1.1 Payment Considerations Payment Considerations
Payment Options for Your International eCommerce Customers
Now that you have the customer’s order details and delivery information, it is time to collect payment. U.S. firms that sell online most likely accept payment by credit cards that have been issued by banks in other countries. American Express, Visa, MasterCard, and Discover are the most frequently used payment systems worldwide, both in brick-and-mortar and online stores. In some countries, though, other payment methods are just as popular, if not more so. In many European countries, for example, people buying online often pay by wire transfer or with country-specific credit cards (e.g., Carte Bleue in France). If you have determined that there is a large market for your products in a particular country, you may want to research that country’s favored payment methods to determine if accepting them would increase sales.- Western Union has a payment-by-wire app that can be added to your website.
- Another payment option is PayPal, a third-party service that processes payments from customers’ credit cards and bank accounts and then forwards you the money in the manner you choose. PayPal has become increasingly popular among U.S. firms selling online to foreign buyers. Sellers like it because they don’t assume the risk of collecting the buyer’s payment information, and because PayPal, which collects from the buyer’s bank account or credit card, essentially guarantees payment to the seller. PayPal is most popular in North America and Latin America, and it is gaining popularity worldwide. It doesn’t operate in all countries, but you can find comparable services to fill in the gaps.
Before you enter into an agreement with any of these payment processors, find out how each company resolves payment disputes and take that into account when making your decision. In certain instances, a credit card holder can dispute a charge weeks (or even months) after the seller has received payment. It’s also important to know who takes the hit in the event of a fraudulent transaction.
You’ll also want to consider the costs associated with every ecommerce payment option:
- Each has a unique cost structure that will be listed in written agreements.
- If you are already selling online, discuss with your current bank and payment processor the fees associated with international payments.
- Many companies specialize in processing payments from international customers; to learn more about them, type “international online payment” into an Internet search engine.
The Culture of Online Fraud
Accepting online payment, even from established credit card companies, exposes the seller to some risk. In response to this, many ecommerce/online marketplaces manage payments and the risk of fraud, and some third-party logistics providers also have payment services that protect sellers against fraud.
Chargebacks
The possibility of incurring chargebacks (when the card holder’s issuing bank requests a reversal of charges on behalf of the card holder) is one of the more frustrating aspects of accepting payments online. Weeks, and sometimes months, after having received payment and delivered goods, a U.S. exporter might hear from a credit card holder, or credit card firm, that wants the exporter to reverse a charge for various reasons, including fraudulent use of the card or dissatisfaction with the product. Excellent products,good customer service, and clear return policies will reduce chargebacks and returns.According to CyberSource’s 2010 11th Annual Online Fraud Report, chargebacks account for nearly 50 percent of fraud claims (the other half are claims made by the card holder to the issuing bank, which then issued their own credit on the account). Because of the dollar volume involved in fraud, credit card firms are playing a more active role in the mediation process on chargebacks. The CyberSource report noted that merchants win about 42 percent of the chargebacks they dispute with credit card companies.