Dave considers expanding his business internationally and wonders how to pick a merchant account provider (Dave – thanks for commenting!). In today’s world expanding internationally makes perfect sense for most online merchants, yet if you sell refrigerators, you’ll need to overcome additional obstacles which do not exist in the online digital ecommerce world. Prior to answering Dave, one needs to know what type of business Dave operates…
Does the provider support digital goods transactions? Can he manage international fraud? Will he enable multi-currency processing? Does he provide help with import/export limitations as well as EU VAT or other international taxation?
Expanding internationally is different than being an ‘international merchant’ (i.e. – operating out of the US). Most of the US merchant account providers will decline an international merchant, yet will enable a US merchant to accept international cards. Many US merchants may choose what looks like the easiest way out and start accepting international cards using their domestic merchant account, soon to discover their decision was somewhat problematic, mainly due to: cross border transaction fees, limping international fraud management and lack of multi-currency processing capabilities.
You can read all about cross border transaction fees and how to avoid them. The bottom line is that establishing one insignificant local presence in Cyprus (and an EU merchant account) can do wonders to you and your European customers, decreasing chargeback rates as an additional bonus.
Optimizing fraud management is another big issue a merchant should consider. Whether you manage the risk internally, or outsource the decision making process, you must realize by now that prior to accepting a card you assess the fraud risk embedded in that transaction. Accepting the wrong cards increases your chargeback rate, causes losses and puts at risk your credit card processing future. Declining honest shoppers shrinks your business and damages the shopping experience.
International fraud management is much more complicated than domestic. Many of the tools used by US merchant account providers do not work when accepting international cards. For example, the time the shopper entered your site has little meaning if not normalized to shopper’s origin. Address verification methods tend to work differently when out of the US. Different billing and shipping countries, not to mention problematic or forbidden countries are other examples.
Multi-currency management is a standalone issue, affecting both you and your shoppers. The majority of the US merchant account providers are currency clueless. They understand USD only and enable you to process only USD transactions. If you truly want to grow internationally, you need to consider presenting and processing other currencies to improve the global shopping experience and increase international shoppers’ conversion rates.
Most of the international merchant account providers will enable processing in more than one currency, yet only some will be able to settle in different currencies. At the end of the day, the question is who manages the currency risk and how much the conversion from those other currencies to USD costs. Though this should be addressed separately, I’ll summarize by saying that the best result is achieved when your merchant account provider settles the actual currencies and currency management is outsourced to E4X or FXmicropay (depending on acquiring bank).
Many digital goods merchants already made the international leap, yet only few physical goods merchants have successfully made it through. Until recently this was indeed one hell of a task, yet nowadays a physical goods merchant can choose to outsource the international activity all together! FiftyOne offers a comprehensive global ecommerce solution that enables US merchants to easily transact across borders. Some of the top 500 US merchants have already signed up, so it might workout for you as well… 
Gidi Argov, Founder and CEO
www.CreditCardProcessing-r-us.com
