http://www.cnbc.com/id/101363758
For any business to be successful, it is necessary that it understands the mentality of its consumers.
The e-commerce has also realized this and thus to be successful in every country, it offers payment options that best suit the preference of that country.
For example in Brazil, customers prefer paying in installments whereas in India they prefer paying after the good is received. This definitely does create hassle for businesses but data reveals that all this trouble is worth it as eCommerce has been growing rapidly in emerging markets.
Changing the payment option for every country is a great deal of work which requires writing new contracts, changing contracts with dealers and financial services, calculating the new interest rate and testing out if the software woks fine.
For example, a hotel booking website allows its Brazilian customers to pay in installments, so the website had to join with a Brazilian financial service that would bear the credit risk but with a fee.
The credit card usage in Brazil has increased by 63% since 2007 but the high interest rates on credit cards makes it unaffordable to many ; which leads to using the installment payment method. But this inconvenience will lead to high payoffs: Brazil eCommerce market is set to increase by $8 billion in the next four years.
Lord Alli, a former chairman of British fashion group states," Our job as retailers is to serve our customers. My job isn't to tell them how they want to pay. Our job is to be at their service."
Incurring the extra expense on the payment method is part of their business. As a change in the payment method leads to a drastic increase the number of sales. The business knows that if they lose their margin here(through added expense on payment method) they can earn it through somewhere else.
A Morgan Stanley survey found out that 58% of Russians prefer to pay cash for an online order. It is expensive and inconvenient for companies to provide this option but Qiwi ( a NASDAQ listed payment group) has set up ATM machines that instead of giving cash, take cash. Groupon, Apple and Hotels.com are some of the companies that are signing up for this service.
Nick Robertson, chief executive of Asos states,"If your going to operate globally, you have to operate the best payment methods."
Every country doesn't like using credit and debit cards. Only 10% of German consumers prefer using cards whereas 70% of British consumers prefer using cards.
Despite all this hassle, the companies are optimistic of the future as most of the youth worldwide prefer using plastic.
To end on this note, Lord Alli thinks,"Never punish the consumer for the way they pay. It's irrelevant how they pay; I want them to buy."
For any business to be successful, it is necessary that it understands the mentality of its consumers.
The e-commerce has also realized this and thus to be successful in every country, it offers payment options that best suit the preference of that country.
For example in Brazil, customers prefer paying in installments whereas in India they prefer paying after the good is received. This definitely does create hassle for businesses but data reveals that all this trouble is worth it as eCommerce has been growing rapidly in emerging markets.
Changing the payment option for every country is a great deal of work which requires writing new contracts, changing contracts with dealers and financial services, calculating the new interest rate and testing out if the software woks fine.
For example, a hotel booking website allows its Brazilian customers to pay in installments, so the website had to join with a Brazilian financial service that would bear the credit risk but with a fee.
The credit card usage in Brazil has increased by 63% since 2007 but the high interest rates on credit cards makes it unaffordable to many ; which leads to using the installment payment method. But this inconvenience will lead to high payoffs: Brazil eCommerce market is set to increase by $8 billion in the next four years.
Lord Alli, a former chairman of British fashion group states," Our job as retailers is to serve our customers. My job isn't to tell them how they want to pay. Our job is to be at their service."
Incurring the extra expense on the payment method is part of their business. As a change in the payment method leads to a drastic increase the number of sales. The business knows that if they lose their margin here(through added expense on payment method) they can earn it through somewhere else.
A Morgan Stanley survey found out that 58% of Russians prefer to pay cash for an online order. It is expensive and inconvenient for companies to provide this option but Qiwi ( a NASDAQ listed payment group) has set up ATM machines that instead of giving cash, take cash. Groupon, Apple and Hotels.com are some of the companies that are signing up for this service.
Nick Robertson, chief executive of Asos states,"If your going to operate globally, you have to operate the best payment methods."
Every country doesn't like using credit and debit cards. Only 10% of German consumers prefer using cards whereas 70% of British consumers prefer using cards.
Despite all this hassle, the companies are optimistic of the future as most of the youth worldwide prefer using plastic.
To end on this note, Lord Alli thinks,"Never punish the consumer for the way they pay. It's irrelevant how they pay; I want them to buy."
I found this very interesting. It never occurred to me how much effort and thought a business had to put into payment methods. Its also interesting that there is ATM machines that take cash; so more payments can be done online. I feel that this ATM won’t just do well in the Russian market, but if they expanded this thought into the U.S. we could see an even bigger increase in e-commerce.
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