Growing international? 3 ways your new customers can pay

Growing international? 3 ways your new customers can pay

Are you thinking of expanding your business beyond the U.S. borders? Serving international customers can be an exciting step toward growing your business. But before you can accept your first order from out-of-country customers, you'll need to have a system in place to accept foreign currencies.

There are several ways to do this. No matter which method you decide, be prepared to pay a little more (and sometimes a lot more) than you would for  domestic transaction processing. Because of the risks of fraud and chargebacks, companies that provide these services will usually charge more for international transactions.

1.  Work with a merchant account provider that will convert international credit card payments into dollars. Are you already working with a merchant account provider to handle your U.S. credit card transactions? Ask if it handles international sales as well. You can also work with a merchant account provider that specializes in international transactions.

If you'll be doing a high volume of sales with customers abroad, ask about a "multi-currency merchant account." This type of account allows customers browsing your site to select their country's currency and pay with that currency, while you collect in U.S. dollars (usually within two days of the transaction, according to eCommerceWeekly.com). Multi-currency accounts can get expensive, however, according to Merchant Warehouse. For one thing, you'll likely pay a higher monthly maintenance fee. For another, you'll likely have to pay a setup fee to obtain processing equipment and software, according to eCommerceWeekly.com.

2.  Go through a payment processing service. As with domestic payments, a variety of services exist to let you forego getting a merchant account altogether.

PayPal's standard, no-monthly-fee PayPal account, for example, will allow you to accept 24 different currencies in 190 countries. But you will pay for that privilege.

PayPal's standard rate for U.S. transactions is 2.9 percent plus $.30 per transaction. For international transactions, that goes up to 3.9 percent plus $.30 per transaction. If you need the capabilities of an Advanced PayPal account (which lets customers check out directly on your website without having to leave your site and go through PayPal), you'll also pay an additional $5 per month. If you need the Pro version (which allows for more customization as well as phone payments), you'll pay an additional $50 per month.

 A service called Stripe offers a similar payment processing service to merchants in 11 countries, including the U.S. This service has no setup or monthly fees and pays you on a seven-day rolling basis. Its standard transaction rate starts at 2.9 percent and $.30 per transaction, and it does not charge an extra fee for international transactions.

Compare the cost per transaction you'd get with a merchant account with these services, however. Despite their ease and lack of monthly fees, these services' relatively large per-transaction fees could chip away at big purchase -- or cost you more in the long run if you're doing a lot of business with international customers. 

3. Have customers in a different country wire funds from their local bank to your U.S. bank account. The cost of the transfer will depend on the charges made by the bank that is doing the sending and by the amount that your bank charges to accept that money into your account. To accept a wire from a customer, you provide your banking information. According to Practical Ecommerce, that information should include your bank's name, your account number, your routing number, your SWIFT code (an identifier that's required when receiving money from a bank overseas), your bank's branch name, your bank's address and your bank's telephone number.

The advantage: Because the funds are moving directly from bank to bank, wire transfers are secure, and you'll get the money with almost no delay. If you still have concerns, Practical Ecommerce suggests creating a separate account to receive funds for international orders.

The disadvantage: The expense. Such transfers can run $35 or more (international transfers of foreign currency that needs to be converted are typically more costly than transfers of U.S. dollars), so they're not a cost-effective solution for smaller purchases. If your international customer is spending $1,000 or more, however, a wire transfer can be a better option than PayPal or even a merchant account provider because the total fees for the transaction might be lower.

Because customers have to initiate the wire transfer process with their banks, it can also be cumbersome for someone who is looking for a quick online shopping experience. So this option is more suited for, say, a custom-art or luxury goods business.

As you're comparing your international payment choices, be sure to get clear answers about:

• The countries from which they will accept transactions and the currencies they will handle. If you're anticipating that your sales will come from certain geographic locations, you'll want to be sure that your payments solution will work in all of those countries.
• The laws in the countries you're doing business with. Some countries restrict residents' credit card use. In other countries, credit cards simply aren't as common.
• The total cost for the transaction, including setup charges for necessary accounts, monthly fees and the per-transaction charge.
• How the service provider sets currency exchange rates, and at which point in the transaction they charge them.
• The length of time that it will take from the moment an international customer pays until the money shows up in your U.S. account.
• What tools and services the provider has to help you reduce fraudulent payments and chargebacks.

There is one type of international payment method you're better off avoiding -- international money orders. It's difficult to verify if a money order issued in another country is legitimate. Add that to the fact that it can take your bank days to verify it after you deposit it, and that greatly increases the possibility of fraud. These scams most often target small-scale eBay sellers, but professionals selling services (such as photography and translation) to foreign customers can also be targets, according to grassroots consumer awareness group Scam Shield.

See related: Mobile gift cards can give small businesses an edge

Published: March 9,2023