By Brandon Banks
In today’s ever-evolving digital landscape, it’s clear that merchants need to be thinking beyond their local markets and memberships. The modern era of e-commerce has provided merchants with the opportunity to reach customers all over the world. Yet, as with every golden opportunity, there are also new, emerging challenges. Developing a comprehensive payment strategy has never been more crucial.
At the heart of any effective payment strategy is connectivity. Ensuring that your payment processing systems can communicate with anyone from anywhere is a vital first step for any merchant looking to expand, challenge the norm, and seize the benefits of global commerce. Being equipped with a future-conscious payment strategy, powered by effective connectivity, is the foundation for lasting success in this rapidly changing world.
Global Reach and Connectivity
In this context, connectivity refers to the ability to link with multiple payment providers both domestically and internationally. This ability is paramount for any merchant aiming to scale globally. However, establishing such connections is just the beginning. Understanding the complexities of global payment processing and finding efficient solutions is the real challenge.
Understanding the Complexities of Global Payments
When dealing with global payments, merchants have to consider various factors, including the following:
It is important to match these factors with your customers’ expectations in order to provide a smooth payment experience.
Let’s say you own an online store that has done very well in the U.S. and you want to start selling your products in Europe. Customers are significantly more likely to abandon carts if you don’t accept payments in their local currency. Not every payment processor is capable of processing payments in different currencies, so you may need to utilize a different system for international and domestic payments.
Your European customers may prefer different payment methods than your current customer base. In order to offer an optimal customer experience, you will need to make sure your payment processor and system can adapt to the requirements of your new customers.
Europe also has different regulations and restrictions for ecommerce. In order to sell goods, you will need to ensure your business remains compliant with all laws and regulations. This includes managing any foreign exchange risks associated with international transactions.
This is why connectivity is such a crucial component of a future-conscious payment strategy. Having the ability to connect with multiple payment providers is key for scaling globally and meeting customers’ needs. It gives merchants a competitive advantage by offering more options without sacrificing security or convenience.
Choosing the Right Payment Provider and Technology
Managing the complexity of global payments is crucial for strategic growth. Choosing the right payment service providers and technologies will simplify your operations. When evaluating payment processors, you may want to consider the following solutions:
- Merchant of Record (MOR) — MOR is a third-party entity that takes on the responsibility of handling transactions, including managing fraud prevention, tax collection, and regulatory compliance in different regions. Working with an MOR can help merchants simplify the process of expanding to new markets, as it eliminates the need to establish a local entity or navigate unfamiliar regulations.
- Like-for-Like Settlement — If a customer pays in their local currency, you will receive that same currency without having to worry about exchanging currencies. With this method, you can avoid unnecessary fees and mitigate the impact of exchange rate fluctuations on your profitability.
- Payment Orchestration Platforms — This provides a single platform with global connections to payment gateways, payment processors, and payment services (like fraud prevention, tokenization, and compliance). They can also enhance customer experience by offering flexibility in payment options.
Remember, not all payment processors are created equal. You want to work with a processor that meets your needs now and in the future.
Don’t fall into the trap of looking at cost alone. While cost is a significant factor, successful businesses consider several other aspects like the provider’s reliability, security measures, customer service, and compatibility with target markets.
A payment processor that offers low transaction fees but has high payment failure rates can cost you more in lost sales and customer dissatisfaction than you save in transaction and interchange fees. Likewise, a processor that doesn’t support preferred payment methods in your target market can limit sales potential.
Building a Future-Conscious Payment Strategy
In the context of a payment strategy, connectivity encompasses more than merely establishing links with multiple payment providers. It involves strategic decisions about leveraging the right technologies, partnering with suitable payment providers, and understanding and implementing effective global payment practices. This intricate web of decisions requires careful planning and a future-conscious approach.
In the end, the goal is to create a seamless and enjoyable payment experience for customers, regardless of where they are in the world. Achieving this requires a combination of the right technology, partnerships, and business strategies. Connectivity is not a one-time task, but an ongoing process that evolves with your business and the global payments landscape.
Remember, a future-conscious payment strategy isn’t built in a day — it’s a journey. Every step taken in understanding and enhancing your connectivity is a step towards making your business successful.
To find out how to generate the perfect payment solution for your business, contact Nexio today. Our experts have a long history of helping companies navigate through the complexities of payments and designing solutions that work both now and in the future. Make sure you’re ahead of the game. Contact Nexio to start building the perfect payment strategy.