Cross-border payments account for a massive amount of the cash flow crisscrossing the globe, with these transactions expected to total $39 trillion by 2022. These payments are more complex than domestic payments as they often have to be routed through several banks before reaching their final destinations. Each step of the process requires compliance with various government regulations, and every bank and payment processor charges its own fees to cover the costs. This results in slow and expensive cross-border payments, with the average fee amounting to roughly 6.8% of the total payment.
The June/July “Cross-Border Retail Payments Tracker®” examines international payment developments, including why interchange fees continue to rise and what merchants can do to lower the costs.
Around the Cross-Border Payments Landscape
Fraud never takes a holiday. Cyberthieves are always thinking up new ways to exploit online channels to steal funds and sensitive personal data. For example, eCommerce fraud losses are expected to exceed $20 billion this year, up from $17.5 billion last year. This rise is due largely to the rise of online sales, as a growing number of transactions means fraudsters will have more opportunities to scheme.
Global eCommerce totaled $26.7 trillion in 2020 and accounted for 19% of all retail sales. That’s up from 16% in 2019. The rise to online shopping came as retailers were forced to reduce their hours and capacity levels to protect staff and customers from the pandemic. The biggest growth in eCommerce was seen in South Korea, where sales in the country increased to 26% in 2020, up from 21% of all retail sales in 2019.
Cart abandonment, a problem for all online retailers, is especially tough in the Asia-Pacific region, where studies have found that customers ditch their purchases an average of 70% of the time. In the U.S., the figure is slightly less than a quarter of all customers and 18% said they did so because the checkout process was too complicated. Experts say businesses need to address cart abandonment for mobile customers where it is 86% on smartphones, while mobile purchases account for 47% of them. They advise working with payment providers to offer compelling ways to pay.
For more on these and other stories, check out the Trackers News & Trends section.
eCommerce Platform Fancy On Curbing Friction In Cross-Border Luxury Sales
The cross-border commerce sector has been on the rise for more than a year. Global eCommerce sales are now expected to exceed $4.8 billion by 2026, while business-to-consumer sales are projected to grow by 27% over the next five years. Consumers in the U.S. spent about $795 billion in online goods last year, with cross-border purchases accounting for more than one-third of those transactions.
In this month’s Feature Story, CEO Greg Spillane, of New York-based eCommerce platform Fancy, tells PYMNTS why cross-border luxury fashion merchants must devise a solution to high shipping fees and offer payment methods that consumers demand.
Deep Dive: Frictions In Cross-Border Luxury Sales And Technologies To Overcome Them
Global eCommerce has swelled as more consumers shop online without regard to borders. Last year, sales increased to $4.3 trillion worldwide, and revenues are projected to grow to more than $5 trillion in 2022. The strong growth is due, in part, because merchants have reduced online shopping friction, which has speeded up transactions and lead more consumers to embrace international shopping. Despite the phenomenal increase in sales, cross-border shopping still has challenges.
This month’s Deep Dive examines the rise of global eCommerce and how merchants can turn to payment providers and cutting-edge technologies to keep their payments smooth.
About The Tracker
The “Cross-Border Retail Payments Tracker®,” a PYMNTS and Citcon collaboration, examines the frictions involved in cross-border payments in the luxury fashion industry and the tools and technologies that can help businesses overcome these challenges.