Dive Brief:

• Amazon is working with Western Union on a cross-border, cross-currency payment service that would allow Amazon customers to pay for their purchases at Western Union agent locations in-person and in local currency, according to a Western Union press release.

• Amazon is using Western Union’s platform, which leverages its operations in more than 200 countries and territories through which it moved $300 billion in principal across 130 currencies last year, according to the press release. The company has more than 500,000 physical locations in its worldwide retail network, as well as a growing digital footprint.

• The in-person payment option will be featured on the Amazon website checkout page for customers in eligible markets. Amazon has not yet identified which countries and markets will offer the capability or in which currencies it will initially be available.

Dive Insight:

In announcing this partnership, Western Union quoted a Forrester Research estimation that the cross-border online shopping market will reach $630 billion in sales by 2022, accounting for about 20% of the total e-commerce market. PayPal also said in its own recent report on cross-border shopping that about half of the 34,000 global shoppers it surveyed said they shop internationally online. 

The vast potential of cross-border e-commerce has been known for some time, and many in the retail sector have been positioning to take advantage of it. Most recently, for example, Walgreens Boots Alliance announced it would sell beauty products to customers in China and other countries through Alibaba’s Tmall online marketplace. For retailers, even giants like Amazon, seeking more international customers opens up new revenue sources at a time when they may be facing competition and mature or saturated markets for some of their products.

But, setting up cross-border sales channels is only the initial step toward tapping into market potential. The biggest challenge in making cross-border e-commerce work is processing of payments in exchange of different currencies. Some companies have sought to leverage new technology, such as blockchain and cryptocurrencies, to overcome this challenge. For example, Japan’s Rakuten developed Rakuten Coin, with the aim to make it a borderless currency for e-commerce.

Amazon and other e-commerce giants have taken similar steps to ease international sales. However, there is something to be said for simply letting consumers pay in the currency of their choice and face-to-face, especially if it allows sellers to complete transactions they might otherwise not be able to access. The relationship with Western Union ultimately should help Amazon compete against the other international giants of e-commerce, all of whom are trying to cross borders in search of more revenue.