the go or skipping the checkout line when running errands on the way home from work. Mobile commerce has taken hold as a result, from Rakuten Pay to Android Pay, and last year, Japan consistently led the way on mobile conversions, selling more on mobile than through desktop. Merchants expanding into regions where population density alters daily life must do so with payments strategies designed to please these customers. Otherwise, they risk failure and irrelevance.
Ultimately, local context matters.
Today's merchants must be more thoughtful than ever before as they tailor the payments piece of their commerce strategy to new regions. It should be obvious: your strategy for Latin America may not be a fit for the Middle East. The key to widespread adoption in Rio de Janeiro, Brazil likely differs from what works in Denver, Colorado. I urge any business with the drive to go global to think about the customers you serve as individual people, not trends. Adopt payments strategies designed for your customers' most nuanced needs before rushing to offer technology they may not understand or want. Put a local payments strategy first, and the doors will open for global business success.