The Pros and Cons of Accepting International Card Payments

In an increasingly globalised marketplace, the need to take international card payments has never been greater. E-commerce businesses can tap into huge global consumer bases, while it’s now essential for your business should you be in some sectors, such as hospitality. But it hasn’t always been as straightforward as it is today. Making payments internationally used to be extremely difficult, and the global banking industry has had to act quickly to avoid being left behind by disruptors in their industry. 

What Are International Card Payments?

International payments, also known as cross-border or foreign transactions, refer to funds transfers between individuals, businesses or financial institutions in different countries. These transactions typically involve exchanging one currency for another as part of the process. Depending on the countries involved, the methods used, and the financial institutions facilitating the transfer, they may be subject to various regulations, fees and processing times. 

The Pros of Accepting International Card Payments

Accepting international card payments in the UK offers numerous advantages for businesses, enhancing their growth and customer satisfaction. Here are some key benefits.

Expanding Your Global Reach

By accepting international cards, businesses can tap into a global market, attracting tourists and international customers. For instance, during the 2019 Rugby World Cup, UK retailers saw a significant increase in sales from international visitors. 

Improved Customer Experience

International card payments provide a seamless and convenient shopping experience for customers. This can lead to higher customer satisfaction and repeat business.

Increased Credibility for Your Business

Businesses that accept international payments can stand out from competitors who do not. This is particularly important in tourist-heavy areas like London, where international visitors expect to use their cards without hassle. 

The Cons of Accepting International Card Payments

Of course, accepting international card payments is a complex business, and there are plenty of challenges and other considerations that you will want to take into account when deciding whether to get involved.  

Higher Transaction Fees

International transactions often have higher processing fees due to currency conversion and cross-border charges. For example, a UK retailer might face additional costs when accepting payments from US customers. To mitigate this, businesses can negotiate better rates with payment processors or consider using a payment gateway that offers competitive international rates.

Currency Fluctuations

Exchange rate volatility can impact the final amount your business receives if it’s being sent from abroad. For example, a sudden drop in the pound's value could reduce the revenue from international sales. Using hedging strategies or multi-currency accounts can help manage this risk.

Risk of Fraud and Chargebacks

International payments are more susceptible to fraud. A study by Stripe highlighted that cross-border transactions have a higher fraud rate than domestic ones. This can come in the form of ‘chargebacks’, in which payment is made but then retracted by the payer afterwards from their side. Implementing robust fraud detection systems, such as machine learning algorithms that monitor transaction patterns, can help reduce this risk.

How to Choose the Right International Payment Gateway

Selecting the right payment gateway for international transactions is crucial for businesses aiming to expand globally. Here are some tips and advice to help you make an informed decision:

1. Transaction Speed: Fast transaction processing is essential to ensure a smooth customer experience. Delays can lead to cart abandonment and lost sales. Look for gateways known for their quick processing times.

2. Security Features: Robust security protocols are vital to protect against fraud and data breaches. Ensure the gateway complies with PCI DSS (Payment Card Industry Data Security Standard) and offers tokenisation, encryption, and 3D Secure authentication features.

3. Supported Currencies: Multi-currency support allows customers to pay in their local currency, enhancing their shopping experience. This feature also helps businesses avoid currency conversion fees and exchange rate fluctuations.

4. Integration with Existing Systems: The gateway should seamlessly integrate with your e-commerce platform, accounting software, and other business systems. This ensures smooth operations and reduces manual work.

Essential Features of International Payment Gateways

• Multi-Currency Support: This feature enables transactions in various currencies, making it easier for international customers to purchase from your store.

• Security Protocols: Look for gateways that offer advanced security measures, such as fraud detection, encryption, and compliance with international standards.

• Integration Options: Ensure the gateway can integrate with your existing systems, including e-commerce platforms, CRMs, and ERPs.

Comparison of Top International Payment Gateways

PayPal

• Pros:

  • Global Reach: Available in over 200 countries and supports 25 currencies.

  • Ease of Use: User-friendly interface and easy integration with most e-commerce platforms.

  • Security: Strong fraud prevention tools and buyer protection policies.

• Cons:

  • Fees: Higher transaction fees compared to some other gateways, especially for international transactions.

  • Account Holds: Some users report issues with account holds and freezes.

Stripe

• Pros:

  • Developer-Friendly: Highly customisable with extensive API documentation.

  • Multi-Currency Support: Supports over 135 currencies and offers dynamic currency conversion.

  • Transparent Pricing: Competitive and transparent fee structure.

• Cons:

  • Complexity: It may require technical expertise to utilise its features fully.

  • Limited Customer Support: Some users find customer support needing more responsiveness.

Worldpay

• Pros:

  • Global Reach: Operates in over 146 countries and supports multiple currencies.

  • Comprehensive Solutions: Offers a wide range of payment solutions, including POS systems and e-commerce integrations.

  • Security: Advanced fraud detection and prevention tools.

• Cons:

  • Fees: Can be higher than other gateways, with additional charges for certain features.

  • Complex Setup: Initial setup can be complex and time-consuming.

There can be risks associated with taking international card payments. The association with fraudulent transactions, while the fees for accepting them in the first place are usually higher. But there are actions that you can take to mitigate the worst of it, and there are plenty of examples of small businesses which have significantly benefited from expanding their market in this sort of way. Research and select the right international payment provider that fits your needs, and you could also tap into this connected world!