The advent of internet shopping has made the world of commerce a much smaller place. Consumers can now shop without borders and order goods from all over the globe with minimal restrictions. This offers a huge opportunity for retailers to maximise sales and those that offer international services have a competitive edge over other merchants.
‘Generation Y’ in particular relies heavily on the internet and regularly uses it to shop. As older generations may be a bit concerned about the risks of shopping online, i.e. “What if my money gets stolen?”, “What if the product never arrives?”, “How can I speak to a customer service department?”, younger people tend to be less cautious and are far more open to search multiple, unfamiliar websites for the best price on a new TV or order a new phone case from China because it’s so much cheaper.
However, retailers are missing out on a huge target of customers from all around the world simply by not considering payments. In fact, research has shown that the payment process can be a major turn-off. Although the younger generation is more comfortable with inter-territory purchases. 67% of 18-24 year olds said they would happily order from an overseas market, a massive 64% of them fail to complete a transaction solely due to the payment process. In contrast to this, only 38% of the over 55s would make overseas purchases. This shows that international retailers absolutely need to offer a variety of payment methods to young people to prevent losing out on such a large portion of their potential overseas customer base.
It is key that ‘Generation Y’ is being offered trusted and recognised payment methods when shopping online, especially when visiting international merchants. For example, if they are about to purchase a dress from a website in Hong Kong and they don’t recognise any of the payment methods, they will not want to complete the transaction. Alternative payment methods resonate with the younger audience who are willing to shop internationally and will ensure the sale is finalised, rather than lost.
Payment technologies are also becoming increasingly sophisticated and, as ‘Generation Y’ is often considered digitally native, they will also be open to many alternative payment options, which older consumers may doubt and feel uncomfortable using. The easier it is for young people to shop, the more money they are likely to spend.
‘Generation Y’ is also very socially active online. Therefore, additional payment methods through social media, including Facebook and Twitter, are providing new opportunities too, especially considering the huge reach of both platforms. A Facebook payment service has enormous potential for success, considering the size and spread of the network: 1.3 billion people are active on Facebook every month, including 945 million via the mobile app[i]. Whether users will put their trust in these when transferring money, it remains to be seen, although, it seems that the younger generations are more tech-savvy and will be more likely to trust this technology. As already mentioned, the specific payment methods per country will need to be considered here for international merchants.
This only touches the surface of international payment issues. As you can see, there are many factors that need to be considered, such as age, gender, location and payment preference. Merchants need to properly consider the best way to integrate payment systems that will meet the needs of their customer base. Otherwise, they will find themselves in a situation where a competitor selling the same product has an advantage because it also offers payment methods that customers are used to and feel comfortable using.
About Frank Breuss
Frank Breuss, director of international sales at The PPRO Group, was previously country manager Austria and sales manager Europe at SafetyPay and also worked for switch energy, CyberTron Telekom AG, Amazon.de and Sodexo Motivation Solutions Austria in leading positions. At PPRO, Frank focuses on customer and partner relationship management as well as customer acquisition.
About PPRO
The PPRO Group is an integrated solution provider enabling international electronic payment processes. It covers the entire value chain from acquiring through issuing to processing. Complementing conventional credit card services, PPRO offers payment service providers and partners a fully integrated interactive platform supporting a multitude of national and international alternative payment schemes across more than 100 countries.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now