Navigating International Payments

Digital marketplaces have not only made it easy to launch a business, but also to tap into new ones.

Successful eCommerce businesses can dare to aim high and expand their reach to international markets and audiences. Though possible, one of the biggest challenges facing business owners is managing and accepting payments across multiple nations that function differently.

This guide will walk you through the process of optimizing your payments for different markets, facilitating seamless payments.

‍

What is cross-border eCommerce? 

Selling to markets and audiences beyond the country of origin or operations is referred to as cross-border eCommerce otherwise known as international eCommerce.

Global eCommerce can be of multiple arrangements like having a physical store in new markets or having an online-only business that sells in new markets via an eCommerce website or a common marketplace. And, cross-border eCommerce payment gateways help with the payment process across currencies and countries.

‍

Importance of cross-border eCommerce in global trade

If you are looking to expand your business, cross-border eCommerce has tons of benefits in store for you:

Tap into new markets

Moving your business abroad opens an ocean of opportunities. Businesses get access to bigger audiences and everything it has to offer. Putting your business out for customers beyond the realms of your country expands its potential, possibilities, and returns.

New revenue opportunities

Operating in one’s own country facilitates access to a limited set of audience. When you break that geographical operational boundary you get to sell your products to a completely new set of audience, improving your revenue opportunities. A bigger audience brings in bigger revenue and ultimately profit.

Enhanced brand visibility

Brand affinity is a major contributor to your sales. Having the benefit of brand awareness gives you extended sales opportunities through word of mouth. The more people know about your brand, the more they will spread the word and add to your sales.

Moving to new markets adds to your brand visibility beyond sales, giving you recognition. This will help you seamlessly expand to even bigger markets and countries and bag sales through brand awareness.

Competitive edge

The next big thing that successful businesses think about is international expansion, which is easier now. So there’s a high probability your competitor is already planning this expansion and you may lose the opportunity to have the entire spotlight to yourself as the early movers. You get to create a massive brand following and make heavy sales.

‍

What are cross-border payments and why are they important?

As the merchant, if you are in a transaction with a buyer not based out of your country, it is a cross-border payment, otherwise known as international payment. The process of payment does not function similarly to a domestic transfer that happens in one country because the funds move through territories with different modes of payment, currencies, transfer regulations, compliance terms, and more.

Cross-border payments are complicated because you have to be able to process transactions between the new market and yours. Additionally, you have to ensure there’s no friction in customer experience with measures such as offering the accepted and in-demand modes of payments in the new market.

As a merchant, you must be able to provide a localized payment experience for new customers, and international payment solutions help optimize the entire process. An optimized process ensures payments go through with high acceptance rates. This will directly affect your revenue.

‍

Challenges of cross-border payments

There are multiple aspects which make cross-border payments a challenge. Troubles such as transaction fees, taxes, terms and conditions, compliances, and more face merchants, which when solved make the entire experience a breeze.

Here are some of the challenges merchants should be informed about:

Increased costs

Facilitating international payments is expensive as compared to the local transactions because of the add-on costs in transfer of funds across geographies. Charges involved in global payment processing include currency exchange costs, regulatory costs, and intermediary charges among many others subject to local market conditions.

Delayed transactions

Local payments are instant and quick as opposed to their international counterparts. The nuances of sending, processing, and clearing funds across territories create a lag in turnaround time. It takes as much as 5 days to go through the entire process before the merchant's account is debited. Hence, international payments are typically slow.

Adhering to local payment regulations

Regulatory compliance in payments is one of the biggest hassles for merchants. They do not just have to offer a localized customer experience via online channels and payment modes, they also have to comply with local regulations to execute their operations.

Each country has a different set of regulations you, as the merchant, have to abide by to do business with their citizens. These regulations are spread across security standards, like Strong Customer Authentication (SCA) as per the revised Payment Services Directive 2 (PSD2) guidelines in Europe, the legislation and local laws, as well as PCI DSS rules.

Risk factors

Trade within a country has fewer risks involved because of the simplicity of the process. Cross-border eCommerce however comes with elevated risks that stem from geopolitical issues, sanctions, and high exposure to possible frauds.

Compliance terms of every country change frequently and keeping up is a challenge. There is a high risk of accidental noncompliance which may lead to legal and security risks.

Intermediaries

When funds move within the domestic boundaries, only the sending and receiving banks are involved in the process. For international payments, the funds need to pass through multiple intermediaries like financial institutions the respective country demands and certain payment networks. Each of these institutions prescribes its own processes and charges that merchants should know and abide by.

‍

How to make international payments work for your business

Merchants can get help with partnerships or choose to set up the entire process themselves. Either way, being informed is the key. Here are the tactics you can use for your business expansion:

International payment gateway

For starters, find your business a reliable and experienced payment solutions provider like cross-border eCommerce payment gateways. They have what it takes to help you build a trusted business abroad. Payment partners are aware of the complications, trends, and unique requirements of every market as well as your business.

Choose ones that specialize in international payments specifically, can integrate with your current eCommerce ecosystem, and support multiple currencies.

Currency conversion

Merchants must understand the nuances of currency conversion in ecommerce, the steps involved in the process, concerned intermediaries, the conversion rates, any hidden fees, and hedging options.

Some exchanges have a policy of real-time rates based on transaction amount, while others have a flat rate. Ensure there are no hidden fees anywhere and the availability of instruments that protect against currency fluctuation aka hedging options.

You can take steps to cut your costs when you are aware of your expenses. Also, educate your customers about any additional fees they may have to incur and maintain transparency in prices.

Diverse payment options

The key is to offer a localized experience to your new audience. This includes having the right payment options from among credit/debit cards, bank transfers, digital wallets (e.g., Alipay, WeChat Pay), and Buy Now, Pay Later services. Choose the ones that fit well with the market you are targeting, and offer customized experiences like local language support.

Additionally, keep a check on the regulations and requirements of the specific country. Adhere to know your customer (KYC) and Anti-money laundering (AML) regulations.

Optimize for device and security

Each audience has a specific device preference for purchases, most probably a mobile device. So, optimize your business website to support mobiles and ensure there’s no friction in the purchase and payment processes.

Keep track and incorporate security measures like encryption and tokenization to safeguard customer data and prevent fraud attempts.

Customer support

You need a dedicated customer support mechanism in place, a localized one, to address customer’s payment-related queries and improve their experience with your business. Makes sure you incorporate support in multiple languages.

As a merchant, it will also help you to have a feedback collection process in place. The feedback will shed light on any hassles customers may have encountered so you can take action to improve user experience.

Software and tools

Make the most of what technology has to offer by choosing the right software and tools. For instance, you can leverage analytics tools to understand purchase trends and behaviors in the new market to understand what’s working for your business and what’s not. This allows you to maximize success and rectify the gaps.

‍

The Role of payment gateways in international sales

Cross-border eCommerce payment gateways can handle enablement and optimization parts of international sales as your payment solutions. Here’s how payment gateways play a role in successful international sales if you choose to delegate payments:

Support across currencies

International payment gateways offer the flexibility of accepting payments in multiple currencies. They also support the further step of converting the payments into the merchant's base country currency. In fact, they offer an automated process so merchants do not have to figure it all out themselves.

Their platforms are further optimized for speed and user experience which helps push sales up.

Secure payment process

The extended steps of international payments that are vulnerable to fraud attempts are taken care of by international gateways with extreme caution. They take this responsibility and add advanced security protocols such as encryption, tokenization, and Secure Sockets Layer (SSL) technology. They help keep the financial details of all parties involved, safe.

Facilitate exchanges and conversions

Exchange rates keep fluctuating making it difficult for merchants to manage conversions by themselves. Payment gateways are equipped with the means to manage these fluctuations and provide transparent pricing that’s in the best interest of merchants and their customers. They also keep up with the fees of conversions in real-time and manage them themselves without the merchant’s interference.

Provide multiple payment options

Merchants do not have to study and make arrangements to add the preferred mode of payment of their audience. Payment gateways keep up with the trends and ensure all the payment options including credit cards, debit cards, digital wallets (e.g., PayPal, Apple Pay), and alternative payment methods like Alipay in China, and SEPA transfers in Europe are available.

Compliance with Local Regulations

They also handle the regulations and compliance part of the payment process without merchants having to do it themselves. Be it GDPR in Europe or anti-money laundering (AML) laws, payment gateways offer compliance services across all countries.

Enhanced user experience

Beyond what’s legally and technically required to support payments and conversions, payment gateways constantly improvise their software features to reduce any points of friction and maximize user experience. It can be as simple as reducing process time or as complex as providing language options, they take all measures to reduce cart abandonment rates and increase conversion rates.

Fraud and risk prevention

Beyond security and compliance, international payment gateways also have fraud detection and prevention measures. Any data breach or attempted fraud is detected and stopped. They use ML and AI techniques to find and flag dubious activities and help secure both the merchants and their customers.

Dispute and chargeback management

Chargebacks are a major source of financial losses for merchants. The costs, intermediaries, and process of handling chargebacks multiply for international payments. Payment gateways spare the hassle of dealing with all this by providing end-to-end chargeback management and prevention services that reduce the financial burden on merchants.

Analytics support

Gateways have full access to payment data which they store and analyze to derive insightful trends. They can help merchants with data on customer demographics, sales trends, and payment behaviors. These trends chart the course of action for major decisions and improvements.

Support scaling and expanding

Cross-border payment gateways offer not just one but multi-country and multi-currency support. Because each country is governed by different rules and regulations, expansion is difficult. Payment gateways make it possible for you to do it easily. They handle the payment requirements of any country you want to expand to provide you with scaling support.

‍

How to choose the right cross-border payment gateway

Blindly choosing the international payments gateway with maximum features or offers is not the right call. You need the one that fits the needs of your unique business. Here are some tips you must consider:

• Business needs - pinpoint what you need from your payment solution and check the best option for your business size, audience, industry, finances, and future plans.
• Costs and expenses - payment gateways handle the conversions part but they charge the fees from you. They also have additional monthly fees, setup fees, transaction fees, and more. Check them all.
• Features - check if they offer every global currency support and payment method, security measure, tech stack for user experience, analytics features, and regulatory compliance.
• Integration - choose the payment gateway that easily integrates with your eCommerce website, CRM platform, and application. Also, check their customer support service to ensure they will look after all your inquiries and solve them promptly.

‍

Conclusion

It is a big task in itself for a merchant to set up the entire framework of international payment in-house. This is not only time-consuming but also prone to errors and misses that are an extra burden.

It is always in the best interest of the merchant's interest to hire an expert in the field of global payments, so you can have all the time to best serve your new audience and have your payment partner keep rolling funds into your bank account automatically.

Payby is one of the most reliable partners for cashless payment solutions. We are on a quest to empower your business and turn it into a global brand.  We equip you with innovative online and offline digital payment infrastructure to meet consumer preferences at every touch point, based on your business needs.

Merchants who choose Payby enjoy multiple benefits of our online payment gateway such as paylink, payable invoice, direct pay, QR code payments, recurring payments, JSAPI payment, and more. Additional features include seamless AppCommerce, pay with wallet, robust fraud detection and prevention, and seamless integration with leading CMS.

Time for you to get started with Payby today.