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Ignoring Cross-Border eCommerce Leaves (Lots of) Money on the Table

Nitin Sumangali |

International shoppers coming to U.S. merchant websites are precisely the type of shoppers merchants dream of: They’re highly motivated to seek out the goods they want and willing to spend once they find what they like. These foreign consumers provide a powerful benefit beyond the sheer volume they deliver by building brand recognition in markets where merchants may have limited physical presence. The velocity and volume of traffic on American websites from foreign consumers is so large and growing so quickly that merchants and issuers ignore it at their peril.

From November 1 to December 4, 2011, international consumers spent $2.9 billion at U.S. merchant websites according to comScore, an 82% increase in volume compared to the $1.6 billion spent in 2010. These purchases provided 13% of all eCommerce on U.S. sites, up from 8% in 2010. In 2011, the amount of cross-border sales conducted on “Cyber Monday” grew 188% relative to the year before—from $68 to $197 million—and constituted 14% of all sales that day compared to 6% in 2010.

For U.S. merchants, taking cross-border eCommerce seriously means developing targeted marketing programs aimed at consumers outside the United States and building the infrastructure that will help bring U.S. merchants’ products to the consumers who want them.

For foreign issuers, the critical task is to build risk management services that allow cardholders to use the Internet to make cross-border purchases simply and securely. The concerns that banks may have about fraud risk inherent in “card not present” (CNP) transactions means that they must work to build security systems that can authenticate transactions, rather than shut the spigot when potential risks arise. Not investing in the security and risk management tools that allow international consumers to shop is, simply put, leaving millions of dollars on the table.

While the holiday season may throw the issue into stark relief, the story is the same no matter the month: Cross-border eCommerce is a channel that merchants and banks must optimize as soon as possible. As the web becomes a larger part of how people around the world choose to shop, it is critical that all parties involved make the process as safe, simple, and secure as it needs to be to keep everyone happy.

Topics: Payments Strategy

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