Increasing globalization and the dispersion of the internet throughout the world is fast blurring physical boundaries in the context of online shopping. Today, a customer in China can remotely access a wide variety of products available in the USA at the click of the mouse. Additionally, E-commerce is becoming popular in not just developed nations, but also major emerging markets such as China, Korea and India. With increasing affluence, they are discovering premium goods from first-world countries such as the USA and the UK.
Financial barriers still exist, however, and currency conversion needs to be transparent and instantaneous for global e-commerce to be effective. A Chinese consumer interested in a US product will expect to be able to pay in his or her local currency, and this is where Multi-Currency Credit Card Processing comes in. By obtaining a multi-currency merchant account, an e-tailer can effectively market and sell products globally. The way it works is simple: a user visits a multi-currency enabled retailer site, where prices will be displayed in a default currency as chosen by the retailer, for example, the US Dollar. The non-US customer (say, from France) will have the option, perhaps from a drop down box, to change the displayed currency from the US Dollar to, in this case, the Euro (other currency options will also be displayed, depending on the arrangement between the retailer and the multi-currency merchant account provider). Upon checkout, the intermediary will withdraw the payment from the customer’s credit card in his or her local currency and remit to the retailer in his or her chosen local currency (in this case the US Dollar)
There are three available options to accept multi-currency payments through a merchant account:
- Domestic merchant account with multi-currency capability: This type of account is made available onshore or domestically, through a local bank that will provide the retailer the ability to accept in specific foreign currencies. The disadvantage with this type of account is that the bank will usually place a limit or ceiling on the number and/or value of transactions per calendar period. Hence, it will be unsuitable for business in the high-volume or high risk categories.
- International merchant account: These are onshore merchant accounts with multi-currency capabilities, but with no ceiling on the volume or value of transactions per calendar period. These are also available onshore and may be opted for by high volume merchants. International merchant accounts will usually provide excellent fraud protection and multi-layer security.
- Offshore Merchant Account: Multi-Currency Credit Card Processing can be obtained by opening an offshore merchant account , or an International Merchant Account which may provide the added benefit of tax free transactions (depending on the location of the account and tax rules in the home country). With this type of merchant account, a merchant can process a high volume of transactions, there may be a minimum processing requirement with most banks, of $100,000 per currency processed per month. This account may be the only option for businesses with bad credit or high risk classification.
Multi-Currency Credit Card Processing is also available through Third Party Credit Card Processors. While Multi-Currency acceptance will open up access to a global market, it will also increase a retailer’s exposure of credit card fraud from emerging markets. Countries such as Yugoslavia, Pakistan, Indonesia, Venezuela, Bulgaria and the Ukraine are some of the leading sources credit card fraud, as indicated by a consortium of e-tailers called the Merchant Risk Council. In order to prevent or at least minimize the risk of fraud, a good fraud scrubbing software needs to be in place on the credit card processor’s end. Fraud scrubbing is a software tool that validates each credit card transaction against a set of criteria such as place of origin of the order, size of the order, referring URL and a number of other factors which are customizable within the software. One downside of this process is that there is a possibility that legitimate transactions may not be authorized. A Multi-Currency Merchant Account will help grow your business and help your business move into the international marketplace.
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