The explosive growth of e-commerce along with consumer preferences for shopping and buying anywhere and anytime has changed how fashion and beauty retailers and brands market and sell their products.
But the omnichannel approach has also transformed how consumers purchase those products. Transactions at a physical register involving cash or a plastic credit card are giving way to digital wallets and other alternative payment options — including cross-border platforms that make global transactions easier for consumers, retailers and suppliers.
Sam Halse, chief operating officer at payment solutions provider Adyen, said the most prominent change in the marketplace has been the merging of online and the physical store, which includes consumer ordering online and picking up in a store. The use of mobile devices and digital wallets is also impacting the in-store experience, Halse said.
“Inside the store, you’re seeing a switch to mobile devices, and it is changing the shopping experience,” Halse said. “Shoppers want to have a more personalized experience, and paying with a mobile [device] creates a different level of engagement.” He said consumers “no longer want to just pay only at the cash register – they expect to pay wherever is convenient for them.”
Halse said this is particularly true with luxury shoppers. Using a digital wallet instead of cash or plastic creates a more elegant transaction, he noted. Indeed, earlier this year Apple Inc. chief executive officer Tim Cook told investors that the company’s Apple Pay platform was averaging one million new users each week. Apple noted that there were about 10 million “contactless-enabled” terminals on line, including about three million in the U.S. Nipping on Apple’s heels is Samsung Pay, which the company describes as having “explosive growth.” And there are other alternative payment companies, which continue to grow.
In China, Alipay is the most used third-party payments service provider with more than 400 million users and counts MasterCard and Visa as financial partners. The e-commerce market in China is estimated to be $1.2 trillion, according to Adyen, which also has partnered with Alipay to offer users secure payments that mitigate chargebacks.
PayPal has more than 175 million users, and generates $9.2 billion in revenue. After spinning off from eBay, the payments systems company has been expanding into new markets and making acquisitions — most recently Xoom Corp., which specializes in digital money transfers.
Omnichannel retailing and the growth of digital wallets is also allowing for greater data collection, Halse said, adding that data is being used to sharpen marketing efforts, improve inventory positions and get a better read on trends. Globally, Halse said cross-border transactions are changing the nature of how payments are made — “whenever and wherever shoppers make a transaction all over the world, which could be online, in a store or on a mobile device.”
Scott Galit, ceo of Payoneer, said his company is “adding infrastructure all over the world” to meet growing demand and make cross-border transactions smoother. Galit said India and Japan in particular are key markets. On the business-to-business side of the market, Galit said his company “is also making a lot of investments” in the integrated payments space. “In the B2B area, we’re seeing demand from companies who want to embed payments into various platforms,” the ceo said, adding that this includes cloud-based solutions for payables and receivables where invoices are automatically generated.
Ralph Dangelmaier, ceo of global payments company BlueSnap, said merchants typically set up their e-commerce sites in a way that incurs cross-border fees on shoppers who are from outside the U.S. But typically the payment acquirers are based in the U.S., which creates a hurdle.
“The biggest issue is the significant percent of false declines that come from cross-border transactions,” Dangelmaier explained. “The solution is for merchants to ensure they have local processing in every region they want to sell. Many merchants don’t consider this — but they are putting at risk as much as 20 percent of transactions that will get declined because it appears to the issuing bank as a foreign transaction. This is a bit of a under-the-covers issue, but it tends to be the largest problem in selling cross-border.”
Regarding broader trends in the global payments sector, Dangelmaier said he expects digital wallets to garner half of e-commerce sales by 2020. “Merchants need to be looking now at how they will work with these wallets,” he said, adding that there are also regional preferences to consider.