educational

The United States of Consumers

Gary Jackson

It seems every year during the fall, a lot of attention within our industry shifts to Europe … with good reason. Yes, there are a number of tradeshows many of us attend to network with peers and strengthen and forge business relationships. And there are more than 500 million consumers within the greater European region, so it definitely makes good sense to examine all of the opportunities this market presents. In fact, there has been a fairly big push to focus on “new” markets across the globe during the past few years, and Europe can be a new market to many merchants that got their start elsewhere. In particular, merchants that started in the U.S. can view taking business to Europe as a logical next step in their plans.

However, with all of that being said, we cannot forget about the U.S. market! Regardless of where any respective businesses is physically located or headquartered. In the “rush” to reach more consumers and generate more revenues, taking attention away from any one market can be an easy oversight to make. Understanding this, perhaps it’s time to take a closer look at how businesses are set up to sell in, and reach, the United States of Consumers.

There is little doubt that technology moves fast, and consumers are not known to wait patiently for anyone to incorporate a new payment process on these newer devices.

Knowing The Baseline, Watching The Trends

It is generally thought that U.S. consumers are willing to spend large amounts for access to large amounts of content. It is also generally thought that U.S. consumers are well-versed in online shopping, comfortable using credit cards for payments, and increasingly turning to mobile devices for making purchases. The question becomes, are all of these statements true? Should they serve as a baseline of sorts for American consumer behaviors? Which of them (if any) are rising trends?

According to the 2013 Consumer Payment Choice study performed by TSYS, 41 percent of online shoppers in the U.S. prefer using credit/charge cards to make purchases. Interestingly, this percentage skyrockets to more than 90 percent when examining the amount of U.S. transactions made by U.S. consumers within the CCBill system, year to date. Why the disparity? Likely it is due to a number of factors including one-time purchases versus recurring subscriptions, the nature of high-risk transactions, and mainstream consumer usage of alternatives such as PayPal.

But any way you look at it, credit cards have a significant place in the minds of American consumers when it comes to online shopping. Where the trends start to emerge is in the rising acceptance of using mobile devices to buy products and services, and the likelihood of U.S. consumers storing their payment information online.

Nearly half (48 percent) of the TSYS survey respondents made a purchase with a credit card they had on file with the online retailer they use the most. Additionally, more than a quarter of them (28 percent) registered their credit card with the online retailer they use the most. The numbers fall off a bit when it comes to the amount of people that made a card payment on a mobile device, but the correlation should not be overlooked. Consumers that are storing their information digitally could very well be more apt to start buying on their mobile devices. Getting websites and join pages optimized for mobile now can help capture transactions moving forward.

Navigating The Present, Planning For The Future

Due to the prevalence of credit cards in the U.S. and the supporting banking systems that have been in place really since the 1950s, it should not come as any surprise that many Americans pay online with credit cards. Compounding this behavior is the shear amount of card choices U.S. consumers have, and the mentality to use U.S. payment types to make purchases from anywhere and everywhere. Yes, there are seemingly countless variations of Visa and MasterCard options, but there are also bank debit cards, prepaid cards, and gift cards. With so much plastic in the hands of U.S. consumers, it’s no wonder using cards to buy online has become the norm.

And for merchants looking to get into the market or expand their U.S. transactions, it seems the question to ask is does the processing partner handle all of these different payment variations seamlessly? The last thing any business wants is to have a consumer ready to make a purchase, only to lose the sale due to not having the consumer’s preferred payment option available.

If a payment processor (and therefore, a merchant) can offer all payment options right out of the gate, that scenario never becomes an issue.

Speaking from a technology perspective, Americans sure do love their gadgets. Whether we look at tablets, smart TVs, content streaming devices, wearable tech, or the latest mobile phones, significant segments of U.S. consumers are always quick to adapt the newest thing. Even online sales in general were quick to catch on back in the late 1990s and early 2000s.

There is little doubt that technology moves fast, and consumers are not known to wait patiently for anyone to incorporate a new payment process on these newer devices. This means that whichever payment processor a merchant partners with should not only have methods for running transactions or subscriptions on the latest tech, but also a steady eye on future trends so when the next big thing comes out and consumers want to make a purchase on it, they can. In the meantime, ask yourself if your payment flows are currently built to handle these various consumer devices U.S. consumers seem to gravitate toward.

Converging Markets

The physical location of your business notwithstanding, it seems to be fairly clear that selling to U.S. consumers can have its own set of obstacles. And sometimes these can be exacerbated should your business happen to be headquartered or operate out of Europe. However, the American market is large and should hold a place within any businesses own strategies. While the baselines and trends listed earlier in this article can serve as a primer of sorts to U.S. consumer behaviors, it’s important to also consider a few additional things if you are looking to get into the U.S. market from elsewhere.

It is true that many U.S. consumers tend to be a bit wary of making online purchases through a non-U.S. merchant. This essentially boils down to the fact that there is a perceived trust they have with the U.S. banks and credit issuing institutions, dating back to the 1950s. Another contributing factor to this behavior can be based on perceived challenges interacting with support teams that are not located in the U.S. may present. Lastly, U.S. issuing banks will generally decline European authorizations unless the account is set up to allow for trans-Atlantic e-commerce transactions. Rightly or wrongly, these perceptions and practices exist. But they can be addressed and overcome.

So what is a European merchant to do? The short answer is to look for or ask the current payment processing partner how it interacts with U.S. consumers and financial institutions. If the consumers see a payment method they recognize and trust, they are of course more likely to proceed with the purchase.

Another important aspect to consider is the ability to process transactions in U.S. Dollars. American consumers will pretty much never use any other currency to buy something online. Or offline, for that matter. Once again, this is where the right payment processor can help. Offering multi-currency payment options is a practically mandatory component for a European merchant selling in the U.S.. A processor that not only has them, but can help with integration into the merchant’s payment systems can make a huge difference.

The Worldwide Economy

At the end of the day, today’s merchants are poised to reach an ever-growing number of consumers. We have the Internet to thank for that. With so many different consumer behaviors, technology trends, and regional regulations to consider, it can quickly become apparent how complex selling online can be. The U.S. does have a huge number of consumers. And successfully selling to them has helped many businesses grow and thrive. So whether they are in your home country or across an ocean, understanding and getting business from them should never be overlooked.

Gary Jackson, managing vice president of sales and Internet markets for CCBill. Since joining CCBill in 2006, he has been a champion for new market segments, notably the gay market, and has been passionate in finding new ways to drive revenue for commerce sites in the online adult industry — for merchants and their affiliates alike. Jackson has been honored in online adult industry with the 2011 Cybersocket Business Person of the Year, the 2012 XBIZ Executive Leadership Award — Web. A Seattle native, his past work includes managing the Academy Awards in 1996 at the L.A. Music Center, as well as performing on Broadway as a professional actor/singer.

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