The number of global digital buyers is growing daily, and many people are spending more time than ever looking for products to buy online. People are also relocating and expanding their businesses to reach global audiences. As a result, the need for cross-border payments continues to rise. According to PRNewswire, the value of international remittance and cross-border payments transactions will grow from USD 37.15 trillion in 2020 to USD 39.9 trillion by 2026.
Even so, cross-border payments face several hurdles before reaching their intended recipient, and the process is often time-consuming and expensive. While most individuals may be able to bear with these difficulties, the same is not sustainable for Startups as these challenges delay Startup growth and waste resources.
Let’s examine what the challenges are for Startups, why Startups need to deal with these challenges, and how founders can win the struggle against payment hurdles in emerging markets.
Payment hurdles that startups experience and how they affect them
Picture yourself finally launching the brilliant solution you’ve been building after years of planning and hard work. You’ve pushed your product to the right audiences and garnered all the necessary attention, only to have no means of receiving your funding or face hiccups accessing the funds after raising them.
No doubt, this can be very discouraging.
Cross-border payments have been a significant challenge for many startups operating in emerging markets. Some common pain points include limited banking infrastructure, currency exchange regulations, high transaction fees, and a lack of trust between buyers and sellers. However, Startups can overcome these challenges by leveraging versatile and global payment solutions.
Now, to beat an enemy, you must examine them. On that note, let’s look at these challenges in-depth and how they can affect a business.
#1 Limited payment options
Startups have difficulty offering their customers various payment options due to the limited payment infrastructure in their countries. This negatively impacts their ability to attract and retain customers.
#2 High transaction fees
Cross-border payments can be expensive, with high transaction fees, long processing times, and poor exchange rates. Foreign exchange is often a losing game. Startups, especially those operating in emerging markets, cannot afford these high transaction fees, which limits their ability to expand their customer base.
#3 Currency conversion
Startups operating in different countries may experience difficulties converting currency, especially when there are currency regulations. This can make it challenging to pay suppliers or receive payments from customers.
#4 Lack of trust
Establishing customers’ trust, especially in other countries, is challenging for Startups. When this happens, you’ll find that it leads to hassles in receiving payments. This may be due to fraud, lack of transparency, and mistrust of online transactions.
#5 Payment security
Startups may struggle to ensure the security of their payment systems because Cross-border payments are susceptible to fraud, making them vulnerable to cyber-attacks and hacking. That's why it's expedient for Startups to take measures to protect against fraudulent transactions. This can be difficult as fraudsters may use different tactics in different countries.
These payment hurdles can affect startups in various ways, including:
Reduced revenue: When startups face payment hurdles, it can reduce their ability to generate revenue, leading to lower profits or even business failure.
Limited market reach: Payment hurdles can limit the ability of startups to reach new customers, especially those in other countries, leading to missed business opportunities.
Poor customer experience: Customers may abandon purchases due to limited payment options, leading to a poor customer experience and negative feedback, which can harm the company’s reputation.
Reputation damage: Payment hurdles can damage a startup's reputation, especially if customers experience difficulties making payments or receiving refunds. This can lead to negative reviews and word-of-mouth marketing, harming the startup's brand image.
Cash flow issues: Cross-border payment hurdles can lead to delays in payments and cash flow issues, which affects a Startup's ability to pay suppliers, employees, and other expenses. This can result in reduced productivity and a slowdown in business operations.
Limited payment options: Startups may face difficulties in offering their customers various payment options due to limited payment infrastructure in the countries where they operate. This can negatively impact their ability to attract and retain customers.
High transaction costs: Cross-border payments can be expensive, with high transaction fees and poor exchange rates. Startups, especially those operating in emerging markets, may be unable to afford these high transaction fees. Coupled with the time it takes to process these transactions, it limits their ability to expand their customer base.
How Startups can overcome the payment hurdles
The challenges can be overwhelming, but the good thing is there’s a silver lining. Startups in emerging markets can overcome the challenges posed by international payments, and we’ll show you exactly how to achieve this.
#1 Choose a payment gateway that supports multiple currencies and payment methods
A versatile payment solution that supports multiple currencies and payment methods can help startups to accept payments from customers worldwide. This way, startups can ensure their customers can pay using their preferred payment method and currency. We give you access to 15+ currencies in 21+ countries. Enough options to provide ease for your customers.
#2 Offer different payment options
Startups also need to offer different payment options to your customers. Apart from credit/debit cards, other options like e-wallets, and bank transfers, can make it easier for customers to pay. A versatile payment solution will enable startups to accept payments through these different methods. (reference LaaS when it has been released)
#3 Ensure security and compliance
Security and compliance are critical when it comes to accepting payments. Make sure to choose a payment solution that complies with regulations like the (PCI DSS), and other certifications. All of which Leatherback has. Additionally, ensure that the payment solution is secure and has measures in place to protect against fraud.
#4 Optimise for mobile payments
With more people making payments on their mobile devices, it's essential to optimize your payment solution for mobile devices. A versatile payment solution will allow startups to accept payments through mobile devices and ensure a seamless checkout experience.
#5 Consider the fees
Fees can be a significant consideration when choosing a payment solution. Look for a payment gateway that offers competitive pricing and transparent fees. Also, consider any additional fees that may apply, such as currency conversion fees.
Benefits of overcoming the payment hurdles and seeking out good solutions.
#1 Global reach
A good cross-border payment solution can help startups reach customers from all over the world. This allows startups to expand their customer base and increase their revenue streams. At Leatherback, we understand the value of global reach to Startups, which is why we are dedicated to making this a reality for founders all over the world. The same can be said for your business too, with just one CLICK.
#2 Improved customer experience
A smooth and hassle-free payment experience can improve customer satisfaction and loyalty. By offering different payment options and optimizing for mobile payments, startups can provide a seamless checkout experience to their customers.
#3 Increased efficiency
A good payment solution can help startups streamline their payment processes, reducing manual errors and saving time. This allows startups to focus on other aspects of their business and improve their overall efficiency.
#4 Enhanced security
Payment solutions that comply with regulations offer enhanced security measures to protect against fraud and data breaches and startups should use such. This can help startups build trust with their customers and protect their reputation.
#5 Competitive advantage
Startups that offer a wide range of payment options and a seamless checkout experience can gain a competitive advantage in the market over their competitors. By providing a better payment experience than their competitors, Startups can attract more customers and improve their brand image.
Cross-border payments can be a significant challenge for emerging market startups. With the right payment solution, however, Startups can overcome these obstacles and capitalize on the growing potential of cross-border trade.
Startups should look for payment providers with experience operating in emerging markets, as well as those who provide versatile and global payment solutions. By overcoming these obstacles, startups can increase customer loyalty, strengthen brand reputation, and capitalise on significant growth opportunities.
