Today’s ecommerce world is characterized by great leaps in technology, combined with the ongoing consequences of the coronavirus pandemic. Among their most noticeable effects are those related to the ways buyers and sellers conduct payment transactions for goods and services. The upcoming months and years are sure to bring about a continuation of these trends, particularly for those merchants who accept international payments.

1. Increased fees.

According to the National Retail Federation, card swipe fees have ballooned massively over the past 19 years. These fees totaled $20 billion when the organization began keeping track and have skyrocketed to $110.3 billion as of 2020.

Since then, the pandemic has brought about a marked increase in ecommerce. Because credit and debit cards are used for online payment processing, merchants are seeing the spike in fees that come with these card-not-present transactions. Additionally, curbside and buy online, pick-up in-store (BOPIS) payments are also subject to the higher rates.

2. A continued trend toward buy now-pay later.

In a new spin on those old-school layaway plans, merchants and customers alike are now reaping the rewards of the buy now pay later (BNPL) model. As 2022 rolls on, an increasing number of sellers are expected to begin offering their customers the option to take advantage of installment financing options that allow them to spread out their payments over a fixed period of time.

As inflation continues to grow and costs keep rising, it seems likely that more and more buyers will be attracted by this cushioned approach to purchasing, particularly when it comes to big-ticket or luxury items. Inevitably, BNPL will also become subject to more stringent federal regulation as greater numbers of shoppers fall behind in their payments.

3. The popularity of feature-packed mobile wallets.

Embedded in the smartphones that virtually everyone now carries with them are digital wallets. These secure repositories can securely store sensitive details like credit, debit, and loyalty card information. That makes it possible for payments to be made in a “contactless” or “touchless'' simply by waving a smartphone or wearable device within a couple of inches of your Near-field Communications-equipped card reader.

Even international customers can join in on the fun and security of making digital payments using their smartphone’s wallet. That’s because a growing number of global sellers are keying into the trend by allowing shoppers to shop using PayPal, Apple, and Android Pay. This greater choice, combined with the ability to accept local currencies, can help engender trust and enhance cross-border relationships between you and your customers. 

4. An uptick in cross-border payments and the technology making them possible.

It’s a bright time for businesses that offer their products and/or services to customers around the world. Of course, your international customers are much more likely to complete the purchase process on your ecommerce site if you allow them to pay in their native currency. At Inovio, we offer support for nearly every international currency imaginable — nearly 180 in all! That way, you can offer your international customers the ability to pay in a currency they are familiar with, complete with flexible settlement times, and a simpler checkout experience. Eliminating price differentials at the time of purchase will even increase sales and reduce credit requests, returns, and chargebacks.

5. A focus on central bank digital currency.

Attention in recent years has been directed toward cryptocurrency. However, the mainstream popularity of players such as Bitcoin has remained somewhat stagnant. In no small part this is due to crypto’s volatility; consumers are reluctant to invest in something that could plummet from a sky-high value one day to a sub-basement level the next.

For that reason, there is a great deal of discussion about central bank digital currency (CBDC). This so-called digital dollar stablecoin has already been accepted in a number of nations and is being considered by several more, including the United States. The benefits are clear: CBDC is supported by strong blockchain technology that allows money to be securely transferred from person to person 24/7 in real time. Regulation will remove the risky “Wild West” aspect, making it possible for funds to flow quickly but without risk.

6. A heightened emphasis on cybersecurity.

Any business that sells internationally is deemed to be high-risk by providers of merchant services and payment gateways. This is because instances of fraud are much higher for global transactions. In response to this reality and the overall heightened sophistication of cybercriminals, security measures are becoming more complex and stringent than ever.

To combat fraud and a growing number of chargebacks, regulators and financial institutions are fighting back by using data analytics, machine learning, and artificial intelligence. They are also encouraging merchants to implement anti-fraud measures such as 3-D Secure payments that require more thorough authentication on the part of the user. At the same time, innovators will find ways to make the user’s authentication process as seamless as possible to reduce frustration and keep the shopping experience fast, friendly, and secure for both domestic and international buyers.

7. Heightened regulations.

If consumers and the merchants who sell to them want to be protected from data breaches and fraud, stronger regulations are sure to come into play. The Consumer Financial Protection Bureau (CFPB) is taking steps to ensure that customers’ sensitive payment information is protected from hackers regardless of whether it is handled by major players like Google or Amazon, or by emerging fintechs and BNPL operators.

The pandemic has made it clear that our world is interdependent. When disruption occurs in one sector, it quickly spreads to affect the whole, often in unpredictable ways. To cope with these disruptions, the financial sector has responded with both a combination of nimble repositioning and a doubling down on innovation.

In the international payments ecosystem, consumers and merchants alike are feeling the effects. While fees are more substantial, innovations like BNPL and digital wallets are widening the landscape and providing buyers with added choice. At the same time, keeping a laser focus on security will help protect your customers' sensitive data, and your own business from data breaches and reputational damage. 

While it is impossible to know for sure everything international sellers will face in an uncertain future, one thing is sure: These digital payments trends will be at the top of the discussion.