Now’s a great time to be a US-based online retailer. Not only is the eCommerce market constantly growing, but also a larger portion of holiday shopping is moving online. In fact, US consumers estimate that online purchases will account for 46% of their 2015 holiday shopping.
Purchases by customers located outside the US, also known as cross-border sales, hold an even greater potential for US retailers. The global B2C cross-border eCommerce market was worth $230b last year, and 82% of global consumers reported making an online purchase from a merchant based outside of their home country. Especially during Black Friday and Cyber Monday, international consumers will most likely be looking to take advantage of US sales.
Despite the opportunity to tap an increasingly lucrative market, many US merchants only ship domestically. Some of these US retailers believe that because they don’t ship goods internationally, there’s no reason for them to accept credit cards issued outside the United States. Riskified’s data proves otherwise. In this post, we analyze the numbers to show how much money US merchants who block orders placed with non-US payment methods are leaving on the table, and explain how much revenue they stand to gain by accepting international credit cards.
Why US merchants Don’t Accept International Credit Cards
There are many reasons e-retailers based in the US might decline orders placed with non-US credit cards. Most cards issued by international banks do not support AVS (which is supported mainly in the US and UK). Therefore, merchants relying on fraud prevention filters that automatically “red-flag” transactions with missing or mismatched AVS data as fraudulent are likely to reject orders with a billing address outside the US.
Moreover, if a store ships only domestically, a merchant may assume there’s no need to accept international cards. In fact, merchants who don’t give shoppers the option to enter non-US credit card details at the checkout page have no way of knowing how many customers drop off at this point because they don’t have a US card.
This is a misguided approach. Merchants should be considering the full context of an order instead of relying on a rigid, rules-based fraud management strategy. Once we approach these orders in this way, it’s easy to identify many legitimate reasons why a US domestic purchase might be paid for with a foreign credit card.
US Shipping and International Billing – What’s the Use Case?
The steep discounts and sales offered online during Black Friday and Cyber Monday are enticing to consumers across the globe. In addition to attractive pricing, some items sold by online retailers based in the US are simply not found in other countries. If a site doesn’t ship to their home country, international customers may opt to ship the purchase to friends and family in the US. Lack of international shipping options or high shipping costs can also lead cross-border consumers to use US freight forwarding services (also known as reshippers).
Cross-border online purchases are not limited to seasonal sales, and international buyers have good reasons to ship their purchases within the US year-round. For example, tourists and foreign exchange students are likely to make online purchases with a card issued in their home country and to have it shipped to their US dorm room or hotel.
How Often are International Cards Used in US Domestic Orders?
To figure out how much revenue US online merchants who accept only US cards are losing, we analyzed our data on US domestic orders paid for with international credit cards. Specifically, we looked at the data for fashion, jewelry, and sports equipment merchants based in the US. Our data shows that merchants who block orders with a US shipping address and an international billing address are losing out on a lot of business from legitimate customers.
Fashion: Nearly 10% of Domestic Orders are Paid for with International Cards
When it comes to fashion e-tailers based in the US, our data shows that nearly 10% of the orders shipped domestically in the US were placed with an international credit card. The fact that Riskified approved over 96% of these orders while maintaining a low chargeback rate indicates that the vast majority of these transactions were legitimate. Online fashion retailers who rely on fraud filters or on rules-based systems to automatically decline such orders are turning away nearly 1 out of every 10 legitimate domestic orders placed on their website.
Jewelry: International Cards Used in 12% of Domestic Orders
Jewelry is another vertical where we witness many cross-border consumers purchasing from US online merchants: International credit cards were used to purchase nearly 12% of domestic orders placed with US jewelry merchants. Despite the relative high rate of risk and fraud attempts in this vertical, Riskified approved 89% of these cross-border transactions without incurring significant chargebacks. In other words, only 1 in 10 transactions shipped within the US and purchased with a non-US payment method was fraudulent. Given the potentially high customer lifetime value of jewelry consumers, needlessly turning away so many good orders may be costing merchants in this industry thousands, if not tens of thousands, of dollars over the long-term.
Sports Equipment & Apparel: 6% of Domestic Orders Purchased with International Cards
Of all orders shipping domestically placed with our US sports equipment & apparel merchants, 6% were purchased with a non-US card. This may seem low relatively to the fashion and jewelry stats, but with over 90% of these orders safely approved, we are talking about a significant potential boost to your topline revenue.
Start Reaping the Benefits of Cross-Border eCommerce
The numbers speak for themselves – even if you only ship domestically within the US, failing to accept orders placed with international payment methods means you are rejecting good customers and losing money. If you do accept international credit cards, make sure not to rely on fraud filters or rules that can lead to false positive declines. Regardless of your vertical, you stand to boost your sales revenue significantly by growing your international customer base.
If you are interested in selling to consumers around the world, Riskified can help you accurately distinguish between valid and fraudulent orders, and give you the confidence to grow your cross-border revenue.
If you have any questions or want to learn more, contact us at firstname.lastname@example.org