No type of expansion is more exciting than the decision to begin selling your goods and services abroad. However, as with any other big opportunity, there are some challenges as well. One of the most daunting for many entrepreneurs has to do with all that is involved in getting paid by foreign consumers. That being said, learning the ins and outs of international payment gateways is one of the first steps you should take before going global with your business.
What is a payment gateway?
If you have a domestic website where you sell products or services, you may already know the answer to this question. However, a basic review never hurt anyone. In effect, a payment gateway is a service that integrates with your ecommerce platform, enabling you to securely receive online payments from your customers. The gateway acts as an intermediary between you and your site’s shoppers, helping to facilitate the transaction safely and quickly.
There are several steps in the online payments process that the gateway, whether domestic or international, helps to accomplish.
- The customer inputs their payment information into the checkout portion of your website.
- Payment information is encrypted and sent from your browser to your server.
- Details are forwarded to your payment gateway.
- Your gateway forwards the encrypted data to your payment processing company.
- The payment processor sends the information to the credit card company (Visa, American Express, etc).
- The customer’s bank receives the information, verifies that there are sufficient funds, and sends their response to the processing company.
- The processor forwards the response to your gateway, which sends the authorization for processing.
- You fulfill and ship the order.
- You submit all approved payments to your acquiring bank in a batch at the end of the day.
- Your acquiring bank conveys a request to the customer’s bank for settlement.
- The card issuer sends the settlement to the acquiring bank, usually by the next day.
- The acquiring bank deposits the funds (less any fees) into your merchant account.
The bottom line is, without a reliable gateway service, sellers like you would be unable to successfully accept payments online.
Considerations when choosing an international payment gateway.
As the numerous steps above make clear, the digital payments landscape is complex. This is even truer when it comes to selling goods and services in foreign countries. However, once you partner with a reputable international gateway service, you can earn buyers’ trust by providing them with a safe and secure purchasing platform.
The key attribute of an international payment gateway is its ability to accept multiple foreign currencies. One unavoidable fact of ecommerce is that consumers prefer to make purchases using their own familiar monetary denominations. When your gateway facilitates payments in your buyers’ native currency, your potential patrons are far more likely to complete their purchases because they understand exactly how much they will be paying.
Pricing is not the only important aspect to keep in mind when it comes to international payment gateways. There is also the issue of your credibility as a merchant. If potential customers question the security of your website, they will click away before completing their purchases. Although every nation has its own security standards and regulations, signing up with a strong gateway can promote the safety of your customers’ data. This is because a good gateway will follow the individual data safety standards for each of the nations it serves.
Additionally, the ways that buyers prefer to pay vary in different countries. To provide targeted service to the customers you are courting, you need to allow them to make purchases using their preferred method of payment. To that end, make sure that your gateway is equipped to process the specific payment types your customers want.
Finally, you should not sign up with a gateway until you thoroughly understand all of the fees associated with it. In addition to the standard processing fees that you may already be accustomed to remitting for domestic transactions, you will also be required to pay what is known as a cross-border fee. This interchange fee is unavoidable unless you choose a gateway that is set up to route payments to local banks in the region where your customers live. In addition to cross-border interchange charges, you will also be charged foreign exchange fees for converting from your currency to your customer’s.
How your international payment gateway can amplify your success.
If your current business operations are leaving you with a “been there, done that” feeling, it might be time to expand and share your products and passion with a new set of customers in other countries. Once you select a payment gateway that can grow right along with your aspirations (one that is customized to meet the needs of the buyers you want to serve), you will be in an excellent position to realize the many benefits of global ecommerce.
- More revenue from a larger customer pool and more purchases.
- A shot in the arm to your morale that comes from helping people and sharing your brand, thus providing solutions to buyers’ pain points.
- Access to capable employees from other nations who can add their talents, cultural perspectives, and insights.
- Diversifying your markets, thus not only expanding your profile but also shielding your business from the effects of business interruption should conditions deteriorate in a particular part of the world.
Of course, establishing a global presence also takes your company’s brand and reputation to a whole new level. Choosing to share your products and vision with new customers around the world is a bold move. Accomplishing it means coordinating numerous moving parts, including conducting careful research on the areas you want to serve, the various international payment gateways, your potential buyers, and cultural factors, as well as the rules and regulations unique to each nation. Although taking this step is not for the faint of heart, with the right international payment gateway partner, your growth potential is virtually limitless.