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

Many on-line merchants make their best effort to enhance the shopping experience. By Geolocation they identify the shopper’s location and offer a local shopping experience, including local currency pricing. This is now supported by acquirers enabling multi-currency processing.

In such international transactions, no conversion occurs and the merchant receives the foreign currency paid by the shopper. The merchant can either manage the FX in-house, use third parties which specialize in this field and can guarantee the USD amount, such as E4X or FXmicropay or use direct cross currency processing offered by acquirers, such as ChasePaymentech.

One way or another, due to these many bypass solutions, Visa and MasterCard added the new cross border transaction fee. The fee applies when a shopper makes a single-currency purchase at a foreign country merchant, or in other words, when the issuing bank of the shopper is located at a different region than the merchant account of the seller.

Many travelers and on-line shoppers are already familiar with this fee, yet only few merchants are aware of the higher discount rates associated with such transactions, as well.

The workaround is relatively simple and should be applied when possible. Merchants may open local merchant accounts once establishing a local presence. Many of the merchants operating internationally already have international presence and those who do not can easily obtain one. Now that Europe is one big region, researches show that most US merchants can cover over 80% of their international sales by opening one Canadian entity and one EU entity only.

As shoppers origin is already identified (Geolocation – remember?), any international transaction is automatically routed to the relevant local merchant account. Issuer and Acquirer are now in the same region and no cross border transaction fee applies.

Gidi Argov, Founder and CEO
www.CreditCardProcessing-r-us.com