This month at FinTech Alliance, we’ve been focusing on the word of payments. In our latest Thought Leadership article, Jed Rose, General Manager of EMEA at Airwallex, discusses the impact of the payment experience on a customer’s impression of a brand.
The perception of a brand does not lie solely with product quality. From a customer’s first interaction with a business, they’re making subconscious and conscious judgements on their experience which means each touchpoint matters.
Arguably, one of the most important interactions with a customer is when they’ve expressed interest in purchasing and reach the stage when they’re asked to part with their hard earned cash. Nailing down the payment experience can be the difference between growth or failure.
Here are a few key factors that your business should consider:
It’s easy to assume that European markets work in similar ways to each other. In the UK, Visa and Mastercard dominate as schemes, and in 2019 card payments accounted for 53% of all ecommerce payments – this figure jumps significantly when you consider that Apple Pay and Google Pay are classified as digital wallets even though they are technically backed by a card.
However, you don’t have to travel far to see completely different customer behaviour when it comes to payments. Germany, for example, is one of the most fragmented markets when it comes to payment methods and the ecommerce space is dominated by card alternatives such as SOFORT and Giropay. Similarly in the Netherlands, customers prefer to make purchases with iDeal which is the interbank system used by all major Dutch consumer banks.
If you’re looking to appeal to a global audience, consider the ways you can localise the experience in each market you enter. Two key ways of doing this are making sure you offer the most popular payment methods and to price your products or services in local currency.
Cost and transparency
For many years, traditional banks have been the go to for anything related to finance. This effective monopoly has led to unfair pricing practices, especially when it comes to SMEs. Last year the European Central Bank ran a study on FX pricing for SMEs and found that banks had overcharged businesses €638 million annually through discriminatory pricing in euro/dollar contracts.
Banks aren’t the only ones playing this game due to the industry’s historic lack of transparency. Many other payment providers hide the cost of FX in inflated rates and even promote their service as ‘free’. PayPal notoriously charges around 3% for FX conversions and this can cut into already small margins for ecommerce sellers.
Businesses can avoid these towering costs by looking for a specialist provider that offers transparent pricing above the mid-market for FX and prevents you or your customers from having to foot the bill. Doing business globally doesn’t have to come at a significant cost.
Whether you’re paying suppliers, taking customer payments, or running mass payouts to sellers on a platform - speed matters. For too long, businesses and customers have come to accept that it can take days or weeks to receive a payment. In the UK and Europe there’s little to no excuse for this with Faster Payments and SEPA transfers.
FinTechs like Airwallex offer Faster Payments like speed on a global scale by connecting to local payment systems on your behalf. By doing so, businesses avoid the slow and costly SWIFT network and benefit from transparent, market-leading FX rates at the same time. Quicker payment means improved cash flow for small businesses, quicker turnaround from suppliers and likely improved customer satisfaction.
Doing business globally does not have to require taking on significant, hidden costs. Delivering a localised, seamless, and low friction payments experience is key for global business growth and for building a strong, trusted brand.