Ecommerce’s share of retail sales has risen dramatically since the pandemic started, with Europe seeing an increase in cross-border sales of 35% in just one year. The UK has become the second most popular market for online cross-border shopping, topped only by the US and followed by China. A recent Ecommerce in Europe report reveals that when asked, 216 million consumers stated they have bought from an eCommerce site not based in their home country. In fact, as pandemic-related problems diminish in scope, cross-border shopping is expected to increase steadily.
The Cross-border Payment and Ecommerce Report 2012-2022 highlights that the compound annual growth rate is predicted to rise above 20% for the cross-border B2C eCommerce market during 2020–2027, and that earned revenue is estimated to reach more than $4 trillion by 2027. The global B2B eCommerce market is expected to reach $18.57 trillion by 2026.
This all adds up to a world of opportunity in the cross-border eCommerce market, and is showing no sign of slowing down. This is, of course, great news for merchants who have a whole new world of consumers to tap into. Traditional bricks and mortar retailers, who’ve already adapted to accept online payments during the pandemic, are now also hungry to have a piece of the cross-border eCommerce pie and reap the rewards of more customers.
It’s the acquiring banks and Payment Service Providers (PSPs) who are able to help their customers, the merchants, take advantage of the opportunities offered by cross-border eCommerce who will be most in demand. They will be the payment partner helping merchants truly benefit from this new retail era.
Ecommerce is changing, and PSPs will need to keep up
The traditional market for cross-border commerce has made it challenging for PSPs to optimize their cross-border proposition, especially when serving the needs of their growing SME merchant base. The banking model for cross-border payments has historically involved hidden fees, high costs, delays and reconciliation issues, and continues to do so.
With the boom in cross-border eCommerce and a more geographically diverse client base, PSPs and acquirers will need to support a wider set of settlement currencies or face being supplanted by more agile players in the market. Similarly, with their merchants targeting an increasingly global consumer base, payment providers must be able to collect funds in more currencies or they will be seen as a hindrance to growth.
With payment volumes continuing to increase exponentially, the revenue opportunities of taking control of the FX can not be ignored. As processing margins are being squeezed and with the landscape continuing to become more competitive, carving out a new revenue stream is more necessary than ever.
PSPs and Acquirers can stand out in the cross-border eCommerce world by delivering additional value to their merchants. Providing multi-currency payments accounts is a very effective way of doing just that. It’s logical really. Merchants are now more likely than ever to have both customers and suppliers globally, making a multi-currency solution of increasing value to them.
Not only should PSPs look to access competitive FX rates and optimize settlements via local payment route networks to optimize their cross-border offering, potentially the most important value-add for payment providers to offer their merchants are unique, named multi-currency accounts.
Multi-currency accounts: the point of difference making all the difference
Companies like Revolut, Flutterwave and Sezzle already use Currencycloud to simplify business in a multi-currency world. Using Currencycloud’s APIs, PSPs and Acquirers can provide real value for merchants who want to take advantage of cross-border commerce by offering them a multi-currency virtual account. This gives them access to more than 35 currencies – all from one account, in their name, with no need to manage multiple providers.
This ‘bank in a box’ solution not only opens up exciting new markets and increased revenue streams for the payment providers, it also adds real value to their customer offering. It’s a win-win. PSPs and Acquirers get to offer an innovative cost-saving product to merchants, all while creating new revenue streams for themselves.
It’s true the eCommerce cross-border ecosystem is growing fast. But that doesn’t mean that PSPs and Acquirers can’t catch up.
Feel free to reach out if you’re interested in discussing how Currencycloud can help PSPs and Acquirers optimize their cross-border offering.