The impact of consumer demand

At the heart of cross-border trade sits the consumer. Consumers are demanding the instantaneous connectivity and one click convenience that they’ve become accustomed to through the use of always-on, anytime devices.

Most consumers have already experienced the online shopping experience with immediate, frictionless, payments, and they are not prepared to settle for anything less. In short, they are not prepared to tolerate a service that doesn’t deliver this type of experience. If services do not match expectations, the consumers will simply move their custom elsewhere. And in an increasingly globalised world, this does not just mean just within their country, but internationally.

The bigger picture: why collaboration is key

One of the greatest challenges that stand in the way of creating a world free from financial borders where cross-border shopping can flourish is protectionism and trade wars amongst governments. This type of backward mentality is harmful to commerce, e-commerce and international expansion. Ultimately, it will impact innovation and the scaling of this innovation.

There is increasing pressure from both merchants and consumers who want to transact in a world without trade barriers or financial borders. As a collective body, governments and participants in the payments industry have a role to play in building a world without financial borders where everyone can prosper. This sort of cross-sector collaboration will prove is key to building a world without complex trade tariffs and red tape for transacting across borders.

The importance of local market expertise in a globalised world

Another challenge hindering cross-border trade is the disparity between consumer payment and shopping trends in different countries. Each market is unique, with local merchants and consumers requiring different things from their payments providers. Herein lays the challenge. Payment service providers must enable their merchant partners to offer relevant local payment methods and retain a strong local footprint with the best consumer experience possible, while–at the same time competing with other local merchants and cross-border competitors. Put simply, In other words, they need to operate locally and internationally in a perfect unbroken unison.

This challenge is exacerbated in high-growth emerging markets where generally, traditional financial services and payment tools have not yet developed as much as those in more established markets like the US or the UK. The prevalence of alternative payment methods, such as payments made using something other than a credit or debit card stands as a barrier to the seamless consumer shopping experience—and merchants face the frustrating inability to integrate solutions tailored to local markets.

In markets like Asia and Latin America, these alternative payment methods still represent as much as two-thirds of all payments made. Brazil is the largest

e-commerce market and the strongest economy in Latin America, yet only 32% of Brazilians have credit cards, with most favouring bank transfers, cash vouchers and local cards. Another example is real-time bank transfers called ‘pay-by-links’ which are the most popular payment method in Poland, used by 62% of Polish e-consumers. If merchants can only offer card transactions to Polish consumers, they will inadvertently be directing many potential customers to their competitors.

If merchants are able to offer alternative payment methods, consumers can choose to pay in a way that’s most convenient to them. However, for multinational merchants trying to operate at a global level, catering to local payments preferences creates a layer of complexity. And so, there arises the need for a payments platform to remove the complexities for merchants and provide the seamless experience that online shoppers have come to expect.

What next?

The developments of frictionless cross border payments will create unprecedented opportunities for merchants looking to expand beyond their local market. Those merchants that find the right payment service provider to partner with, offering not only first-class technology, but also local market knowledge and expertise, will be the ones who succeed to capture the growth.

To capitalise on the increasingly globalised consumer, merchants need to work with partners who enable strong customer experience through local expertise and excellent service levels, especially when transacting across borders.

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