E-commerce, or electronic commerce, has become a vital component of the global economy, and it has fundamentally transformed consumer behavior and how businesses operate. Today, individuals from all corners of the world have the ability to conveniently shop from global retailers like Amazon and Alibaba.
And with the Covid pandemic acting as a catalyst for this trend, global e-commerce sales recently hit a record high of $5.2 trillion in 2022 and are projected to surpass $8.1 trillion by 2026. This surge in online shopping has created new opportunities for businesses and revolutionized the way payments are made.
More and more people are moving away from traditional payment systems which have often been plagued by shortcomings such as limited payment options, high transaction fees and limited opportunity for integration.
Thanks to the convergence of financial services with modern-day technologies, the e-commerce industry now enjoys an array of digital payment options. Gone are the days when a consumer or merchant would have to line up in a banking hall.
In the new era of e-money, a new wave of financial institutions labeled Electronic Money Institutions (EMIs) are making it seamless for the e-commerce market to thrive across borders. If you’re unfamiliar with how EMIs operate, we have done a comprehensive introductory article to EMIs, you can check it out here.
While numerous financial payment solutions have emerged over the past two decades, Electronic Money Institutions (EMIs) have distinguished themselves by offering alternative banking services in addition to issuing e-money, virtual wallets, peer-to-peer payments, and APIs for integration with third party service providers.
That said, let's delve into some ways EMIs are changing the game in e-commerce:
More Flexible Payment Options
EMIs have introduced a wide range of payment options beyond traditional methods like credit cards and bank transfers. Some EMIs offer digital wallets, peer-to-peer payments, physical and virtual debit cards, providing consumers with more flexibility and convenience in making online purchases. This expansion of payment options has attracted more customers to engage in e-commerce transactions.
Improved Transaction Speeds
Unlike the traditional banking system where it can take days for a payment to clear, EMIs facilitate fast and seamless transactions by leveraging advanced technologies and infrastructure. With real-time payment processing, customers can complete purchases quickly, leading to enhanced customer satisfaction and increased conversion rates for merchants.
Global Accessibility
EMIs enable businesses to expand their reach to a global customer base. By offering cross-border payment capabilities and supporting multiple currencies, EMIs eliminate barriers for international transactions, allowing merchants to tap into new markets and increase their customer base
Streamlined Integration
Most of the existing EMIs are designed to provide user-friendly and seamless integration with e-commerce platforms through APIs and plugins. This simplifies the implementation process for merchants, saving them time and resources while ensuring smooth payment transactions for customers..
Collaboration and Partnerships
EMIs often collaborate with e-commerce platforms and marketplaces, fostering a mutually beneficial relationship. By partnering with EMIs, e-commerce businesses can leverage their payment solutions, gain access to a wider customer base, and improve the overall shopping experience for their customers.
A recent study conducted by Paysafe revealed that 63% of online businesses worldwide view their checkout process as a competitive advantage, recognizing the significance of offering alternative payment methods. Furthermore, the study indicates that 61% of online businesses have started offering digital wallets, with 67% reporting an increase in sales completed through this method in 2021.
In PayPal's Borderless Commerce report for 2022, it was highlighted that 46% of global online shoppers are more inclined to make purchases from businesses that provide innovative virtual or digital experiences. Additionally, 38% of cross-border shoppers express greater confidence in shopping internationally when their preferred payment option is available.
Evidently, digital payment solutions are gradually becoming the pinnacle of the e-commerce industry, which is why Fintech-driven financial institutions like EMIs are gaining popularity. As of 2020, there were over 500 EMIs in Europe, a trend that is now picking up in today’s borderless economy.
When venturing into the world of Electronic Money Institutions (EMIs), it's crucial to make informed decisions that align with one’s business needs. Selecting the right EMI provider can significantly impact your e-commerce operations. Let's explore the key factors to consider when choosing an EMI:
Range of Services: Assess the range of services offered by the EMI. Consider whether they provide the specific services you require, such as e-money issuance, virtual wallets, peer-to-peer payments, or integration with other payment service providers. Choose an EMI that offers the services that align with your business model and goals.
Fees and Pricing Structure: Evaluate the fees and pricing structure of the EMI. Understand the costs associated with their services, including transaction fees, account maintenance fees, currency exchange fees, and any other applicable charges. Ensure that the fees are reasonable and transparent, and they fit within your budget.
Security Measures : Security is of utmost importance when it comes to financial transactions. Look into the security measures implemented by the EMI to protect your funds and sensitive data. Consider factors such as encryption protocols, fraud detection systems, and regulatory compliance. A robust security framework is crucial to safeguard your business and customer information.
Compliance and Regulation: EMIs operate within a regulated industry, and it's essential to ensure that the EMI complies with all relevant regulations and holds the necessary licenses. Check if the EMI is authorized by the appropriate regulatory bodies and if they have a strong compliance program in place. Working with a compliant EMI will minimize legal risks and provide a stable financial environment.
At Peanuds, we understand the dynamic nature of the e-commerce industry. That's why we are dedicated to keeping pace with the rapid innovation happening in the field. With a steadfast commitment to very high regulatory standards.
But our dedication doesn't stop there - we also strive to provide you with the best Payments experience available.
With the Peanuds platform, we simplify cross-border transactions, and offer multicurrency support, SEPA, and SWIFT services, making it effortless for you to expand your business globally. Our seamless payment system integration is designed to benefit your entire organization, providing a hassle-free experience for both you and your customers.
Choose Peanuds and embrace the future of e-commerce payments!