Despite the events of 2020 appearing to reset the landscape of global payments, cross-border commerce is here to stay. The truth is, cross-border payments can be made in real-time almost anywhere.
International payments take longer to clear than domestic payments due to the involvement of more parties and compliance processing. Payments made cross-border involve the making of the payment and the receiving of the payment being based in different countries.
Transactions such as these can occur between individuals, companies, and financial institutions that want to move money between different countries. However, the merchants who operate internationally must have the ability to accept payments in each country they target.
Receiving International Payments
If merchants want to grow internationally, they should work with a Payment Service Provider (PSP) that offers a secure, global payment gateway. As the connection between the various entities in the payment network, a payment gateway allows funds to be safely passed between clients, merchants, issuing and acquiring banks.
Validating the payment and encrypting the sensitive financial data transferred between the relevant parties is done through this mechanism. If you are looking to expand your business, it is important that the gateway you choose supports multiple payment and settlement currencies.
A card transaction in local currency may result in a higher acceptance rate. When consumers shop online, they want to know the final price in their own currency. This could lead to frustration for the consumer, and merchants should strive to make their pricing as transparent as possible.
These obstacles can be overcome in a few ways; merchants can set up multiple bank accounts in the different countries that they wish to accept payments from (which can be costly), or they can work with an experienced global payment service provider. Merchants should choose a PSP who will facilitate seamless cross-border transactions both for themselves and their clients.
In that context, there are several ways companies that are involved in cross-border commerce can provide their consumers with a better user experience. Here are our top tips for a successful cross-border strategy:
- Offer Popular Regional Payment Options: Depending on the territory you choose to operate in, it is important to understand the predominant payment methods. If credit or debit cards are in demand, you might need to optimize your processes to make the most of this. It is not always the cheapest option for your customers to use a universal credit card brand, so make sure to conduct some research about local credit card options too.
- Work With A Local Partner: By partnering with local partners, you will be able to navigate the domestic market. Partnering with a local partner will give you access to knowledge about the culture, social structure, business customs, consumer preferences, logistics, infrastructure and legislation. A local partner is a must-have in some territories and may even be able to offer greater benefits or exemptions.
- Adopt The Local Language: A multilingual customer service enhances customer loyalty. If you put in the effort to address your customers in their own language, they will value your offering more.
For merchants seeking to expand overseas, cross-border payments should be well-versed because maintaining that commitment will allow you to provide your customers with a superior payment experience, and hopefully encourage their retention. Therefore, using an experienced PSP that can guide you through the complicated mechanisms of international payments is worth the effort.