Nearly half the world’s population is expected to be online in the next couple of years. This growing population will not only have a dramatic impact on global e-commerce sales, but also the way merchants capitalize on local preferences and demands.
One example is currency conversion. Findings from a recent survey conducted by Penton Research and commissioned by E4X, a multi-current settlement solutions provider, show a strong partiality for local currency and an adversity to U.S. dollars (USD) only, which many have believed to be the standard. The adversity is so strong, in fact, that of all shoppers polled, a third showed their aversion for USD-only pricing by either abandoning carts, purchasing less, leaving the site to check conversion rates or never returning to the website.
“It is natural for e-commerce merchants to concentrate on domestic markets and USD pricing initially, not fully appreciating the role that local pricing will play in their sales success internationally,” said Gary McDonald, President of E4X. “Global consumers strongly prefer to shop and purchase in their own currency and as a result, USD-only websites are likely leaving money on the table by ignoring global shopper preferences. Additionally, many e-commerce merchants don’t realize that they can price in foreign currencies and still settle in an expected, guaranteed amount of USD.”
For consumers, the partiality for local currency is likely more about trust, clarity and the user experience rather than patriotism. By supporting their payment preferences, consumers can feel confident in “the knowledge that all costs and fees are being full disclosed.”
E4X recommends the following considerations for merchants looking to expand to include global pricing:
Extended Rate Guarantee - Consider Refund and Chargeback FX exposure on global payments.
Reduce Foreign Exchange Costs - Look for transparent costs that are easily traceable and auditable.
Payment Types - Ensure all payments types, including alternative payments are supported by a streamlined reporting and reconciliation process.
Net New Revenue Generation - Revenue Sharing that can be earned on foreign exchange is an important factor to consider.
Split Settlements - Consider if you will require local payouts and need a % of funds held in local currency (for VAT etc).
View the survey’s complete findings.