CNP Expo Panel Looks at E-Commerce Payments in Emerging Markets
May 23, 2012
The very nature of e-commerce ensures that, as soon as a business’ Website is live, that business is global. It can be accessed by any consumer in the world with an Internet connection. The final general session of the first annual CNP Expo in Orlando, Fla. yesterday explored how much effort—if any—an e-commerce business should put into generating sales in emerging economies. The answer, according to panelists—and a common one at panels throughout the week at the CNP Expo—is: it depends.
“Whether you decide to sell into a particular market is very unique to the product you sell, the service you offer, whether you can get it there, whether you can address the custom issues, whether you can fulfill the order from your location or you have to have logistical support in that particular area,” said René Pelegero, president and managing director of Retail Payments Global Consulting Group. “Those are all issues you need to consider before you get into the area of payments. Once you get to payments, there are a whole host of additional issues to take into consideration.”
Having local knowledge can help you navigate those issues and decide whether or not to establish a local presence in certain countries, said Peter Caparso, president of North America for Dutch processor Adyen.
“Here’s an example,” Caparso said. “If you’re going to Brazil, it certainly helps to offer local payments there. Yes, 72 percent of the population there has a credit card. But, of that 72 percent, only 20 percent have an international credit card. So, if you can’t work with a local bank and handle local Brazilian credit cards you’re leaving a large percentage of that market on the table.”
Increasingly, Brazil and the other BRIC countries (Russia, India and China) are the destination for companies that want to sell globally. In addition to the fact that these are huge countries with the opportunity to reach billions of consumers with relatively few technology integrations, another attraction for merchants is the type of consumers found in these nations, according to Albert Drouart, world payments product management, emerging market payment solutions for Digital River Inc.
“There is a global shopping class that exists in all those markets that makes it worth considering them together,” Drouart said. “At what level depends on what kind of merchant you are, but out of the millions of people in Brazil, for instance, there’s a class that’s already consuming and it’s the same for the other countries. So if your products are tailored for an affluent shopper, it’s worth considering them as a group.”
Not everyone, however, is bullish on the entire BRIC bloc. Adam Bowman, head of European sales and business development for Irish payments processor OmniPay, advises his clients to avoid Russia entirely.
“I have steered OmniPay away from the Russian market and will continue to do so,” Bowman said. “I think Russia’s a terrible place to do business.”
Bowman noted there are plenty of countries a U.S. company can expand to without making life difficult for itself, though Drouart countered that engaging in business in Russia on a cross-border basis by accepting Visa and MasterCard is a simple option that could be attractive to merchants interested in that market.
Mostly, American companies need to fight a tendency to think about doing business in other countries the same way they do at home, Bowman said.
“We seem to have a default setting that says, ‘even though I know things are different in other countries, in my heart of hearts, if I scratch just under the surface it will be pretty much the same.’ But I think a better default setting—a safer default setting—for us all would be to assume nothing is the same. Assume everything is different.
“In the card space, ” Bowman continued, “ that means assume the laws governing payment acceptance are different, assume the schemes have different rules, assume the banks work differently, assume that culturally everything is different. You have to invest and do your homework before you can make any real money.”