Preventing cross-border fraud and credit card chargebacks is key to international growth
The UK makes up 4% of the global GDP. That leaves 96% of the world to aim for.
If your business is doing well at home, then there’s a very good chance of finding a demand for your goods and services overseas. According to the Department of International Trade, 85% of companies say international expansion has led to a level of growth not otherwise possible. Limiting your business to the domestic market also means failing to take advantage of huge potential. While international growth is a positive for many businesses, the potential for dealing with a credit card chargeback increases as your customer base grows.
This growth potential is good news for retailers. The UK’s share of local top retailers with international traffic share is an impressive 49%. ASOS, online fashion retailer and early mover into international expansion, today generates over 40% of online sales internationally.
The demand for British goods in China and the US is growing too. Take the online giant Alibaba. The Chinese e-commerce platform wants to bring China and Britain closer than ever. With 350 million customers at its fingertips, Alibaba wants to help British businesses get to them more easily.
According to Pitney Bowes’ global research, 66% of consumers now shop cross-border, creating an unprecedented global opportunity for retailers. This buying behaviour frequently occurs when consumers make in-store purchases during their international travels and follow up with online purchases from the same cross-border retailer.
A recent DHL survey also found that cross-border sales will prove to be a significant growth driver of overall e-commerce. Today, cross-border e-tailers are boosting their sales 10-15% by selling internationally, and a remarkable 71% expect their cross-border sales share to increase.
Subsequent to the increase in these cross-border trends has followed an increase in digital fraud. Since EMV and chip technology have made it harder to defraud card-present transactions, criminals are moving over to card-not-present and cross-border fraud. The percentage of fraudulent transactions on UK debit cards that occurred outside the UK rose 25% in recent years. Furthermore, fraudulent cross-border transactions made up close to one-third of all the fraudulent transactions on 52 million active UK debit cards, up from 23% on previous years before.
Visa subsidiary CyberSource’s 2016 UK eCommerce Fraud Report discovered that 60% of the businesses it surveyed, which already sell outside the UK, have a higher incidence of fraud on cross-border orders than on domestic sales.
Cross-border transactions are challenging for merchants and consumers, given cross-border fraud in international channels is 2.5 times higher than in domestic channels, according to a study from LexisNexis. However, the opportunity for growth is leading cross-border merchants to invest in fraud prevention tools.
Despite this downside, cross-border e-commerce is huge and presents an unrivalled growth opportunity on a global scale that every retailer should consider addressing.
Growth is out there, and UK businesses shouldn’t let borders and fraud obstruct such opportunities. There might be a perception that exporting is a risky venture, but businesses can reduce risk and protect themselves by spreading it across a wider range of customers and geographies, and double down on their fraud prevention strategies by working with international partners.
Finally, trust is one of the fundamental reasons consumers are motivated to shop cross-border. Creating a competitive advantage that builds trust is a major strategic opportunity for businesses. Secure online payments processing, coupled with effective fraud and chargeback prevention tools, can help consumers overcome their reservations about shopping across markets. Working with strong specialist partners is a good way to get past this hurdle.