Every industry varies from region to region, with each location in the world having its unique challenges. However, when it comes to e-commerce, there are some elements that all business leaders should take note of. In this article, experts from ACI Worldwide – Richard Jolly, Direct Merchant of e-commerce, EMEA, Phillip Finnegan, Vice President and General Manager, Pacific region, and Leslie Choo, Managing Director in the ASEAN region – come together to share their thoughts on what’s set to disrupt the e-commerce market in the coming year.
Across the world, retail e-commerce sales continue to rise: this year alone, sales are expected to grow by 21.5% compared to 2018. While it’s no surprise that merchants face different challenges depending on markets or geography, there are also many similarities. A primary requirement for retailers and merchants this year will be understanding and planning for increased physical and digital convergence as a way to serve customers in all areas of commerce. Retailers are also focused on ensuring their shopping, payment and fulfilment methods easily support the increasing demands from customers for seamless transitions from one channel to another.
This article discusses the global trends in e-commerce across EMEA, the Pacific region and ASEAN area, comparing and contrasting what is expected for 2019.
As payments remain one of the most vital customer touchpoints during the entire shopping experience, this year will see one main challenge for merchants in EMEA: how to deliver a seamless experience that maximises the chance of converting sales.
With research showing that businesses which offer the top three payment methods in a country have increased conversion rates by up to 30%, it has become crucial to tailor payment methods. This is particularly significant in Europe, where there is a vast selection of payment preferences across the region, such as traditional cards (credit and assorted national debit schemes), mobile wallets (e.g. Apple Pay and Samsung Pay), online bank transfer and invoice. Payment preferences can vary significantly between markets and across various demographic groups, particularly in countries like Germany where there is a very distinctive payments landscape.
Although this isn’t a new challenge, it is becoming an increasingly important one for European merchants who are investing more efforts in cross-border and cross-channel trade. To give themselves the greatest chance of international success, they need to offer the local payment methods that are recognised, trusted and used by the end consumer. Many payment methods that were previously nascent are now described as mainstream.
Cost-effectively accessing the right acquirers and ensuring exact, frictionless fraud protection is also an imperative part of this challenge for merchants in the EMEA region. Addressing this entails implementing the right technology and enlisting expert support.
With Europe concentrating on creating a seamless experience and how to maximise conversion, the Pacific region is more focused on how to alleviate merchant fraud. Although EMV chip acceptance has significantly reduced certain types of merchant fraud, there is undoubtedly more work required in the coming years. 85% of fraud in Australia is currently driven by card-not-present fraud. With online shopping traffic growth increasing to 19.2% in 2017, up from 11.5% in 2016, there is plenty of opportunity for retailers, as long as they are able to implement the appropriate fraud protection measures.
In line with global trends, we can expect to see significant growth in alternative payments. Last year, Alipay and ‘buy now, pay later’ schemes such as Zip and Afterpay saw significant uptake. Merchant demand has seen acquirers and larger payments players work hard to make sure these payment methods are accepted across in-store and online channels. Additionally, many domestic debit card schemes are also set to move online and drive widespread acceptance this year.
For retailers in the Pacific region, the unique opportunity is to capture a greater share of the giant Asian markets. Products from Australia and New Zealand are in high demand in Asia, so the ability to effectively service cross-border trade from these markets, particularly into China, will be a critical challenge for merchants this year.
Although it could be argued that merchant fraud remains a global concern, the major trend in the ASEAN region for 2019 is set to be the uptake of new payment options. There has been a significant rise in payment options compared to two years ago. We’ve seen payment methods such as Alipay and WeChat Pay that are now well entrenched in China becoming an increasingly important part of the payment mix across ASEAN, as these countries also strive to capture a share of the Chinese market. Additionally, national real-time payment schemes are increasing usage of real-time payments by consumers – notably in peer-to-peer funds transfers, but increasingly in interactions between consumers and businesses. Singapore’s PayNow Corporate and Malaysia’s DuitNow both launched in 2018 and will have an impact in 2019.
China has become one of the largest markets for both domestic and international transactions. This development has encouraged many of the very large merchants such as Alibaba Group and JD.com to investigate the idea of branching out their e-commerce services to capture more ASEAN customers.
This is expected to continue driving the trend towards cross-border commerce in the region and it is expected that both B2C and B2B cross-border commerce will be a major growth area for merchants in the ASEAN region this year. There will, however, be many challenges to address, such as understanding and addressing the local regulations in each country.
The other big challenge that will be faced with this cross-border growth is the capacity to understand and secure against fraud in various countries and new markets. Taking advantage of global consortium data and seeking advice from global e-commerce experts will be a crucial step for merchants as they plan their growth path.
Common themes across global e-commerce
Even though it is intriguing to see perspectives on payment behaviours from around the globe, it is evident that there are many common themes and challenges. Cross-border and international expansion is clearly a priority shared across the global merchant payments community, and could well increase the focus on fraud and compliance, especially considering PSD2 and GDPR in Europe require merchants to monitor and adapt their fraud and security approaches over multiple jurisdictions.
As the growth in IoT-connected devices continues to rise, these shared challenges will persist as merchants seek ways to take advantage of the emerging opportunities. Overall, a clear and tailored
payment and fraud strategy is critical in guaranteeing a seamless and safe experience.