But with new market opportunities come new challenges and considerations tied to convincing those consumers to make their own leap — from browsing to actually clicking buy buttons.
Digital River Chief Payments Officer Eric Christensen told PYMNTS offering the right mix of localized payment options for different geographies is one way to boost conversions and influence consumer behaviors. But there’s a delicate balancing act — and sometimes it’s possible to offer too many payment options, which results in diminishing returns.
Christensen said at a high level, “the world is becoming more and more ‘local’ from an eCommerce perspective.”
Essentially, any merchant that posts goods or services online has the potential to reach a customer wherever they may live, he said. The first step is considering just how important a given country is to the brand’s overall go-to-market strategy before committing to which localized payment options they will offer.
To do that, enterprises must be keenly aware of the nuances that are intrinsic to each market.
Christensen cited two examples. In Japan, consumers are used to making purchases online, but prefer to pay for those items in person at local convenience stores. In Germany, consumers have traditionally avoided carrying credit balances.
“So, offering German consumers payment methods that allow the customer to make a payment directly from their bank, as opposed to a payment from a credit card, is important in order to have that German customer’s trust,” said Christensen.
Asked by PYMNTS whether there’s a “sweet spot” of an optimal number of payment methods that should be offered in a given country, Christensen cautioned that merchants should avoid a “NASCAR effect” when catering to new customer bases.
“Having too many logos on your shopping experience is going to create confusion for the customer,” he said, adding, “Anytime you have the consumer thinking too much and trying to figure out what the best solution is, it’s going to drive them to have additional thoughts. And that additional thought may lead them to saying, ‘I don’t want to make this purchase.’”
There’s also the knock-on effect of spreading the merchant back office too thin trying to manage payment methods that may not be driving the most revenue, said Christensen. The company that has 10 payment logos on its site needs to make sure all 10 of those options are working and available.
“You have to think about whether you have backup partners for each of these different payment methods in case something goes down with your primary partner,” he told PYMNTS. “And the more you’re thinking about doing that, the more you are not focusing on optimizing the top payment choices in that market.”
While Christensen admitted it’s hard to put a figure on the optimal number of payment methods, the “sweet spot” for a given market may stand at about five or six payment options, covering the majority of a market’s preferred payments. Going far beyond that tally is not likely to drive incremental revenues or returns on investment.
Cryptocurrencies — Not Yet Ready For APM Prime Time
Among the alternative payment methods making headlines are cryptocurrencies. But Christensen noted we are “still in the early phases” of crypto adoption. Most people who are in the crypto space are not looking at digital coins as a way to make payments, but are instead focused on leveraging cryptos as means of investment or as commodities. Yes, Tesla has made it official that you can buy a car with bitcoin. And PayPal has made it possible for users to pay with cryptos.
But those announcements “are as much a marketing grab as anything else, I think,” Christensen told PYMNTS. Over the short term, “I don’t see consumers using cryptocurrency for mainstream purchases anytime in the near future.”
Just as we are seeing the great digital shift force merchants to recalibrate their online payment offerings on a market-by-market basis, so too are we seeing shifts in B2B verticals, said Christensen — leading to the consumerization of those transactions.
“Businesses are coming online, and the people that are shopping for businesses are more and more savvy eCommerce shoppers in their personal lives,” he said. “So, they’re used to making specific purchases in specific ways in their personal lives.”
Those consumers want to have the same online shopping experience when they’re buying, for example, 10 laptops for a dentist’s office.
But, Christensen noted, commercial enterprise payments have back-office and accounting complexities that are tied to those transactions. They need to make sure purchase orders are in place, and the accounting team signs off on the activity. Back-office functions need to flow as seamlessly as possible. To that end, Digital River said this month that it is working with TreviPay to build out a “consumer-like” buying experience for corporate clients to grow their businesses internationally.
Moving Toward Real Time
We’re increasingly moving toward real-time payments, observed Christensen, and the ease of peer-to-peer (P2P) transactions has some shoppers wondering why they can’t have the same experience making a payment from their bank account to a merchant. Christensen noted ACH rails can be slow, sometimes taking a day or two after a transaction before the payments are processed.
“There’s no real reason why the B2B space can’t evolve, and real-time payments gives us this big step toward that evolution,” he said. “Everything is moving toward ‘faster, faster, faster’… And so, the payments ecosystem, especially on the banking side, needs to evolve as well.”
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