Cross-border ecommerce brands turn away paying customers when their payment methods and fraud tools are not up to date
Understanding the local payments ecosystem is an important reason for brands to take a gradual approach to implementing their online shop in new countries. Gradual implementation will give retailers time to collect data and decide on the best payment methods for each region.
Assessment of the local payments market needs to be thorough, examining local demands and expectations. Merchants need to consider implementing alternate payment methods such as Cash on Delivery (popular in the Middle East and Russia).
Local acquiring is an often-overlooked piece of payments infrastructure that is one of many steps that can reduce the number of “do not honor” instructions, issued by an international acquirer.
Using local acquirers means that fewer payments are flagged as “do not honor” because the international acquirer wasn’t familiar with a local card.
International online purchases are subject to significantly higher fraud flags than domestic purchases. This is a big issue for conversion as, in many cases, retailers are effectively turning away customers who have already purchased.
Generally, half of the flagged fraud cases are simply ‘do not honor’, due to suspicion, as opposed to any real fraudulent issue. If a company doesn’t invest in sufficient fraud tools, then they will find that in new markets like Turkey, where they are not familiar with local payment methods, a huge percentage of cards are automatically rejected.
For instance, when Inditex entered Poland they found that most credit card payments were being declined. Rather than assume that fraud was the root cause, they investigated and discovered that the declines were due to Polish credit card issuers require cardholders to register their cards for online purchases.
In Poland – a payment from an unregistered card is systematically declined. Inditex tweaked their messaging so that customers were aware that they needed to register before making a purchase. This small tweak transformed their approval rates and boosted conversion.
Best practice would be to involve local users in the development of each local payment page, that way customization will truly have a local feel. Offering the key payment methods in a region, or even a small selection of relevant options will be paramount to conversion success. Payment methods are constantly evolving.
Retailers should consider payments as a strategic issue, not only at the time of opening an online shop for a market but as an ongoing concern. This need to constantly evolve payment types is why so many retailers export the complexity of payment methods to experts in the market.