Cross border commerce globally is a multi-trillion dollar opportunity and it is ripe for disruption in both SMBs and Enterprise businesses alike. Cross-border payment flows are expected to reach a $156 trillion in 2022 and are growing at 5% CAGR.
These are the findings of a new report “The 2022 Global State of Cross Border Commerce” which assess the level of organisational readiness amongst businesses for cross border commerce.
Expected to reach $156 trillion globally, growing at 5% CAGR, cross-border commerce is a high priority in 2022 for 93% of the businesses big and small surveyed across the United States and Europe.
Cross-border commerce can be divided into four categories:
- B2B Transactions: which make up the largest share ($150 trillion)
- C2B Transactions: cross-border ecommerce transactions for physical and digital goods ($2.8 trillion)
- B2C Transactions: Include wages, salaries and contractor disbursements ($1.6 trillion)
- C2C Transactions: includes remittances ($0.8 trillion)
The reasons driving companies to pursue cross-border commerce vary, but more than half (51%) of businesses surveyed believe cross-border commerce is necessary simply to keep up with their competitors.
Other reasons to prioritise cross-border commerce include an awareness of new opportunities outside existing markets (57%), requests from prospects outside of current markets (42%), existing markets are fully penetrated (33%), sales decline in existing markets (26%) and experiencing an economic slow-down (24%).
While the opportunity to sell and buy cross border has clearly gained prominence, organisations of all sizes and industries are faced with a multitude of barriers as they seek to penetrate international markets. New customer acquisition is the biggest operational challenge according to 36% of businesses, followed closely by risk management at 35%.
Simultaneously, cross border decision-makers clearly indicated that managing data security risk (52%) and the ability to accept local payments (49%) are most important for growing their cross border commerce.
Key findings and recommendations:
- Localising digital experiences is critical to conversion: From website content with language translation, currency presentation, and customer support teams to accepting local payment methods of all kinds, localization will significantly improve customer experience and build the local credibility and trust required for conversion.
- Outsource risk management to specialised vendors: A leading concern for businesses considering cross-border expansion is the numerous risks involved. Businesses can reduce this burden by working with vendors and partners that specialize in areas such as security, fraud, ID verification, and more.
- Integrate cross-border initiatives into an overall business plan: When planning and implementing cross-border initiatives, organizations should consider where else these practices can benefit their business.
“There is no denying that cross border is exploding, and while businesses large and small acknowledge it is a priority, there are serious operational challenges that many organisations need to resolve in order to reap the benefits of this massive opportunity,” said Arik Shtilman, CEO and Co-Founder of Rapyd.
“Of the 52% that ranked risk management as most important for cross border growth, only 27% of those businesses have succeeded in fully implementing a solution. This gap exists across our findings, that despite businesses knowing what they need to do, they have yet to implement the critical tools necessary to successfully access billions of new customers around the globe.”
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