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Credit Cards and Ecommerce in Emerging Markets

by Laurel Delaney | August 20, 2013 | Comments Off on Credit Cards and Ecommerce in Emerging Markets

Enabling broader credit card functionality and multiple payment options on your ecommerce site allows you to sell to emerging markets, which comprise more than half of the world’s population, and to other promising regions of growth in the world as well. You’ll increase revenue and enhance profitability for your e-retail business by accepting credit card payments. In this article, we discuss where these emerging markets are, what is involved in setting up a credit card system and what online payment methods are most commonly used to sell to emerging markets.

 

Selling to Emerging Markets

Emerging markets have huge selling potential, yet no two markets are alike. According to McKinsey & Co., massive urbanization is propelling growth across the emerging world. This growth will increase a global “consumer class” from about 1 billion in 1990 to over 4 billion by 2025. “Nearly 2 billion will be in emerging-market cities,” writes McKinsey & Co. “These cities will inject nearly $25 trillion into the global economy through a combination of consumption and investment in physical capital.”

Global eCommerce - Brazil eCommerceWhere are these emerging markets? Global business knowledge portal globalEDGE, housed within Michigan State University, shows that they range from Singapore and China, to Turkey to Brazil, accounting for a large share of world output and offering enormous market potential.

Prior to expanding into these territories, do your homework. Thoroughly examine the consumers, their attitudes and buying habits, the market size, sweeping trends, the distribution system, currency factors and local competition. This will give you a clear understanding of what you are dealing with.

 

Setting Up a Credit Card System

Before selling to emerging markets, you must set up a credit card payment system that has these four elements in place on your ecommerce site:

  • A shopping cart: A cart allows customers to select their preferred payment option (such as PayPal).
  • A global payment gateway: The gateway links your website to your processing network and merchant account.
  • A credit card processor: This processes the transactions coming from the global payment gateway.
  • A merchant account: Transaction funds are deposited into this account. It could be your bank account, for example. With PayPal, you do not need a merchant account because it handles everything for a fee. Google Wallet is also easy to set up for payment merchants and customers and provides good international coverage, although China is not listed on Google’s available countries.

 

Most Common Online Payment Methods

The single most important question to ask before selling into any emerging market is this: What payment methods are accepted?

Consider China. Most Chinese customers predominantly use cash on delivery (COD) or Chinese debit cards, which are the equivalent of an online bank transfer. Visa’s CyberSource notes that each of the 20-plus Chinese banks has its own debit card, meaning vendors would have to network with each bank for sufficient coverage.

Fortunately, one of China’s biggest banks, UnionPay, has partnered with PayPal and is poised to serve as a company’s payment intermediary. Such a fluid payment gateway lets Chinese consumers shop anywhere they want, including your ecommerce site. This move will open a massive segment of the Chinese market for PayPal and for all e-retailers.

Global eCommerce - PaymentsIf you want to immediately and safely sell to more than 193 countries in multiple currencies, including many of the emerging markets, PayPal may be the way to go. It allows you to accept many credit cards, including America’s four major credit cards (American Express, Discover, MasterCard, and Visa) and China’s UnionPay (China), for a modest per-transaction fee.

For countries that aren’t served by PayPal or that don’t use one of the four major American credit cards, you must research those customers’ preferred payment methods. One way to do this is to search on “banking” in a select country to see what payment options it offers and what strategies it uses to market their services.

For example, the results for a search on “Egypt, banking” include Central Bank of Egypt and HSBC Egypt high on the page. A quick review of both sites shows that CBE does not have mobile, internet or ecommerce information, while HSBC does in its Internet Banking portal. That gives you a good indication that Egyptians are just beginning to have online payment opportunities.

With that information, you can implement a plan to appease those customers with the help of your bank and perhaps the local overseas bank. (You can also sell to Egypt through PayPal!)

Another approach is to search on your desired country and “preferred online payment method.” For Israel, you would find Skrill Payment Gateway, a payment network providing more than 100 payment options, with 41 currencies covering 200 countries and territories. Do this search for each country you wish to sell in, and you’ll be surprised at how much you can glean. You might end up offering several global gateway payment methods to service the world.

Making your site credit card friendly is a giant step toward doing business with the world, not just emerging markets. Remember, though, that no payment method is effective unless it is guaranteed (the money makes it into your bank account), secure and private. Instill a sense of trust on your site, and you will enjoy a loyal base of repeat customers from the world over.

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Pitney Bowes enables operational excellence in global ecommerce by eliminating “border friction”, and connecting you to the a global consumer base. If you’re a US retailer looking for more information on cross-border parcel shipping, subscribe to this blog for weekly updates, and contact us for more information.

For more information on checkout, payments, fraud risk management, or logistics visit www.gringrowth.com and connect with experts in the global ecommerce industry.

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