When you and your customers are located in different countries, any financial transaction between you is considered to be a cross-border payment. Now that you want to engage in cross-border or overseas payment processing, it is vital that you understand all that goes into dealing with multiple currencies and jurisdictions outside your own nation.

More than processing local currencies.

One of the first things to realize about cross-border payments is the importance of allowing shoppers to pay in their native currency. By extending this courtesy, you are showing buyers that you want to be absolutely transparent about every purchase and are committed to enhancing the customer experience. On a practical level, promoting total payments clarity also helps to reduce the number of chargebacks you experience. Buyers who fully understand the price they will be paying, including taxes and transaction fees, will be less likely to return products and request a refund.

That being said, there is more to succeeding in global ecommerce than simply furnishing prices in buyers’ native monetary denominations. You also need to recognize that payment preferences vary widely according to culture and geographical region. Therefore, it is important to use analytics and insights from locals in your target area to get a true sense of shoppers’ preferred ways to pay so that you can be sure that you offer them.

Major challenges found in cross-border transactions.

As merchants contemplate whether to expand into the global marketplace, many are intimidated by the prospect of taking international payments. The following are the main obstacles that anyone selling internationally will encounter.

• Cost. Not surprisingly, it is more expensive to accept payments from your international customers. Specifically, you will encounter regulatory costs, currency exchange charges, and fees from the various players in the payments process.
• Longer turn-around time. While domestic payments can occur virtually instantaneously these days, it may be five days before international ones clear.
• Complying with local regulations. Whenever you do business in any jurisdiction you need to understand and comply with any and all pertinent laws and regulations. Doing so often requires that you enlist the services of a local company who can assist you in wading through and adhering to every requirement. While taking this extra step can add to your cost of doing business, it goes a long way toward ensuring that you will continue to be allowed to sell to your international customers.

For instance, let’s say you want to market your products in the EU. This will require that you implement strong customer authentication (SCA) according to the rules set forth in the revised Payment Services Directive 2. Furthermore, you must comply with the cardholder protection standards set forth in the Payment Card Industry Data Security Standard (PCI DSS).

Elements of the regulatory landscape to keep in mind.

There are several main components that go into the overall regulatory landscape that you will face as an international seller. These include the following.

• International laws and regulations. Each country you serve is its own microcosm and is governed by unique laws and requirements. As we suggested above, this is why you need to gain a working understanding of each nation’s specific statutes for taxes, payroll, employment, and other compliance issues. 
• Global tax and payroll requirements. Building a compliant international tax and payroll system can be daunting. Even so, it is important to comply with all the laws and regulations that pertain to you as an international seller. Failing to do so can result in financial penalties as well as a hit to your brand's reputation. 
• KYC and AML procedures. The payment processing industry has implemented a number of requirements designed to protect the integrity of the international cardholder data you process. Two of the most important of these are know your customer (KYC) and anti-money laundering (AML) measures. KYC involves protocols to authenticate customer identity, screen for fraud, assess risk, and comply with regulations. AML procedures help to identify and prevent money laundering and the financing of illegal activities that often results from it. Companies are required to put measures in place that monitor for suspicious activities, establish internal controls and conduct comprehensive due diligence on every user and transaction they conduct.

Strategies to address the regulatory landscape.

Whether you sell domestically or internationally, regulations are a fact of life that you will only avoid at your own peril. Implementing these practices can help you to streamline your compliance.

• Review and analyze updates regularly to ensure compliance. Monitoring regulatory websites and joining professional organizations related to your industry can help you in keeping your ear to the ground.
• Streamline your internal controls. Technology solutions can provide you with ways to automate tasks, track activities, and create reports that make compliance accurate and simple.
• Outsource complex compliance tasks. There is no shame in enlisting the services of skilled professionals when regulatory requirements become overwhelming. These skilled experts can also add a layer of accountability and may even take on the burden of liability, ensuring that you have support if issues arise.

Selling internationally provides you with an unparalleled opportunity to expand your company and spread the word about your brand to an entirely new group of eager customers. The regulations each country puts in place are primarily designed to protect both you and the international consumers you serve in a variety of ways. Take the necessary steps to remain in compliance with them, and you will add a strong building-block to your international company’s foundation.