Along with language, a major hurdle to North American e-retailers cracking the European market is accepting European payment methods. Beyond having different types of credit and debit cards, many Europeans prefer being invoiced after they receive the goods they ordered online. Just one in three online payments in Europe is made by credit card, according to market research by e-commerce vendor We Do Commerce.
Pittsburgh-based We Do Commerce, which designs, builds and supports web and mobile commerce platforms, is using Swedish payment company Klarna to help its U.S. clients targeting Europe offer invoicing on their sites as a payment option.
While We Do Commerce builds e-commerce sites, it uses e-commerce software from Demandware and Magento, both of which do not offer invoicing as a way to pay.
That’s where Klarna comes in. Retailers who use We Do Commerce can add Klarna as a payment option for consumers at checkout. Stockholm-based Klarna provides an invoice-based payment system, whereby it pays the seller directly once goods have been delivered to the customer. It then invoices the customer in their native language and collects payment directly from them.
When shopping at an e-commerce site that uses Klarna, a customer can check the Klarna Invoice box at checkout. She then enters her government identification number and Klarna runs a quick credit check. If the consumer’s credit passes, the customer can finish her order without having to pay online. Customers pay Klarna by bank transfer after they receive their goods. Klarna assumes the transaction risk, including fraud, and conducts its own credit checks and fraud protection measures for each transaction. The amount merchants pay Klarna varies, but the fee structure is typically a small percentage of each transaction as well as a monthly fee. For example, for Swedish merchants, the typical monthly fee is around $44.94.
Klarna also offers an account option whereby customers who shop online using Klarna Invoicing can click a Klarna Account box to have all online purchases from participating e-retailers consolidated into one invoice at the end of the month. The customer can choose to pay the entire amount at once or to pay off a part of the total each month.
A growing number of We Do Commerce’s North American clients are looking to expand into the European and Asian markets where credit card payments are used less for online orders than in the U.S., says Jeanette Thomas, CEO of We Do Commerce. The platform provider says many of its clients expanding into Europe plan to add the payment option to their international sites—including multichannel retailers, national brands, web-only merchant and smaller niche online businesses. However, it would not name any of the retailers. We Do Commerce works with retailers including Burton Snowboards, Staples and Sally Beauty Supply.
More than 15,000 online shops in Sweden, Norway, Denmark, Finland, Germany and the Netherlands offer Klarna invoicing on their e-commerce sites. The vendor says it will expand into Austria later this year.