Remember when things were hard to get and shoppers had to travel far and wide to get them? Switzerland for that once-in-a-lifetime watch. France for that statement gown. New York for that fabulous designer jewelry.
Now customers don’t need to fly across oceans to make those purchases. They’re browsing Paris boutiques, Swiss clock shops and New York galleries right from their phones. Every shopper’s favourite global brand is one tap away. As cross-border shopping gets easier, more merchants are looking to start selling internationally, or to enter new markets and expand sales to more countries. With greater reach, a larger customer base, and considerable revenue growth potential, it’s a sales strategy worth exploring. But cross-border, global payments can be a challenge to navigate.
Retailers usually employ “acquirers” (acquiring banks) to process credit and debit card payments on their behalf. For instance, when a customer in another country makes a purchase using a credit or debit card, the merchant’s acquirer sends a purchase authorization request (through card networks) to the customer’s bank in the foreign country, requesting payment.
Happily, for merchants and customers alike, payments often go through. At the same time, relying on those touchpoints between different banking systems can lead to payment challenges. For instance, financial institutions may not be familiar with the method used or may not recognize the same information. These kinds of issues can delay or halt the transfer of funds. Patterns of fraudulent activity between banks or countries could also lead the customer’s bank to decline the request, frustrating your customer and losing the sale.
A better way to handle cross-border payments is through domestic acquiring, done through local acquirers. In this scenario, when a customer initiates a cross-border purchase, an acquirer in the customer’s country sends the purchase request to the customer’s bank. In this case, the request is local and far more likely to meet local requirements – without delays and with no declined requests. Come tax time, reporting is easier, too.
For online stores that have customers in multiple markets, domestic acquiring is still the best method. But it doesn’t make sense for retailers to maintain separate domestic acquiring relationships in every country they sell to. Instead, retailers often work with a single provider that has local acquiring licenses in several countries. Retailers simply need to partner with a domestic acquirer that is licensed in the region(s) they sell to most
With domestic acquiring, online sellers benefit from higher purchase authorization rates, faster transactions, and lower fees. They save time and resources by letting their provider handle all the regulatory and technical questions, and deal with the ups and downs of currency exchange. Local acquiring creates happier customers, too, with more payment options and far fewer declines.
As customers embrace cross-border shopping options, new sales horizons are opening up to retailers. But cross-border payment challenges don’t need to slow things down. Local acquiring with single providers is helping maximize revenues and reduce costs, as it streamlines and enhances the shopping experience.
Our marketing specialists can help you grow your retail base, bring in more leads, and maximize your cross-border potential.
Contact OTT Pay today to speak with our marketing strategists and connect your business with more customers worldwide.