The collective experience of COVID-19 transformed shopping and payment behaviours around the world with an accelerated shift towards online purchases in particular. Global ecommerce rose from 15% of total retail sales in 2019 to 21% in 2021, and further growth is expected, predominantly driven by the success of digital marketplaces, according to Juniper Research.
In these digital marketplaces, shoppers might hardly notice whether the store they’re buying from is based around the corner or around the world. With fewer restrictions on where, when, and what they can buy online, the rise in ecommerce is largely international in nature. According to Juniper Research, the value of cross-border ecommerce is forecast to exceed USD 2.1 trillion in 2023, from USD 1.9 trillion in 2022.
Increasing ecommerce across borders creates opportunities for merchants in multiple markets. Findings from Mastercard’s borderless payments report 2022 show just under half (47%) of small businesses were doing more international business than they were before the pandemic, while 43% of consumers say they sent money internationally to buy products from abroad. However, there’s room for improvement when it comes to making payments across borders.
The promise of borderless commerce is complicated by poor connectivity and consistency between domestic payment systems and schemes. This is one way Mastercard can help. Our gateway services provide simple, secure connectivity to multiple schemes to grow digital acceptance at speed, particularly in emerging and growth markets. With a global network of over 200 acquirers – from Singapore to Canada and countries in between – providing local acceptance and comprehensive payment methods, our single connection can help payment service providers reduce costs and complexity while meeting local payment needs.
We’ve witnessed significant cross-border ecommerce growth in intra-regional corridors. We might guess this is because of the relative ease with which a merchant might scale their business into nearby markets, which are more likely to share common ways of doing business and similar consumer demands, and easier delivery logistics.
We’ve also witnessed significant cross-border ecommerce growth out of emerging markets, which often lack the established payment infrastructures of their more developed peers. To meet the needs of merchants in these markets, Mastercard has developed a range of cloud-based commerce solutions that lower cost and hardware barriers to entry, such as Click to Pay, Hosted Checkout, and Tap on Phone (QR and online). These solutions are capable of accepting locally-relevant payment methods such as digital wallets.
Going forward, we’re focusing on developing digital payment solutions to meet the needs of emerging industry verticals such as subscription payments for media providers, and payments for workers and makers in the ever-growing gig economy. Additionally, we’re leveraging our network to help merchants offer secure, responsible, and convenient payment by instalments as consumer demand for Buy Now, Pay Later continues to grow.
The threat of fraud increases as online commerce grows and new payment options emerge, compounded by the complexities of sending and receiving money internationally. This has the potential to dissuade consumers – 42% fear they could become a victim of fraud when making cross-border payments.
Businesses have a responsibility to protect customer data, striking a balance between experience and security. It’s a key point of tension, as customers expect convenience without disruptive fraud prevention tactics, and declining a customer poses a reputational risk. But there are rewards on offer, with customer satisfaction greatly boosted when companies respond well to fraud experiences.
More than ever, customers need service providers to help navigate the new emerging payment trends and bring best-in-class value-added services. With a wealth of cybersecurity solutions, we’re providing partners with new fraud prevention solutions across regions and markets, such as Brighterion, which uses machine learning capabilities to help lower false positive outcomes. Meanwhile, we’re pioneering advanced tokenization to protect consumers’ data and new EMV3DS 2.0 standards to streamline and secure authentication.
Mastercard’s trusted and globally recognised brand and franchise meanwhile provide consumer assurance to overcome consumers’ psychological barriers.
Changing business models and shifting consumer expectations mean a demand to connect with more payment methods across more sales channels and markets. Payment service providers faced with this triple challenge may struggle to navigate the increasingly fragmented payments landscape. They must grow their reach while supporting all popular payment methods in the market.
Even with unicorn players gaining serious market share, heritage players remain a vital part of the global infrastructure. Traditional banks have an important role to play in making cross-border payments faster, more cost-efficient, and better connected.
Globally and regionally, businesses need to navigate through regulations, protocols, and consumer payment preferences. For more than 50 years, Mastercard has been at the forefront of payments. Our unrivalled global connections give us a local footprint on a global scale to help merchants and payment service providers meet the challenges and opportunities of rising cross-border ecommerce now and for years to come.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Maria Parpou, Executive Vice President, Mastercard Payment Gateway Services, leads the gateway business in over 100 countries. She joined Mastercard in 2022 and brings over 25 years of diverse payment experience, including consulting, investment fund management, commercial payments, and leading ecommerce solutions.
The Mastercard Payment Gateway is an acquirer-neutral gateway with connectivity to more than 190 acquirers around the world. We provide an API-powered gateway platform, the knowledge and expertise of Mastercard, and a single connection to a growing catalogue of Mastercard products and services. We offer our partners the Mastercard difference: proven technology, security acumen, and payments expertise.
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