Are Cross-Border Payouts Preventing Ecommerce Growth?
It used to be that independent sellers—craftsman, artists, collectors, hobbyists—were limited to the financial opportunity within their immediate geographic reach. Without the operational infrastructure of a larger organization, selling into other markets came with some major hurdles: generating consumer awareness around a product; sorting out the cost and logistics of shipping; receiving payment promptly and securely. For most, that meant keeping their business local. They’d advertise around town, set up in local markets, and travel door-to-door to peddle their wares.
That changed with the emergence of the Internet and ecommerce marketplaces like eBay, Amazon, and Etsy. Suddenly, independent sellers had access to a global market and—in many ways—their financial opportunity exploded. Ecommerce platforms boosted product visibility, streamlined shipping options, and guaranteed receipt of payment. Sellers could seamlessly transact with buyers all over the world. The geographic barriers to growth had come crumbling down.Brazil, China, India, Japan, Malaysia... US-based marketplace sellers struggle to transact here Click To Tweet
Or at least that’s how it looked. But according to a new report from Hyperwallet called The State of Ecommerce Selling in 2017, one-third of ecommerce marketplace sellers operating in the United States say that the difficulty, inefficiency, and cost associated with international payment processes is preventing them from making their products available to buyers in other geographies. Brazil, China, India, Japan, Malaysia, Russia, Mexico, and even Canada are among the markets where US-based sellers have faced challenges transacting. Obviously, some barriers to seamless global selling remain.
Why Cross-Border Payouts Are So Difficult
For ecommerce sellers, the difficulties of cross-border payouts manifest themselves in obvious ways: high foreign exchange or service fees, lengthy delivery times, and—occasionally—simply not being able to transact with buyers in a particular country. But the reasons behind these frustrations are not always so clear. Why can’t ecommerce platforms—which were designed with the explicit purpose of connecting geographically-dispersed buyers and sellers— provide their users with a fast, affordable, and secure international payout solution?For many ecommerce marketplaces, tackling payout challenges in-house is not an option Click To Tweet
We’ve looked at the issues with cross-border payouts before. Legacy financial infrastructure, diverse regulatory environments, and strict licensing requirements all combine to make cross-border payouts inefficient, expensive, and slow. Here are just some of the requirements that an ecommerce company would need to meet in order to provide a truly global payout solution:
- Open local bank accounts and legal entities in every country of operations
- Maintain float and global treasury operations for all associated currencies
- Manage remittance licenses; understand local regulations, compliance, and AML programs
- Track transactions, resolve exceptions, and provide multilingual customer support
- Validate and securely store tokenized payments data
For many ecommerce marketplaces, tackling these challenges in-house is not a realistic option. The result is a payout process that inhibits sellers’ international selling opportunities and prevents them from achieving their long-term revenue potential, which—in turn—increases the likelihood that sellers will switch to another ecommerce platform. (We’ll take a closer look at how payments affect seller loyalty next week.)
Simplifying Your Global Mass Payments Solution
Of course, attempting to build a comprehensive mass payments solution in-house isn’t the only option for ecommerce marketplaces. Instead, they can partner with a global payout provider like Hyperwallet to sidestep many of the challenges of cross-border transactions and expand their sellers’ financial opportunity.
By integrating with Hyperwallet, ecommerce marketplaces can instantly harness our global reach and scalability, giving them seamless payout functionality to 200 countries and territories in more than 170 currencies. With over 45 international financial partners, payment tracking features, and real-time payout options, companies can avoid many of the delays and fees typically associated with cross-border payouts. Hyperwallet’s onboarding process comes equipped with account tokenization and verification modules, and our multilingual contact center ensures that your worldwide sellers can quickly receive support in their native language.
Download The State of Ecommerce Selling in 2017 report for more information.