Pricing & Payment Options are Key to Int'l Success (765 words)
Localization of pricing and payment methods is important to international success
By Renee Frappier
Is your company interested in cashing in on international sales opportunities? Chances are you've devoted a great deal of attention to cultural differences when it comes to product, language and catalog layout. Don't stop there.
To build response, examine differences in cultural attitudes to payment methods and pricing issues.
"Localization is indispensable for attracting large numbers of customers in Europe's fragmented market," writes Forrester Research analyst Dr. Therese Torris. "Even customers who speak English prefer sites that offer their local language, as well as local product selections, relevant payment options and localized versions of customer service," she says in her book, "The Best of Europe's eCommerce," published in August 1999.
European markets are indeed fragmented, but they are also rich in opportunities if you are willing to invest a little time to find out exactly what your customers want. This may seem a daunting task with so many cultural variations to investigate.
Depending on the country and product in question, a higher price may work better than a lower price, or a payment option uncommon in the United States may achieve a greater response overseas. Become aware of the prices and payment methods offered by successful catalogs local to your target market, and emulate them when possible. Take the time to consult with other companies that have experienced success internationally. Talk with international payment companies that specialize in knowing your target markets.
In the United States, checks and credit cards rule as preferred payment methods.
Consumer preference in the United States for paying by check or credit card is partially due to the float—the period of time between charging and billing—those consumers get.
According to Jane K. Winn, an expert in consumer payment methods, customers in Europe are not as accustomed to using payment devices that include an element of float. European consumers traditionally are more comfortable with payment in cash or a method with the same finality as cash, such as bank transfer, money order or debit card.
While check and credit card payment options are popular in many parts of Europe, they are not the preferred choice in several countries, and are definitely the least attractive choice in Germany, Austria, the Netherlands and the Scandinavian countries.
In certain countries, consider offering other popular European payment methods, such as bank giro transfer, postal money order, and direct debit.
In some markets—such as France, England and Ireland—payment typically is made at the time of order. In addition to payment by credit card, also consider offering such payment methods as direct debit, where customers provide their account details or a debit card number issued by local banks; Postal Money Order, a guaranteed funds payment method; and personal check.
For consumers in some countries, transferring funds in their local currency directly from their bank or post office to your company account is a secure and convenient payment method. This can be done either online or through their financial institution.
Not all European consumers enjoy paying up front. In fact, buyers in many markets may expect to be billed after you ship the goods. This is particularly true in Germany and Scandinavian countries.
When invoicing for goods shipped in Germany, the Netherlands and Scandinavia, the bank giro transfer or direct debit is used about 80 percent of the time. Credit cards and postal orders will be used in approximately 20 percent of purchases, so they should still be offered as options.
Despite the need for local invoicing capabilities and local banks, collecting payment on invoices need not be difficult.
There are several international payment processing companies that maintain networks of local accounts around the world into which local currency transfers are collected on your behalf, then forwarded to you in the currency you designate with all relevant payment details. These companies can even take care of invoicing customers on your behalf. What's more, a payment processing company can offer you centralized reporting, and usually can clear payments less expensively than the banks.
Regardless of the payment options you offer, always try to offer prices in each country's local currency. In 2002, when local European currencies are phased out in favor of the Euro, pricing in Eurozone countries will become much simpler. In the meantime, you must give consumers the option to pay in their national currencies, using the payment options they prefer.
Renée Frappier is marketing manager for Pacific Network Services Ltd. (PacNet), a leading international payment processing company based in Vancouver, Canada. She can be reached at (604) 689-0399.