If you are engaged in e-commerce and your clients live in different countries, you have to have a reliable payment service provider. You have to be able to accept payments from all over the world and besides, you have to be sure that your business won’t collapse and your clients won’t go in case of payment system failure.
Choosing the right payment processor is an important task. The right choice will let you avoid mischief with taxes and high commissions and will contribute to the growth of your business at the international level.
Why do you need an international payment processor?
Payment systems coordinate the information from the buyer’s credit card with the information of the seller’s bank. If the buyer and the seller are in different countries, you need an international payment system.
Processing payments made in one jurisdiction is easy because the system uses the same language and the same currency. E-commerce, however, is often an international enterprise. Your clients may be located in many different countries and you have to be able to bill them wherever they are. Ideally, your payment system has to support different currencies and different languages. This is why the right choice of the payment service provider is so important. You can choose your payment system at the internationalwealth web portal and below we are going to discuss the pitfalls that you have to avoid in the process.
Pitfall 1: Take currency exchange rates into consideration
Multicurrency support is what your payment system must provide. If you allow your clients to see the prices in their local currency, your sales will grow. You have to pay for this opportunity though. You have to realize that different payment systems have different currency exchange rates.
Please make sure that the payment system that you are considering has favorable currency conversion rates. Needless to say, it has to support payments in the national currencies that are of interest to you.
Pitfall 2: Develop a clear understanding of the tariffs and commissions
International payments come at a higher cost in comparison to domestic payments and you have to clearly understand the payment system’s tariffs and commissions. A commission is charged on any payment that you receive (and maybe the payment that you make too). The amount of the commission will have a direct bearing on how you price your products.
Every payment system charges commissions but their amount can be different. Please also bear in mind that some payment systems will lower their commissions when your transaction volume (or transaction number) reaches a certain level.
Pitfall 3: Use only a fraud-proof payment system
Protecting your business from fraudulent activities is vital if you are engaged in electronic commerce. Online payments are safe but they are not 100% safe. The payment system that you use should have the AML/ CTF instruments, follow the KYC requirements, and carry out serious client identification procedures. Please don’t get annoyed by the compliance requirements that you will have to meet when applying for services to a payment system: they are there to protect you.
You also have to understand how the fraud filters of a particular payment system work. Imagine what a client of yours would feel if he/ she tried to make a payment and it was blocked! Chances are that he/ she is going to shop somewhere else.
Please note that some payment systems such as Stripe, for example, allow adjusting fraud filters. This is a handy feature indeed.
Pitfall 4: Use the payment system that has a mobile application
A good payment system must be able to handle mobile payments as efficiently as it handles payments made from a computer or a tablet. The best part of online shopping is done with the help of a smartphone and you should make a note of this fact.
Pitfall 5: Use the payment system that allows different payment methods
Using a payment processor that accepts payments made by different methods is simply necessary if you want to make a profit. This is especially important if your clients are in Europe: different payment methods are preferred in different European countries.
Some payment systems accept only the payments made with credit cards. However, bank transfers and electronic wallets are highly popular in Europe in particular. If a client cannot pay you the way he/ she prefers to pay, he/ she will shop somewhere else.
Pitfall 6: Take the foreign legislative norms into consideration
If you are engaged in international business operations, you have to respect the laws of the countries that you work with. Please make sure that the payment system that you are considering complies with the European and international requirements pertaining to payment service providers. This concerns both the client identification procedures and the regulations for transactions.
Pitfall 7: Find out what could lead to account suspension
Any payment system has a list of requirements that you have to meet. The requirements are there to prevent financial fraud, to give truthful information about your company to your clients, and to avoid the risk of possible financial losses.
If the payment service provider that you use is suspicious of a certain transaction that you make or receive, it is going to ask for explanations. Please note that your account may be suspended until you provide an explanation.
How to choose the right payment system
Some payment systems are good while some other payment systems are not so good. Choosing a good payment system is of utmost importance for your business success. The payment system that you choose should possess the following qualities:
- It should have transparent service fees and commissions;
- It should offer a wide choice of payment methods;
- If should have a reliable anti-fraud system;
- It should be in compliance with the European and international security regulations.
Please note that it would be impossible to receive a payment from Europe unless the last condition in the list above is satisfied.
The most popular payment systems in Europe are Stripe, 2Checkout, PayPal, Shopify Payments, and others depending on the particular country. Please seek professional advice when choosing the payment system that you are going to use.