Recently, PPRO, a global provider of localized payment solutions, pointed out in its latest guide “The Hidden Costs of Payment Difficulties in Cross-Border Retail” that the “hidden costs” of cross-border payments are continuing to erode global retail revenue.
Payment Guide shows that although global e-commerce is still expanding rapidly, payment experience is still a key bottleneck restricting conversion rate.
72% of merchants said that the payment failure rate of cross-border transactions is higher than that of local transactions, and payment friction is continuing to lead to the loss of consumers; 94% of cross-border consumers hope to complete payments in local currencies; 99% of consumers prefer to use payment methods they are familiar with and commonly used.
PPRO CEO Motie Bring said that the global average shopping cart abandonment rate is about 70%, and on the mobile side it is as high as over 75%.
When consumers encounter an unfamiliar or distrustful payment experience at checkout, the likelihood of abandoning their purchase increases significantly.
The lack of localized payment is becoming an invisible “profit killer” for cross-border retail.
Motie Bring emphasized that the lack of local payment methods directly led to the inability of merchants to effectively convert the large investment in marketing.
If consumers cannot find a payment method they are familiar with and trust during the checkout process, the entire purchase decision will be interrupted, and the traffic costs paid by merchants will be wasted.
This problem is particularly prominent in cross-border transactions, because the payment habits of consumers in different countries vary greatly, and merchants cannot simply assume that consumers around the world accept the same payment methods.
The effect of providing local payment methods on revenue and conversion rates has been verified by data.
Perry, head of new business for PPRO Asia Pacific, revealed that accessing local payment methods can bring about a 12% revenue growth and a 7.4% increase in conversion rate.
“94% of cross-border consumers want to pay in their own currency, and this number may be underestimated.”
The payment guide further pointed out that the retail industry is undergoing a structural change-from price competition to focusing on experience-driven growth.
Up to 40% of consumers’ perceptions of value come from non-price factors, such as ease of payment, availability of trusted local payment methods, and a smooth overall checkout process.
The degree of localization of payment methods directly determines consumers’ trust in the brand.
Motie Bring believes that when a Swedish consumer sees an unfamiliar brand, but if the brand supports a local payment method that he is familiar with and trusts, such as Swish, he will be more confident to make a purchase.
The payment method carries consumers’ comprehensive expectations for transaction security, usage habits and after-sales guarantee, and is the first step to establish brand trust.
Payment Guide predicts that by 2030, digital wallets are expected to account for 65% of global e-commerce transactions, and alternative payment methods are expected to account for 79% of online transactions.
This shows that localized payment capabilities are no longer “optional” but an infrastructure for expanding global retail.
Motie Bring said that the core challenge in building global localized payment capabilities lies in complexity. PPRO’s solution is “one access, global expansion”. Through one integration, merchants can access local payment methods in more than 85 markets, thereby avoiding duplication of technology development and greatly accelerating market launch.
In addition, Perry pointed out that China’s cross-border overseas expansion is undergoing structural upgrades: from low added value to high added value; from no brand to strong brand; from physical products to virtual products.
This trend puts forward higher requirements for payment localization capabilities, because different types of goods and services face greater differences in consumer payment habits.
Based on this, Motie Bring believes that PPRO’s strategy in the Chinese market is to not only serve large enterprises, but also help small and medium-sized businesses go overseas.
“If merchants invest a lot of money in marketing, but the final payment method does not match consumer habits, conversion will fail. PPRO hopes to ensure that cross-border retailers in Shenzhen can successfully complete payments in any market.”
