Amazon will stop accepting Visa cards in UK due to high transaction fees

E-commerce growth is expected to reach pre-pandemic levels by the end of this year. However, fast-growing and emerging regions remain excluded from access to global e-commerce due to the prevailing constraints on cross-border shopping.

With global e-commerce sales expected to reach $ 4.9 trillion by the end of this year, e-commerce shaped new consumer habits in terms of purchasing preferences. Despite these predictions, the growth and accessibility of e-commerce in some regions is still prohibited due to existing constraints that could be resolved, with the right timing and the right approach.

In the first quarter of 2021, global e-commerce reported revenue of $ 876 billion, up 38% year-on-year, with forecasts of a continuous growth by 24.5% by 2025. Yet the surge has not been as widespread as it seems at first glance. Much of the population in fast-growing and emerging markets is unbanked – up to 50% of Africans are still financially excluded, followed closely by South Americans and Central Americans at 38%. As a result, some regions face limitations in cross-border e-commerce.

Frank Breuss, CEO and Co-Founder of Nikulipe, a FinTech company creating and connecting local payment methods to access emerging and fast-growing markets, points out that while each emerging market has its own specific issues regarding cross-border payments, there are three main ones which stand out as the most widespread.

“The problems that stifle growth in fast-growing and emerging markets have been around for ages. The variety of payment cards, country-specific legislation and currency restrictions, and logistics are among the main issues hampering the growth of e-commerce. For example, while payment cards like Visa and Mastercard are widely available in North America or Western Europe, they are not readily available in fast growing and emerging markets. Even though consumers have payment cards, they are often local cards, intended for home use only, meaning they cannot be used to purchase goods from international merchants.

Breuss specifies that the situation is similar with bank transfers. For those with accounts at local banks, these financial institutions, in most cases, are not well connected to the international banking network, making cross-border bank transfers very slow and expensive.

Country specific laws or their absence are also ongoing struggles for fast growing and emerging markets. Latin America deals with operational payment limits, where payment orders can only be placed on working days at certain times. The fragmented market is a constant headache for Africa: with more than 40 different currencies and regulators, it poses a barrier for international traders. According to Breuss, even if a consumer is able to purchase goods or services from an international website, the merchant might not have easy access to the payment themselves.

Logistics issues such as shipping restrictions or customs delays are another added battle for many emerging markets, adds Breuss. International traders must find ways to get goods to their customers in these regions on time, as well as overcome customs bottlenecks, which add to the delays.

Helping solve these problems for international merchants and at the same time including as many consumers as possible in global e-commerce is no easy task – it takes time, local know-how and persistence, notes Breuss.

“A certain lack of clear regulations and laws in emerging markets increases the complexity of introducing new solutions. First of all, it is essential to understand the markets and their nuances, in order to offer local payment methods that are relevant and adapted to the needs of consumers in each market. Partnering with trusted payment solution providers could help manage the flow of money from fast growing and emerging markets to the merchant.

With issues such as payment and card limitations as well as logistics, fast growing and emerging markets are ripe for new solutions. Helping to solve long-standing problems could eventually end the exclusion from global e-commerce. If consumers continue to demonstrate their willingness to shop internationally, more merchants will try to find a solution to meet the demand and, as a result, put more pressure on the legislation to adopt the necessary changes. Now, with consumers in emerging markets doing just that, it seems like now is the right time to start working out the complexities.

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