One of the principal challenges faced by online businesses is catering to international customers. To truly be competitive in today’s highly saturated digital marketplace, you need to cast the widest net possible, but accepting international credit card payments isn’t as simple as setting up a shopping cart and inviting people to buy. There are some specific nuances of international credit card processing that you’ll need to understand if you want to build an international customer base.
- Not All Payment Merchants and Platforms Accept International Credit Card Payments
When shopping around for a credit card merchant or payment gateway, don’t automatically assume that international payment processing is part of the deal. Due to the complexities and costs associated with international payment exchanges, many merchants will either limit your ability to accept international payments or charge you exorbitant fees for the privilege. That’s why it’s so important to do your homework and find a payment processor that’s equipped to handle international transactions.
- Domestic vs. Offshore Merchant Accounts
While we’re on the subject of researching merchant accounts, it’s important to recognize the difference between domestic and offshore options. With a domestic merchant account, you’re transacting business with a U.S.-based bank. Funding times are usually faster than with offshore accounts (1 to 3 business days on average), and the rates tend to be lower. An offshore merchant account will put you in business with a non-U.S. bank that handles all of your transactions. Although rates tend to be higher and transaction times slower, offshore merchant accounts often have more options in terms of currency exchanges.
If you’re unsure of which type of account to use, or if you’re not in an optimal position to establish your own merchant account, your best bet is to go with a third-party payment processor that is equipped to manage high-risk international transactions on your behalf.
- You Have to Be Mindful of Exchange Rates
If all of your prices are listed in U.S. dollars, you may be turning away international customers without realizing it. Online shoppers are known for making split-second decisions, and many aren’t going to take the time to look up currency conversions. To maximize your conversion rate, use an ecommerce platform or third-party app that automatically detects and converts currencies right on the product page.
- You Also Have to Be Aware of Cross-Border Fees
Cross-border fees are an unfortunate but unavoidable cost of doing business when it comes to international transactions. For instance, Visa and MasterCard are both known for imposing these charges to recoup the costs associated with international transit. A standard cross-border fee runs 1 percent for MasterCard and 1.2 percent for Visa. This fee is charged to the buyer, not the seller, which is good news for your business but may dissuade some foreign shoppers from making a purchase.