Voice of the Industry

From local to global – how domestic payment programs can reach international presence

Thursday 23 July 2020 04:00 CET | Editor: Anda Kania | Voice of the industry

Ricardo Leite, SVP, International Markets at Discover Global Network, reveals the value of global partnerships for domestic networks

Why local payments should think global

Merchants are casting a wider net by expanding overseas as their domestic markets have become increasingly saturated. These current dynamics are reshaping the size of the cross-border commerce market, several studies show. Even though typical spend habits have been disrupted amid the current pandemic, we are still expecting to see a rise in cross-border commerce. According to Accenture, the cross-border payments value is expected to rise 5.6% annually. Moreover, Forrester predicts that cross-border shopping will make up 20% of ecommerce in 2022, with sales reaching USD 627 billion.

The desire of consumers for more diverse products is also influencing the global market. Shoppers in Western countries often look to Asian markets for online purchases of cheaper or limited-edition products. Consumers in Asian countries look to Western markets for luxury goods, for example, as Chinese consumers seek high-quality products and niche brands they cannot find in their country.

In addition to online commerce, in-store commerce is also changing at the global level, with people from around the world spending in foreign markets using payment methods from their home countries. Travelers are seeking unique and exciting experiences when entering new destinations – but not when it comes to payments. At checkout, they want convenience, and they carry their payment journey expectations with them. Customer experience is key, so merchants must focus on all types of payment acceptance. As such, there is great opportunity for merchants that maintain a customer-centric culture by offering options to pay with local (or alternative) payment methods that foreign customers prefer.

Merchants are not alone, however. Domestic card programs should also focus on developing these capabilities as local payments also rely on national payment networks. Currency conversion rates, for example, are a particular concern for travelers. A smart POS terminal, combined with a domestic card that has international acceptance, would address this concern, as the POS can show prices in a local currency plus any additional fees.

For domestic networks, providing a local payment experience across borders often requires finding a partner with an international presence. In addition, a partnership with a global network can enable local networks to take advantage of the existing spending trends – such as shopping via marketplaces, employing a unified commerce strategy, or responding to increased demand for ridesharing services, to name a few – while integrating their services in a country-specific compliant manner.

The spending behaviour in emerging markets

Although payment networks in developed countries have been integrated for years, this global expansion is a particular challenge for emerging markets as they seek to connect to an international network.

In the past decade, emerging markets have increasingly embraced the payments ecosystem and have proven that their environment is fertile for new developments. The evolution of mobile money services, debit and credit cards, and other fintech products in regions such as Latin America or Africa has demonstrated that these markets can stimulate the global expansion of businesses.

A closer look at several key countries can illustrate how payments and commerce have been evolving:

Nigeria, India, and Brazil are among the most prominent emerging markets in the world, gaining great visibility due to efforts in increasing financial inclusion while supporting the digital culture. This progress has made these countries attractive for industry players such as merchants, PSPs, and global payments networks.

Discover® Global Network, which recognized the potential of emerging markets, has entered these three countries to offer local industry players the ability to successfully tap into the global market by expanding their services and their customers’ benefits across borders.

Nigeria

While only about half of the population has access to financial products and services, Nigeria is Africa’s largest economy, with a growing middle class. Top destinations for Nigerians to spend abroad include the US and the UK, and there is a significant potential for cross-border payments, not only from tourists, but also from students who study overseas. The national ecommerce market, though, is still young and has been developing for only about a decade. The top ecommerce payment method in Nigeria is cash on delivery followed by e-wallets, so the mission of gaining the upper hand is challenging for domestic payment networks. On the positive side, payments by card are on the rise at brick-and-mortar stores.

The largest national card scheme is Verve (powered by Interswitch), with more than 19 million active cards on its network. In 2019, Verve partnered with Discover Global Network to launch the Verve Global Card to enable cardholders to use their cards internationally and to expand Verve’s payment products and solutions, including rewards and loyalty schemes.

India

India is considered, an emerging market with some of the greatest potential when it comes to cross-border payments, which currently represent 74% of ecommerce sales in the country. Indian consumers have started to expand their search for high-quality products into markets such as the US and UAE, and cards are currently the preferred payment method for online purchases. Despite the country struggling with financial inclusion, there is nevertheless a great opportunity for a partnership between a global and a local payment network, as most of the ecommerce spending goes for travel.

Rupay is a national card scheme with more than 500 million customers using the company’s cards for their transactions. According to industry news reports, Rupay is one of the few domestic payment networks rivalling the international card schemes, such as Mastercard and Visa. This payment network expanded globally in 2012 with Discover Global Network, and since then, it has issued 64 million global cards that are accepted by 48 million merchants across 200 countries.

Brazil

In Brazil, which is one the most developed countries in South America, opportunities for local issuers to expand internationally are tremendous for two primary reasons, according to J.P. Morgan data. First, almost 30% of Brazilian millennials spend their money on travel services. Second, regulations around card payment fees favour the consumer – perhaps another reason why cards account for 43.2% of transactions in the country.

Moreover, the cross-border spending is 17% of total ecommerce value, and when paying internationally, Brazilian consumers prefer the US and China as the favored markets for their shopping needs. In all, 1.5 million Brazilians traveled abroad in 2018, compared with 1.2 million in 2017, representing a rapid growth of 23.3% of international passengers.

To illustrate the value of global partnerships for domestic networks, Elo, the largest domestic card network in Brazil, credits Discover Global Network for helping it succeed in its international footprint. Read the Elo case study here

Elo went internationally with Discover Global Network in 2016. Since then, they have issued several million Elo Global Cards in the first two years. In 2018, the two companies extended their partnership, by adding the Diners Club brand to Elo card. Following the new extended collaboration, any cardholder using Elo Diners Club Brazil card issued by one of the member banks has access to more than 1000 airport lounges worldwide, exclusive offers in hotels, resorts, restaurants and shops in more than 50 countries.

Domestic schemes go international with Discover Global Network

Domestic schemes need both independence in their own market, as well as international certification to scale their global presence. At Discover Global Network, we are pleased to offer each of these benefits throughout the world, including with major national schemes such as BC Card in South Korea, NCCC in Taiwan, Prosa in Mexico, DinaCard in Serbia, and Troy in Turkey.

By partnering with Discover Global Network, national schemes can go international, and the partnerships represent journeys always taken together. With a worldwide reach in 200 countries and territories, our network allows travelers to shop at the more than 48 million merchant locations where Discover® or Diners Club International® cards are accepted, or to get cash from nearly 2.2 million ATMs worldwide.

Through close collaboration, the terms for fees, personalized offers, and card design and branding are flexible, while partners can maintain control over domestic transactions and enjoy significant cost savings for issuers by eliminating local transaction fees. We also support international recognition by working with merchants on targeted offers that drive spend with foreign travelers. In addition, partners are free to place the network’s logos wherever they want on the card, including on the back, as we do not impose a visibility requirement in this regard.

Any successful partnership relies on the support provided throughout the journey. At Discover Global Network, we are always ready to assist, whether it involves curing delays in payment processing or remediating technical failures or non-acceptance issues.

Knowing the potential of local networks and their payment services, our company is at the forefront of developing creative partnerships to facilitate international acceptance and increase scale. Our expertise and technology ultimately brings in a competitive advantage for domestic networks. On top of that, our consumer base of over 180 million Discover Global Network Cardholders around the world spending more than USD 400 billion annually is the best proof of an ongoing growth strategy of expansion.

At Discover Global Network, together with our partners, a new ecosystem is expanding. Global partnerships mean a winning hand for everyone: issuers can offer card programs that are consumer-centric and personalized while benefiting from the global acceptance of their domestic card; domestic schemes can become known internationally; and merchants from different countries can increase customer conversion and stay relevant by accepting multiple payment methods.

To learn more about ways to expand your business horizons, reach out to Discover Global Network to discuss a tailored approach for your journey across borders. 

About Ricardo Leite

Ricardo is an experienced financial services industry professional (B2B/B2C) with more than 20 years working for large, multinational organizations in the areas of payments (network, issuing, and acquiring), corporate strategy, business management and development, and client relationship management. Prior to leading Discover’s International Markets, Ricardo served as Head of Global Products & Partnerships and prior to that as Head of the Global Acceptance organization. Current and past employer list includes: Discover Financial Services/Diners Club International, American Express, Mastercard International, Visa USA, Deloitte & Touche Consulting Group and American Management Systems.  

About Discover Global Network

 Discover® Global Network, the global payments brand of Discover Financial Services, processes millions of cardholder transactions each day. With industry expertise, innovative technology and a closed-loop infrastructure, Discover Global Network provides effective, customized solutions that evolve as needs change. Discover Global Network has alliances with 18 payment networks around the world, and is led by three Discover businesses: Discover Network, with millions of retail and cash access locations; PULSE®, one of the leading ATM/debit networks in the US; and Diners Club International®, a global payments network with acceptance in 200 countries and territories. For more information visit DiscoverGlobalNetwork.com

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Keywords: Discover Global Network, global partnerships, cross-border payments, domestic networks, card networks, emerging countries
Categories: Payments & Commerce | Cards
Countries: World
This article is part of category

Payments & Commerce