In recent years, Singapore has rapidly evolved into a digital-first economy, with the island nation at the forefront of adopting innovative financial technologies. The emergence of digital wallets has signaled a shift in consumer preferences, with predictions suggesting they might soon eclipse traditional card payments. Central to this digital revolution is PayNow, a system that has transformed the way transactions are conducted in Singapore, promising a seamless, efficient, and secure method of payment.
Developed under the auspices of the Association of Banks in Singapore (ABS), PayNow is more than just a payment method; it's a cornerstone of Singapore's ambition to become a fully cashless society. This real-time payment platform enables users to send and receive money instantly using just a mobile number, NRIC/FIN, or UEN number, integrating seamlessly with the Singapore Quick Response Code (SGQR) for QR code payments. Supported by a consortium of major banks and financial institutions under the regulation of the Monetary Authority of Singapore (MAS), PayNow is a testament to Singapore's cohesive approach to financial innovation.
Updating the statistics with the latest information, PayNow's trajectory in Singapore showcases the nation's accelerated embrace of digital payments. In 2020, Singapore witnessed a dramatic surge in real-time transaction volumes, reaching 138.38 million, a 48% increase from 2019. The value of these transactions also saw a significant jump of 40%, escalating from US$110 billion in 2019 to US$154 billion. The growth trend is projected to continue, with real-time transactions expected to climb at a compound annual growth rate (CAGR) of 23.2% to hit 392.94 million by 2025. This would elevate the total transaction value at a CAGR of 17.74%, underlining the increasing significance of digital payments in Singapore's financial landscape (Fintech Singapore).
The recent expansions into real-time cross-border payments further underline PayNow's evolving role in the financial ecosystem. 2023 marked a pivotal year as Singapore initiated real-time cross-border payment connections with neighboring countries. These developments, facilitated by the Monetary Authority of Singapore (MAS), aim to enhance convenience for cross-border fund transfers and small-value payments. The introduction of cross-border QR code payment linkages with Malaysia and Singapore, along with the establishment of a cross-border linkage between Singapore’s PayNow and India’s UPI, highlights the city-state's commitment to fostering financial inclusion and bolstering the ASEAN economy through improved payment connectivity (Fintech Singapore).
While PayNow excels in facilitating local transactions, its integration with international payment systems like Tazapay represents a significant leap forward. This synergy allows Singaporean businesses and consumers to participate in the global marketplace more effectively, providing a streamlined process for cross-border transactions. Through platforms like Tazapay, users can easily transfer funds internationally, opening up new avenues for commerce and personal transactions alike.
Tazapay stands out by offering a simplified and secure method for leveraging PayNow in international transactions. By facilitating the transfer of funds to Tazapay's Singapore account via PayNow, and then on to the recipient's foreign account, it bridges the gap between local and global payment ecosystems. This process not only enhances the utility of PayNow but also offers businesses a competitive edge in the international market.
The cost-effectiveness of PayNow for local transactions is clear, with nominal fees and a structure that promotes accessibility. However, the dynamics shift when considering international transactions. The use of third-party platforms like Tazapay introduces additional costs, albeit often lower than traditional banking fees. For businesses looking to expand globally, understanding these financial nuances is crucial in selecting the most efficient payment methods.
As PayNow continues to evolve, its potential to shape Singapore's digital economy grows ever more significant. Its integration with international payment gateways heralds a new era of financial connectivity, enabling Singapore to further solidify its position as a global financial hub. The ongoing developments in digital payment technologies promise to enhance PayNow's offerings, ensuring that Singapore remains at the forefront of the digital payment revolution.
For businesses and individuals alike, the journey towards a cashless society is filled with opportunities. Embracing platforms like PayNow and Tazapay not only facilitates easier transactions but also opens up new horizons for global engagement. As we look to the future, the role of digital payment systems in driving economic growth and fostering global connections cannot be underestimated.
In conclusion, PayNow's journey from a local payment solution to a key player in international transactions encapsulates the essence of Singapore's digital transformation. Its continued adoption and integration with global payment systems underscore the importance of digital innovation in today's interconnected world. As we embrace these technologies, the prospects for seamless, secure, and efficient transactions are boundless, heralding a new chapter in the story of digital payments.
The eCommerce scene in Indonesia is a lucrative and burgeoning market, evident with its current placement as the 10th largest eCommerce market in the world with a revenue of USD 52.9301 B this year, putting Italy in 9th place¹. The market is certainly a healthy one with a CAGR of 10.4% and has contributed 17% to the global eCommerce market growth rate¹.
This makes Indonesia a prime choice market for any prospecting eCommerce business looking to venture into the international marketspace, especially with the highly competitive market they currently have². Therefore, what better way to localise in such an environment than with one of the most popular local payment methods they have today? Let’s take a look at Dana, and how it functions in an international payment gateway.
Dana is a digital wallet, or e-wallet, service that is popular in Indonesia and has been working together with Bank Indonesia to help advance the country’s aims of both integrating technology into their financial services, and building up the country’s digital economy³.
As a digital wallet, it allows users to make payments with either their saved cards, e-wallet funds, or dynamic QR codes.³
Indonesia’s digitalisation efforts have been successful thus far, based on the drastic increase in the country’s internet penetration rate from 69.8% in 2020 to 75.47% in 2022². This is evidently reflected in both the aforementioned high competitiveness in Indonesia’s eCommerce market, but also in Dana’s own rapid climb in popularity, reporting a jump from 93 million users in 2021 to over 135 million users in 2022–a 145% increase⁴.
However, due to the country’s vast landmass and numerous scattered islands, low banking and internet penetration remains an issue in those remote regions as difficulty in building the infrastructure to support digital payments is still high².
No payment gateway is perfect, and each has their own sets of benefits and drawbacks. Here are Dana’s pros and cons:
At the time of writing, Dana has yet to expand beyond Indonesia so any cross-border transactions involving it must use a third-party payment provider to act as the international payment provider. To do this, a user would need to use one such payment provider that offers Dana as a payment option upon checkout. From there, proceed to conduct the transaction as one normally would in a local transaction with Dana. Once the payment is made, the funds will be transferred from the third-party payment provider’s ID account to one of its international accounts before being disbursed to the foreign seller.
Presently, Dana provides each user with an allowance of 10 free withdrawals, charging an administration fee of IDR 4,500 per withdrawal after that³. Dana also charges administration fees of IDR 1,500 per top up, IDR 7,500 per train ticket purchased via the Dana app, and IDR 2,500 per bill payment³.
However, since Dana has yet to expand beyond local borders, any fees charged for cross-border transactions will be the usual costs that come with using third-party payment providers, such as setup fees, and FX costs.
Now that you know more about Dana, you can now think about localising into Indonesia with more confidence. However, it wouldn’t hurt for you to consider taking a look into robust payment gateways that offer a slew of localisation options like Tazapay to help increase your odds of success.
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Sources
The savvy e-Commerce merchant knows that when it comes to payment methods, they are spoiled for choice. Knowing how many to take on, and the suitability of each in any given market, is a crucial matter entirely that could spell the difference between success and mediocrity in the sphere of e-Commerce. Generally speaking, it is good business sense to have multiple localised payment methods on hand to both increase your odds of successfully integrating into the local market ecosystem and reducing the risk of chargeback fraud.
The overall B2B e-Commerce market is also projected to be continuing its healthy upward trend of growth where it has a reported global market value of 17.9 trillion USD in 2021– a roughly 120% increase from its previous 14.9 trillion USD in 2020, thus making at least 5 times larger than the global market size of the B2C e-Commerce market¹. This tremendous market size and growth is further compounded by the overall increase in digital shoppers worldwide, sitting at nearly four billion consumers in 2021².
This goes to show that the e-Commerce market sphere is not only thriving, but also intensely competitive as well as it is evident that the number of digital businesses and digital consumers will only keep increasing. Therefore, knowing which payment methods to choose from and how they function is key, and this includes knowing how to distinguish between synchronous and asynchronous payment methods.
Synchronous payments refer to payments that are processed in real-time or near-instantaneously. This usually means that payments made using synchronous payment methods are fast and convenient at the cost of high transaction fees and/or greater dispute resolution difficulty. Examples of synchronous payment methods include card payments, internet banking, real-time payments, and bank redirects.
Asynchronous payments refer to payments that are processed with some length of time between the moment of transaction and the resolution of the transaction. The time it can take for an asynchronous payment to process a transaction can take anywhere from a few minutes to a few days, depending on the payment rail used. That said, asynchronous payment methods also have strong brand trust behind them and are typically more secure and readily available than most synchronous alternatives. These asynchronous payment methods include local bank transfers, mobile money, voucher payments, and wire transfers.
Most synchronous payments are powered by a robust digital payments infrastructure to help facilitate the protocols and uniformity needed across banks to make synchronous payments possible, such as Singapore’s inter-bank payment system with PayNow, or Sofort’s utilisation of Klarna Kosma’s PISP-based infrastructure in Europe.
Generally speaking, a synchronous payment in a payment gateway would go as follows:
Asynchronous payments are usually synonymous with more conventional payment methods and/or hybrid payment methods that intend to reach out to the unbanked population of a given market, such as voucher-based payments in Latin America. While they may take more time to process, their security cannot be understated.
This is how asynchronous payments are processed in a payment gateway:
Now that you know more about the difference between synchronous and asynchronous payment methods, you can make smarter decisions the next time you opt for a payment method to adopt into your e-Commerce business. Though, with Tazapay, you can skip the ruminating phase altogether and enjoy access into more than 80 localised markets at your fingertips with just a single click. Don’t delay, try Tazapay today!
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Sources
India stands at the forefront of the digital revolution, marking itself as one of the fastest-growing digital economies worldwide. With over 117 billion digital payment transactions recorded in 2023, and an average of 380 million transactions per day by December 2023, the country's trajectory towards digital integration is unmistakable. Central to this digital transformation is the Unified Payment Interface (UPI), developed by the National Payments Corporation of India (NPCI), embodying India's rapid embrace of digitalization to simplify financial transactions across the board.
UPI stands as a beacon of innovation in real-time payment systems, facilitating inter-bank peer-to-peer (P2P) and peer-to-merchant transactions through a seamless two-click factor authentication process. Governed by the Reserve Bank of India (RBI), UPI's framework enables transactions via a smartphone application, heralding a new era of banking and financial services. Its resemblance to Singapore's PayNow underscores a global shift towards government-led digital payment solutions, fostering an ecosystem where transactions are not just secure but also universally accessible.
In 2023, UPI transactions have seen remarkable growth, with the total transactions processed by UPI standing at 117.6 billion for the year. Specifically, for December 2023, UPI payments in India reached 12.02 billion transactions, with payments worth Rs 18.23 lakh crore being processed in just that month. This represents a 54% year-on-year growth in terms of volume and a 42% growth in transaction value annually (Economic Times) The adoption of UPI spans across diverse demographics, with its popularity not confined to urban centers but also penetrating rural areas, demonstrating the platform's wide acceptance and adaptability.
The international operations of UPI have notably expanded beyond its initial reach. As of the latest updates in 2024, UPI's global footprint has extended to several new countries, making it a more versatile option for international payments. Specifically, France has recently adopted UPI, joining other countries like Bhutan, the United Arab Emirates (UAE), Malaysia, Singapore, Nepal, Oman, Qatar, Russia, Sri Lanka, Mauritius, and the United Kingdom in embracing this system. These expansions underscore UPI's growing acceptance and its potential as a global payment gateway.
This broadened adoption facilitates cross-border transactions, allowing users in these countries to leverage UPI for seamless and secure payments. The collaboration with various international partners and payment providers highlights UPI's versatility and its capability to streamline payment processes across different markets. This development is part of the National Payments Corporation of India's (NPCI) ongoing efforts to extend UPI's reach, reflecting the platform's potential to influence the global digital payment ecosystem significantly.
For regions yet to establish direct UPI connectivity, international transactions are streamlined through third-party payment providers, acting as bridges between UPI and global markets. Here’s how the process unfolds:
Initiating Payment: Users initiate transactions by transferring funds to the payment provider's bank account in India via UPI. This is typically done by scanning a QR code or barcode within the UPI app, representing the transaction amount.
Global Fund Transfer: Subsequently, these funds are transitioned into one of the payment provider’s international accounts. The final step sees the funds disbursed to the recipient's bank account abroad, completing the international transaction.
This model exemplifies UPI's adaptability and its growing acceptance as a versatile solution for international payments, providing a seamless, secure, and efficient transfer mechanism across different geographies.
Given the diverse landscape of third-party payment providers facilitating UPI transactions internationally, businesses and individuals are advised to select partners offering comprehensive support for a wide range of localized markets. This ensures not only the broad usability of UPI across various international platforms but also enhances the efficiency and security of cross-border payments.
With ongoing discussions to further expand UPI's reach to additional countries, the future of international digital payments looks promising, positioning UPI at the forefront of the global digital economy's evolution.
Seamless Payment Experience: UPI's integration with numerous payment apps and digital wallets, alongside its vast network of banks, provides a hassle-free transaction process.
Instant Transactions: The real-time processing capability of UPI ensures transactions are completed within seconds.
Security and Ease of Use: Enhanced with two-factor authentication and a unique UPI ID, the platform guarantees a secure yet straightforward payment experience.
Dependence on Internet Connectivity: The efficacy of UPI is contingent on reliable internet access, limiting its use in connectivity-challenged regions.
Security Concerns: Despite robust security measures, users must remain vigilant against potential phishing and fraud attempts due to the PIN-based authentication system.
Expanding into India's digital market requires a keen understanding of the country's tax and compliance landscape, especially for SaaS companies and digital eCommerce merchants leveraging UPI for transactions. Critical to this expansion is navigating the intricate documentation requirements, including obtaining a Tax Residency Certificate (TRC) and making a No Permanent Establishment (PE) Declaration, among others. These steps are vital for leveraging tax benefits under Double Taxation Avoidance Agreements (DTAAs) and ensuring smooth operation within the legal framework.
Furthermore, the implementation of GST on digital services and the significance of the Equalisation Levy on foreign e-commerce transactions underscore the evolving tax regime in India. These measures aim to ensure a level playing field between domestic and international players in the digital economy. As such, international businesses must stay abreast of these regulations to optimize their tax liabilities and maintain compliance. Download our eBook to understand this in detail
For businesses looking to streamline this process, leveraging platforms like Tazapay can provide significant advantages. Tazapay simplifies the complexities of tax collection, compliance, and remittance, enabling businesses to focus on growth and market penetration rather than administrative burdens.
As the Unified Payment Interface (UPI) continues to evolve, its influence is set to extend beyond the Indian market, marking a significant shift in the global digital payment ecosystem. UPI’s initiatives aimed at expanding its international reach and enhancing its features for global usability are pivotal. In this landscape of growth and innovation, UPI is well-positioned to facilitate seamless and secure online payments on a worldwide scale, embodying India's ambitious vision for a digitally empowered global economy.
In this evolving scenario, Tazapay stands out as a crucial player, offering an innovative solution that integrates UPI alongside other local payment options across 80+ locations with just one integration. This strategic collaboration enables businesses to leverage UPI’s simplicity and security while also accessing a broad spectrum of payment methods globally, ensuring they can meet the diverse preferences of customers worldwide. Tazapay's one-stop payment solution signifies a leap towards creating a more inclusive and accessible digital payment infrastructure, making it easier for businesses to engage in cross-border commerce without the hassle of managing multiple payment integrations or local entities.
CB Insights today named Tazapay to its sixth-annual Fintech 100 ranking (previously the Fintech 250) - showcasing the 100 most promising private fintech companies of 2023.
"Representing 24 different countries across the globe, this year's Fintech 100 is shaping the future of real-time payments, spend management automation, embedded finance, and more," said Chris Bendtsen, Lead Fintech Analyst, CB Insights. Together, they are not only increasing the pace of innovation, but launching new products and features to revolutionize the industry as a whole. I cannot wait to see what this cohort accomplishes next."
"Being recognized in the CB Insights' Fintech 100 list is an affirmation of our vision to revolutionize cross-border payments. We're committed to creating solutions that not only simplify transactions but also instill trust in global commerce. This acknowledgement fuels our determination to push boundaries further," remarked Rahul Shinghal, CEO of Tazapay
Utilizing the CB Insights platform, the research team selected these 100 winners from a pool of over 19,000 private companies, including applicants and nominees. They were chosen based on factors including - equity funding, investor profiles, business relationships, R&D activity, news sentiment analysis, competitive landscape, proprietary Mosaic scores, and Yardstiq transcripts - and criteria such as tech novelty and market potential. The research team also reviewed thousands of Analyst Briefings submitted by applicants.
In a rapidly globalizing e-commerce landscape, Tazapay emerges as a crucial enabler. Its platform provides seamless and secure payment solutions, empowering businesses to confidently operate on a global scale. Tazapay has bridged the gap for cross-border merchants and enterprises, facilitating payment collections from 173+ global markets. Furthermore, the introduction of local payment options such as local bank transfers, QR codes, e-wallets, vouchers, etc. enables businesses to tap into diverse customer segments within these markets, further widening and deepening their reach. Demonstrating commitment to growth and compliance, Tazapay secured a license from the Monetary Authority of Singapore (MAS) and successfully closed its Series A funding in 2023
Quick facts on the 2023 Fintech 100:
About CB Insights
CB Insights builds software that enables the world's best companies to discover, understand, and make technology decisions with confidence. By marrying data, expert insights, and work management tools, clients manage their end-to-end technology decision-making process on CB Insights. To learn more, please visit www.cbinsights.com.
About Tazapay
Tazapay is reshaping the cross-border e-commerce landscape by offering secure, transparent, and efficient payment solutions tailored for global commerce. Catering to industries such as travel, gaming, ed-tech, SaaS, and e-commerce, we're committed to fostering trust and facilitating smooth global transactions. As the e-commerce domain continues to expand, Tazapay remains dedicated to being the payment solution partner of choice for businesses around the globe. Learn more at www.tazapay.com
Security is a cornerstone of any successful eCommerce operation. Among the most effective tools in the arsenal against fraud and chargebacks is 3D Secure (3DS) technology. If you've made a card payment online, it's likely you've encountered 3DS—even if you weren't aware of it. Let's delve into how 3DS works and its role in minimizing chargebacks.
3DS is a robust authentication protocol designed specifically for card payments. It hinges on a three-domain model encompassing the Acquirer Domain (merchant’s bank), the Issuer Domain (cardholder’s bank), and the Interoperability Domain (technology facilitating 3DS communication). This protocol is vital for both payment authentication and additional security checks, offering several ways to authenticate:
The essence of 3DS is its requirement for consumers to authenticate their transactions, significantly reducing unauthorized payments and, consequently, chargebacks.
While 2DS offers a simplified, two-domain model for authentication, 3DS presents a more comprehensive approach, including an additional security domain. The primary difference lies in the depth of security and the consumer's interaction with the authentication process, with 3DS requiring an OTP or similar verification method.
The choice between 2DS and 3DS impacts not just security but the overall customer experience. While both aim to secure transactions, 3DS stands out for its ability to prevent various forms of fraud, including 'friendly fraud'—where chargebacks are filed without legitimate grounds. Implementing 3DS can significantly enhance your efforts to mitigate such risks.
However, the effectiveness and preference for 3DS can vary globally. For instance, while some markets like the U.S. may still lean towards 2DS for its simplicity, others, like Singapore, have widely adopted 3DS, appreciating the added security layer of OTP verification. Knowing your target market's preferences is crucial to implementing the most effective payment security strategy.
Familiarity with 3DS and its application in a payment gateway can greatly benefit your eCommerce business by reducing chargebacks and enhancing transaction security. For those seeking a secure, robust payment gateway solution, Tazapay offers a comprehensive suite of features designed to protect your online transactions. Accredited by the Monetary Authority of Singapore (MAS) and equipped with PCI DSS certification, Tazapay ensures your business transactions are secure and trustworthy.
The digital era has opened a world of opportunities for businesses to go global. Yet, the unique digital evolution of each region and country has profoundly influenced consumer preferences in online payments. This diversity has given rise to local payment methods, designed specifically to align with the distinct consumer behaviors across the globe. Understanding what these local payment methods entail and the reasons behind their emergence is crucial for businesses looking to thrive in the international market.
As we embark on the journey to understand the intricacies of local payment options, it's essential to first navigate through the diverse payment landscape that cross-border payments encompass. These payment methods form the backbone of international commerce, facilitating seamless transactions across borders. Let's delve into the key payment options that businesses and consumers commonly utilize in a cross-border context:
Credit Cards: Universally accepted, credit cards stand as a cornerstone in cross-border transactions, offering convenience and security for buyers and sellers alike.
Wire Transfer: For direct bank-to-bank transactions, wire transfers offer a reliable method for transferring funds internationally, albeit often with higher fees and longer processing times.
Local Bank Transfer: Bridging the gap between traditional and digital, local bank transfers provide a method for customers to pay through their local banking systems, enhancing convenience without the need for international banking facilities.
Local Payment Options: Catering specifically to regional preferences and financial infrastructures, local payment options (or alternative payment methods) offer tailored solutions that resonate with the local consumer behavior, ensuring inclusivity and accessibility in the global marketplace.
Local payment methods, distinct from the conventional international payments like credit cards and bank transfers, cater to regional preferences and needs. Known variably as alternative payment methods (APMs), their development is influenced by a myriad of factors including existing infrastructures, consumer behavior, and government policies. The contrast between the Philippines and Ghana illustrates this diversity perfectly; while the Philippines has embraced eWallets for their unbanked population, Ghana leans towards Mobile Money services provided by telecom companies, showcasing the tailored evolution of payment solutions across different landscapes.
Incorporating local payment options into your cross-border payment gateway is not just a nod to customer diversity—it's a strategic move that propels your business forward. This approach does more than just acknowledge the varied preferences of your global customer base; it actively engages with them, offering solutions that are attuned to their specific needs and circumstances. Here are the key benefits of integrating local payment methods into your international payment infrastructure:
Enhanced Customer Experience: By offering payment options that customers are familiar with and trust, you significantly improve the user experience. This familiarity reduces friction at checkout, increasing the likelihood of completing a purchase.
Increased Market Penetration: Local payment methods open doors to new markets, especially in regions with a high preference for non-traditional payment solutions. This inclusivity allows you to reach a broader audience, tapping into previously inaccessible customer segments.
Higher Transaction Success Rates: Local payment options often boast higher success rates for transactions, owing to their compatibility with the regional banking infrastructure and regulatory environment. This leads to fewer failed transactions and a smoother payment process.
Competitive Advantage: Offering a diverse set of payment options can set you apart from competitors, making your platform the preferred choice for customers seeking convenience and flexibility in their payment methods.
Regulatory Compliance: By integrating local payment methods, you align with local regulations and financial practices, minimizing legal and operational risks associated with international transactions.
Reduced Costs: Local payments can be more cost-effective for both merchants and consumers, avoiding the high fees associated with international card payments and currency conversions.
As the digital economy continues to connect markets worldwide, the strategic incorporation of local payment options into your payment gateway is essential. It not only respects and caters to the preferences of a global customer base but also capitalizes on the unique opportunities presented by the varied financial landscapes across regions. Embrace the diversity of payment preferences to unlock a world of possibilities for your cross-border business.
Embracing local payment methods comes with its costs, a fundamental truth in the realm of international business. To ensure a smooth integration of these payment solutions onto your platform, it's crucial to evaluate the financial implications:
Setup Fees: Assess whether an initial investment is required to access the service.
Platform Fees: Understand the service's cost structure—whether it operates on a flat rate, transaction percentage, or a combination of both.
Payout Options: Consider the currency in which the provider will settle payments to your business account, and whether it aligns with your financial preferences or needs.
FX Rates: Analyze the exchange rates offered for conversions, especially if payouts are in a different currency than your primary business operations.
Gaining a comprehensive understanding of these expenses is key to selecting a payment gateway that aligns with your business objectives and budgetary constraints.
In navigating these costs, Tazapay emerges as a pivotal partner for businesses looking to expand their global footprint. Offering competitive pricing and seamless integration, Tazapay enables access to local payment options in over 80 countries, simplifying the process without the need for establishing local entities. This advantage allows businesses to rapidly adapt to market demands and consumer preferences, ensuring a cost-effective and efficient payment solution tailored to the needs of international commerce.
The landscape of local payment methods is as diverse as the regions they serve. Each area has cultivated solutions that resonate with its unique market dynamics:
This regional overview underscores the importance of choosing payment methods that align with the local consumer behavior and technological infrastructure.
Integrating local payment methods into your cross-border payment strategy is imperative for businesses targeting international markets. By offering payment options that cater to regional preferences, you can enhance customer experience, expand market reach, and improve conversion rates. With the support of partners like Tazapay, navigating the complexities of global payments becomes more manageable, allowing your business to thrive in the competitive landscape of international e-commerce.
eCommerce gives merchants access to a global audience. Via digital payments, anyone in the world can be your customer. The simple shift to online shopping resulted in a complex, worldwide eCommerce marketplace.
But global access also creates challenges, specifically with disputes and chargebacks. Standard domestic chargebacks on a regular day are difficult and costly—the problem only grows more complex with international payments. From changing country regulations to different payment processing methods, many merchants struggle with cross-border chargeback defense.
Let's explore all you need about cross-border disputes and how you can manage global chargebacks.
A cross-border chargeback is a dispute filed by a customer against a merchant in a different country. Usually, the dispute is related to a cross-border transaction, where a global payment or fund transfer occurs across international country lines.
When defining a cross-border chargeback, you must note the exact jurisdictions involved. For a single payment can traverse through several foreign entities (foreign banks, credit cards, currencies, etc). That's why a cross-border dispute simply refers to someone in one country requesting a sale reversal with a merchant in another country.
If you sell a product to someone in Mexico, it is a cross-border transaction. If the customer disputes the charge, it becomes a cross-border chargeback. The payment and the dispute occur between two different sovereign jurisdictions.
Introducing multiple countries into the dispute process creates several difficulties for merchants:
Luckily, there are several steps you can take to better manage international disputes. The following tips can help you build a robust cross-border chargeback defense strategy.
What can anyone presently venturing into India’s B2B e-commerce market expect? Based on a 2019 report by management consulting firm RedSeer, India’s B2B e-commerce market is expected to outgrow B2C e-commerce with a compound annual growth rate (or CAGR) of 80%. By 2025, it is expected to reach USD60 billion.1
With B2B markets thriving (thanks in part to COVID-19 which disrupted the traditional supply chains), these are exciting times to evaluate B2B payment gateways that can support your online business’s plan for expansion into the region.
Tazapay is an international payment platform that provides checkout, escrow, and treasury services at low platform fees and the best FX rates. Contact us to find out how we can help you:
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According to a news article in Business Wire, the Indian Payment Gateway Market is expected to register a CAGR of 15% over the forecast period 2020 to 2025.2
As more payment gateways start to provide innovative features and competitive platform prices, there’s no better time to enter India’s e-commerce landscape while looking for a payment platform to partner with.
With increasing internet penetration and awareness about the ease of online transactions, consumers are changing their preferences to making payments online. Thus, the current top payment methods in India for online e-commerce transactions are as such:
As for the trends to look for in the upcoming years, these are the insights we’ve gathered from our research:
The online payment habits of Indian consumers mirror those of the Singaporean consumer closely. These are the top 3 payment methods in India's online landscape at present:
Accounting for 32% of all payments digitally in India for the year of 2020 according to Statista, cards are the predominant payment method at present.3
While commercial cards differ from regular credit and debit cards in that the accounts tied to them are businesses instead of individuals, these cards are gradually gaining traction in B2B payments especially where timely automated payouts are needed. These include the likes of salary payouts and employee claims.4
However, adoption of commercial cards among B2B companies tends to lag due to high platform fees associated with them. With that said, the popularity of cards in online transactions still means that having this as a payment option is key to a smooth B2B checkout. On top of that, card operators are adopting solutions that will address these issues as discussed in the next section.
In India’s domestic market, HDFC Bank’s takes the lion’s share in credit card penetration at 23.61%, followed by SBI Card at 19.17% and ICICI Bank at 17.57% in 2021.5 For debit cards, RuPay is the leading card issuer at 60% of the market share as of late 2020.6
For a nation that saw an increase of 47 million internet users from 2020 to 2021, it’s no surprise that digital wallets, or e-wallets, are gaining traction as the 2nd most popular payment method for online transactions in India.
Forming 26% of all online transactions in 2020 according to Statista, digital wallets are rising in adoption in conjunction with rising smartphone penetration. Even though over two-thirds of the Indian population doesn’t own a smartphone, it is one of the fastest growing smartphone markets in the world.
Since most e-wallets have a mobile app associated with it, this would also mean that digital wallets would eventually gain the lion’s share of online transactions.
The most predominant player in the digital wallet space is the Unified Payments Interface (UPI), a payment system developed by the National Payments Corporation of India (NPCI), to enable real-time transfers between bank accounts as opposed to collecting and holding money in a separate digital account.
Bank transfers are less popular to pay for online transactions among India consumers, accounting for 18% of online transactions in 2020, only 1% above paying via cash according to Statista.
Bank transfer is also expected to decline in share by 2023 according to JP Morgan’s report to just 17% from their 2019 share of 19%.7 However, should Indian banks start to adopt digital means of conducting bank transfers in conjunction with the government’s encouragement of digital payments, bank transfers may still stand as a viable payment method in the online e-commerce space.
Offer these local payment methods and more across 56 major markets when you connect your online platform with Tazapay. Find out how:
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According to the National Payments Corporation of India (NPCI), Unified Payments Interface (UPI) transactions will see increased usage in a post-COVID economy, especially the 'phygital' world which combines the physical and digital space.
Since its launch in 2016, UPI has grown exponentially at a CAGR of 414%, clocking an all time high of 1,800 million transactions in September 2020.9 This adoption was also compounded by the fact that the government had mandated a zero Merchant Discount Rate (MDR) for all domestic UPI transactions, though this subsidy has since been removed in the 1st of January 2020.
On top of that, UPI 2.0 was launched in 2018 with the aim of expanding UPI with more use cases. For instance, invoice verification, linking of overdraft accounts, additional security through signed intent and QR codes are some of the features introduced in this update.9 These new features can be a game changer in terms of UPI payment adoption and growth in India and your business would be remiss if UPI was not integrated as a payment method in your B2B checkout.
Thus, if your payment platform is able to integrate with UPI and keep up with UPI’s payment features, your online B2B platform stands to gain in having a more seamless payment experience.
Many sources have forecasted that card payments will be overtaken by digital wallets, especially since UPI are offering more features that eases the digital payment process. For instance, JP Morgan predicts that cards will be overtaken by digital wallets as the preferred payment method in 2023, where digital wallets will take up 38% of market share while cards would hold 32% of the market share.
However, this doesn’t mean that you should neglect cards as a payment method either. Global card operators like Visa and Mastercard are planning to integrate with near-field communication (NFC) technology in order to encourage card adoption so that they don’t lose their slice of the pie.10
NFCs are a proximity-based wireless communication standard, and data is transmitted from a tag to an NFC reader via inductive coupling similar to radio frequency identification (RFID). With the latest smartphones having introduced NFC chips into their devices, cards can still be used as a checkout payment method via mobile payment apps like Apple Pay or Google Pay. Users only need to bring their smartphone close to the POS terminal in order to make their payments if they’re shopping physically, while the mobile app can be used to make online payments after a one time authorization. Hence, the transition from having to present a physical card to a smartphone is a seamless one.
Through this highly adopted technology, card operators can then allow merchants to accept digital payments when buyers pay through their smartphones. For example, Mastercard has formed a partnership with Axis Bank Ltd (who ranks 4th in terms of credit card market share in India as of 2021) and Worldline, a payment service provider, to launch its Soft Point of System (POS) payment solution in an effort to allow small merchants to accept card payments via NFC technology.
With this in mind, it is unlikely that cards will be replaced by digital wallets anytime soon. If your payment platform has cards enabled as a payment method, then you won’t lose out to clients who prefer to pay for their goods and services using cards.
With the shift towards online transactions for all forms of payment, the Reserve Bank of India (RBI) is clamping down on fraudulent payments in order to reduce lost value to unscrupulous actors.
In India, the highest value lost to fraudulent transactions is from counterfeit cards, and cards stolen and lost. The new regulations in place mean banks have to provide an option to set daily limits to card spending for cash withdrawals, POS payments, and online payments. Customers also have the option to block international transactions, which on one hand, will help to reduce fraudulent transactions, but on the other hand, presents potential frictions for international businesses expanding into the Indian market.
To prevent any blockages from happening, it helps to be communicative to your customers about your financial details so that they don’t accidentally block transactions tied to your business. For platforms that have low-touch interactions with their customers like online marketplaces and SaaS platforms, it helps to have a virtual account associated with your name so that your buyers know that the transaction is coming from your entity instead of your payment provider’s entity to avoid confusion as well.
Not only that, check if your payment platform is up to date and localised with India’s payment legislations to ensure that your transactions are processed smoothly and not potentially flagged as a false positive. In turn, this may also mean working with the payment provider closely to provide the necessary documentation for their KYB/KYC processes in order to ensure smooth payment operations.
The dynamic payments landscape in India is something that may intimidate any online business trying to enter the region. By partnering with a payment platform that is on top of the changes in the payments ecosystem, you’ll be able to take the burden of keeping up to date with the payments landscape off your shoulders so that you can focus on what your business does best.
Tazapay is able to do all this and more, with localised payment methods to ensure that you capture potential clients who are sticky in their purchasing habits. We’re also able to replicate this payment localisation across 56+ countries, covering over 173 markets worldwide.
Speak with us today to find out more about our payment solutions.
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