The rise of e-commerce is creating a new kind of global merchant–the small to midsize business that sells and ships products anywhere in the world. And those retailers are looking to ISOs for guidance.
Accepting foreign payments requires more than just processing, and it raises a whole new set of questions for merchants: How can I accept payments from a country that doesn’t use traditional U.S. payment cards? How can I sell to a customer base that speaks three different languages? Is my merchandise illegal to ship to certain countries?
ISOs working with new international merchants play a consultative role, says Scott Goldthwaite, senior vice president of product management and marketing for Planet Payment Inc., a multicurrency processor based in Long Beach, N.Y.
“ISOs need to educate themselves so they can have a better conversation with their merchants,” he says.
But help is on the way. In fact, navigating the complex process of setting up international merchant accounts is the core business model for RocketPay LLC, a Newburyport, Mass.-based advisory service for ISOs and acquirers wanting to expand beyond their region.
The card associations divide the world into six geographic regions, and in the past most of the world’s acquirers were licensed in only one region, says Carrie Hometh, RocketPay managing director. That was until e-commerce hit. When customers started coming in from multiple regions, ISOs had to make their systems international, she says.
“It was more than just getting an acquirer in that region,” Hometh says. “You have to process. And your personnel need to be trained in those differences.”
The world’s online shoppers have been trained to shop and buy in their own currency. So if an ISO only can create a merchant account that’s denominated in U.S. dollars, then that merchant is going to go elsewhere, she says.
E-commerce sites should be as country-specific as possible to be effective, Hometh says. That means deciding whether to use a geo-locator to recognize the consumer’s Internet Protocol address and what part of the world they are in. Or merchants might tailor their website so everyone who comes from France, for instance, always sees a French site that’s denominated in euro.
“(Customers) will leave a website if it’s not focused on them,” Hometh says. “And most e-commerce merchants have been very savvy about that. So the acquiring industry has had to respond to that.”
ISOs need to ask merchants not only which currency they want to sell in, but also which currency they want to settle in, Hometh says.
An e-commerce merchant might want to sell in one currency but settle in another because the merchant might have expenses in that currency or foreign suppliers to pay.
ISOs and merchants might be in for a bit of culture shock when doing business internationally for the first time. The way other countries conduct business is completely different from the way U.S. ISOs negotiate contracts, Hometh says. The splits are different, and ISOs get frustrated.
“They’re used to picking up the phone and getting a deal done in a couple of weeks. It can take months to years to establish a solid relationship with an international acquirer. You have to study the culture and be careful not to offend,” she says.
Acquirers generally don’t have much real interest in working with U.S. ISOs, Hometh says. Quite a few ISOs send their highest risk junk merchant accounts offshore.
“It’s stuff they wouldn’t even approve themselves, but thought, ‘Let’s just send it to a bank somewhere else and hope they’ll approve it,” Hometh says. “The international acquirers don’t want to be a junk dumping ground.”
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