Ecommerce and Cross-Border Payments Trends in 2023
The global cross-border payments industry is the lifeblood of the globalised economy, facilitating the expansion of global eCommerce, and the rise of complex international supply chains. Since the pandemic, the increased mobility of eCommerce goods and services, online consumer demand, and a surge in B2B payments have all contributed to the growing importance of the global cross-border payments sector and the companies that rely on it.
The global consulting firm, Boston Consulting Group, estimated that global payments revenue is expected to rise year-on-year by nearly 9.5% in 2022, compared with their estimate of 6.9% in last year’s report, representing rapid growth despite the global challenges of the last 12 months.
Needless to say that there are significant growth opportunities for eCommerce firms and the global cross-border payments industry. For instance, the level of eCommerce growth outside the two biggest markets – China and the United States – is expected to drive the value of cross-border payments to $250 trillion by 2027, according to the Bank of England.
However, the sector faces some major headwinds in the next 12 months. The threat of a global slowdown, inflation, and interest hikes are set to impact costs and consumer confidence. Many eCommerce merchants and sellers are already feeling the pressure on their margins. For instance, Amazon’s recent fulfilment price hike comes at a time of unprecedented market volatility for many online sellers that rely on the marketplace.
So, how do eCommerce merchants plan for growth in 2023? Here are the three biggest trends they can expect from their cross-border partners to manage payment risks to drive growth in a challenging trade environment.
1. One-stop shop for finance support
Traditionally, eCommerce entrepreneurs and merchants have relied on banks to manage all cross-border transactions, as well as funding to expand their business, secure inventory, and hire staff.
However, online merchants have struggled to secure funds with traditional lenders. According to CB Insights, Q1 of 2022 saw the lowest quarterly total of funding to eCommerce companies since 2020. Additionally, the World Bank found that globally, Small to Medium Enterprises (SMEs) have unmet finance needs of approximately $5.2 trillion a year which is almost 1.5 times the current lending market for this segment of businesses.
Cross-border payment providers are uniquely positioned to fill the gap and help eCommerce sellers get access to flexible injections of funds, as well as set up digital processes that allow them to successfully trade internationally.
2023 will see an increasing number of cross-border payment companies build new fintech partnerships designed to provide much-needed financing options for eCommerce businesses to expand and grow across territories.
2. Integrated go-to-market support
In addition to supporting eCommerce businesses to expand and grow, cross-border payments providers can play a critical role in accelerating their time-to-market. Merchants will come to rely on their partners to launch new products on online marketplaces and their sites to buyers worldwide, faster, and more efficiently.
Innovative cross-border payments providers are strategically investing in developing value-added, integrated services to support eCommerce business growth.
For instance, marketing across borders remains one of the biggest challenges that impact the bottom line of eCommerce sellers. Forrester Research shows that 50% of sales are lost because customers cannot find the information, they are looking for on eCommerce sites. Additionally, another research study of global consumers found that 65% of customers prefer content in their native language, and 40% will not buy in another language.
To meet this challenge, LianLian Global recently invested in AI content generator ContentBot, to offer its customers the world’s most advanced AI writer which provides product launching services in 18 languages, all tailor-made to the needs of eCommerce sellers. As a result, LianLian Global addresses the difficulties and language barriers associated with launching products internationally and in new markets, driving the growth and expansion of cross-border trade.
In 2023, eCommerce sellers can expect to see additional essential integrated services available through their cross-border payments providers as the industry shifts to consolidating several eCommerce services into one manageable platform.
3. Supplier payments risk
There’s nothing more disruptive to an eCommerce seller than repeated failed payments to suppliers for much-needed inventory.
Building business relationships with suppliers across the globe can be difficult without the right cross-border payments partner to vet and verify partners. That is why most global payments partners are investing in new processes to help eCommerce sellers mitigate supplier payment risks, including fraud and anti-money laundering.
For instance, LianLian Global’s end-to-end business payments network and best-in-class Know Your Customer (KYC) process enables the company to provide global online merchants and eCommerce entrepreneurs with the most transparent, compliant, and safe cross-border payment options to China – virtually introducing the world’s first cross-border payments guarantee to the country. Customers also benefit from an added layer of robust security, speed, and competitive pricing. LianLian Global removes all the “middlemen” or correspondent banks, eliminating payment delays and the additional costs to hold and send the transfer.
As a result of digital transformation, driven by the Covid pandemic, online transactions have increased massively within online marketplaces. There is therefore a growing demand for frictionless payments that are secure and reliable.
Conclusion
The trends discussed here are all pointing to cross-border payments becoming faster, more secure, cost-efficient, and optimised for eCommerce sellers. For merchants and payment providers, expanding into international markets can bring long-term business opportunities and growth. Partnering with third-party providers, whether for improving payment security or increasing the efficiency of operations, can make the journey to payment modernization and innovation in this sector faster and easier.
By David Messenger, Executive Chairman, LianLian Global
