By Merrick Theobald, email@example.com
In a sluggish economy, what retail chain doesn’t want fresh, new revenue streams and increased cash flow? For many, the path to new revenue lies in expanding their stores’ sales offerings at customer service counters. Cash-based services, such as lottery ticket sales, have proven especially popular with customers and retail chains alike. Customers appreciate the convenience of purchasing tickets during routine shopping trips, and retailers benefit from high margins in simple, largely cash-based transactions.
To extend that same kind of cash-based convenience to additional services at the customer counter, retail chains who don’t already offer international payment services should seriously consider doing so. Sounds daunting? It’s not. Many cross-border payment solutions are really just another form of merchandise, while adding others is a simple matter of entering a distribution partnership. And there are five very good reasons for making the move to international payment services immediately.
Reason #1: Tapping into an enormous market
According to official data from The World Bank, more than 215 million people living today have emigrated from their homelands, driven primarily by the quest for higher-paying work in more developed countries. These emigrants, who are overwhelmingly wage earners with responsibilities for family members back home, transferred more than $325 billion to their home countries in 2010. Bear in mind that this entire $325 billion represents transactions initiated by individuals, making it an extremely sizable consumer market.
Reason #2: Rapid growth of international payment services market
According to additional World Bank data, the $325 billion that emigrants transferred to family back home in 2010 represents a 6% increase over 2009. While 2011 totals are not yet available, World Bank expects them to have reached $351 billion, for another 8% increase, and forecasts similar, continuing increases for the foreseeable future. Very few market offerings available to retailers are seeing such dramatic growth, which is fueled by ongoing growth in emigration as well as the introduction of innovative new services.
Reason #3: More international payments originate in the United States than in any other country
Because of its wealth of opportunities, comparatively open immigration policies, and geographic proximity to those countries from which the largest numbers of people are emigrating, the United States is the world’s leading country for wage-earning migration. That in turn makes it the leading country for international remittance outflows, estimated to have reached $51.6 billion in 2010. That’s surprisingly close to the $59.4 billion spent on lottery tickets in the United States in the same year, according to the North American Association of State and Provincial Lotteries. And with lottery ticket sales growing at a slower rate than cross-border payments, it’s possible that international payment services will eventually take the lead.
Reason #4: A rich choice of services to offer
The health of the international payments industry has spawned a diverse set of specialized services that leverage the Internet and improvements in international funds transfer capabilities. Once driven primarily by wire transfers, international payments now comprise customer options that include:
• Mobile phone top-up delivers prepaid calling time to the recipient in the amount of the sender’s choice and is a popular means of assisting extended family and friends, especially during holidays, birthdays, major events or emergencies.
• International bill payment enables senders to issue recurring payments for such items as rent/mortgage, phone, natural gas, electricity, cable TV and other services, giving the sender the power of remote financial management.
• International retail gift cards can be used to arrange for merchandise purchase and pick-up in the home country, for such items as a much-needed appliance for a grandmother or for gift-giving.
• Prepaid credit cards are often purchased for spouses and for children in the home country, such as grown dependents attending school away from home.
Given the variety of international payment services available, retailers can choose among those that best fit their business models – or offer all for maximum customer appeal.
Reason #5: Short path to implementation
Three of the above international payment services – mobile phone top-up, international retail gift cards, and prepaid credit cards – are simply retail offerings with no real barriers to adoption. All it takes is a relationship with a supplier. Existing service desk personnel are typically able to handle the transactions.
International bill payment is only slightly more complex in its requirement for a distribution partner with cross-border payment capabilities. Retailers who are already set up for domestic bill payment may already have such a partnership in place without realizing it. Those who are not already offering domestic bill payment, or whose bill payment partners are not equipped for cross-border transactions, will find it easy to locate a new distribution partner who can quickly set them up for additional revenue.
A high-growth market ready for entering
The growth of the international payments industry is good news for retailers seeking new revenue streams and improved cash flow. With virtually no cost of entry and tremendous appeal to customers who make regular, repeat purchases, such offerings as mobile phone top-up, international bill payment, international gift cards, and prepaid credit cards, represent one of the most sure ways to not only realize new store income, but also to cement relationships with a truly significant and distinct customer base.
Merrick Theobald is VP marketing of iSend, a leading international electronic payment service provider. Theobald can be reached at firstname.lastname@example.org.