At a time when cross-border sales are increasingly being targeted as a key growth opportunity for online merchants, new cart abandonment statistics show that expanding into Asia’s fast-growing economies is no easy task.
Even so, for businesses that do decide to make the leap, the inclusion of just one factor — the use of localized payments — is proving to be perhaps the single-largest determinant between success and failure for Western businesses looking to expand in the East.
Exploring the issue, PYMNTS surveyed 500 business leaders in the United States, the United Kingdom and Canada for the study “The Emerging APAC Opportunity,” a PYMNTS and Citcon collaboration. The results showed that while shipping costs remain a primary reason why consumers bail on these purchases, payments friction is right behind, turning off potential buyers and causing alarming levels of cart abandonment.
According to the report, 41% of merchants that do not offer localized payment options for their customers in Asia lost 60% or more of their sales to cart abandonment. Add in other pain points, and roughly one-third of merchants said shoppers abandon their carts because of unexpected payment frictions, such as not being able to pay for a purchase using their preferred payment method or due to feelings of concern about security arising from unfamiliar payment methods and sites.
The findings are noteworthy as the research found that 17% of merchants in the U.S. and 16% of those in Canada not yet operating in the Asia-Pacific (APAC) region are planning to make the move over the next year, and would therefore be wise to consider the pros and cons of not localizing payments for APAC shoppers.
U.K. companies are better represented in the APAC region with 31% already selling there, with U.K. merchants in the study generating 13% of their revenue from cross-border sales originating in the APAC region on average. For these merchants, cart abandonment cuts into established revenue streams and makes payments localization even more urgent.
Failing to provide shoppers in APAC with localized payments, such as Rakuten in Japan, WeChat Pay and Alipay in China and Kakao Pay in South Korea, for example, is costing merchants and sellers, with PYMNTS research finding that cart abandonment is 32% higher for merchants not offering localized payments in a region primed for eCommerce growth.
“Forty-one percent of merchants that do not offer localized payments options for APAC shoppers lose 60% or more of their sales to cart abandonment,” the study found. “Among merchants that do offer localized payments options for APAC shoppers, just 32% report losing 60% or more of their sales to cart abandonment.”
Partnering for Higher APAC Conversions
eCommerce firms in the U.S., the U.K. and Canada are starting to understand the power of payments localization and the benefits it brings. Many are partnering accordingly.
In addition to local methods being preferred by APAC shoppers — something PYMNTS also find when researching other emerging markets from Europe, the Middle East and Africa (EMEA) to Latin America — there are clear benefits when processing payments through platforms that have expertise with localized payments.
“Reliability, high authorization rates and reputation can also influence merchants’ payment provider choices,” the study stated, noting that 49% of merchants “cite reliable payment processing as a factor driving their choice in payment provider, for example, while 46% cite high authorization rates and 43% cite a solid reputation. All three of these factors take heightened importance for firms looking to expand their APAC presences.”
For these reasons, PYMNTS found more merchants choosing payments partners that support localization with gateway integrations that enable local payments choice at checkout.
The data showed that over half (55%) of merchants selling to APAC consumers select their payment providers based on the range of payment methods they offer, with 62% seeking providers that offer reliable payment processing services in the region.
See also: CITCON CEO Sees Stronger Companies Forged in Troubled Times
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.
https://www.pymnts.com/consumer-finance/2022/study-finds-fewer-than-10-of-consumers-use-fintechs-as-a-primary-bank/partial/
