Cross-border e-commerce is booming: it is expected to bring in $203 billion annually by 2021. Yet many U.S.-based merchants hesitate to engage in global transactions. To be sure, risks abound, but so do misconceptions about payment fraud.
Using local payment methods (LPMs) — that is, payment methods beyond credit cards — may lessen risk and allow global expansion. Linked to local banks, they typically have built-in security safeguards. In China, for instance, 49 percent of online transaction take place via e-wallet and only 23 percent by credit card.
Risk is reduced because such push-payment methods, where the customer initiates payment, do not require the business to collect consumers’ payment data, thereby lessening exposure to chargebacks due to misuse of stolen cards.
Bank transfers — which move money directly from the purchaser’s bank to the merchant’s — are another avenue to pursue. Used in nearly half of online transactions in Germany, bank transfers are performed via redirect during checkout, through a real-time or offline transfer process.
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