If you live in the U.S., now is a great time to travel to Europe, Brazil or Russia!
The U.S. dollar’s value is at a record high and the trend isn’t expected to change anytime soon. In the last year, the U.S. dollar is up by more than 20 percent against the euro, Canadian dollar, yen and the Brazilian real.
The latest and safest billing trend we are seeing for merchants selling services internationally is utilizing payment processors that offer specialist foreign exchange service providers.
U.S.-based online merchants need to be aware of currency volatility risks when thinking about international consumers, whether for one-time transactions or monthly memberships. Webmasters need to make sure they aren’t leaving money on the table and are maximizing profits.
I want to share some suggestions with XBIZ World readers on how to avoid difficulty with international currency exchanges and how to best maximize your international transactions.
At SegPay we see many U.S. clients wanting to set their pricing models in domestic currency. That’s because site owners believe that using U.S. dollars will create a consistent currency while avoiding fees and volatility from the global currency market. While this might appear to be the easiest and safest route, this can cause issues for your recurring monthly subscribers.
International currency fluctuates against the U.S. dollar month-to-month, creating inconsistent monthly billing transactions for your global customers. Simply put your transactions will differ each month for these international customers on their billing statement due to the currency exchange rate. Often this can aggravate recurring billing customers as they may feel they’ve been billed an unfair price increase or potentially scammed.
We also see merchants choosing to complete transactions in the consumer’s local billing currency. This option provides stability for the customer, however it can cut into potential revenue for merchants. From the consumer side, it creates a consistent recurring billing structure. The problem occurs when currency markets shift and the U.S. dollar strengthens.
International consumers will continue to pay the same monthly membership price point and these sales will convert to a lower U.S. dollar amount, creating a decrease in revenue. In addition, merchants will receive their international payments in foreign currencies and will need their IPSP to handle the conversion to U.S. dollars. This exchange service typically incurs a fee.
The latest and safest billing trend we are seeing for merchants selling services internationally is utilizing payment processors that offer specialist foreign exchange service providers. This service hedges the risk of currency gain or loss to both the merchant and international customer by creating fixed price points on both ends of the recurring billing transaction. Monthly billing price points are guaranteed to both the merchant and the customer at a fixed amount for a set period, typically six months.
The best part is that in most cases, there are no additional costs for this service. Webmasters should contact their Internet payment service provider to inquire if they offer this new service.
International billing and currency exchange is becoming an integral part of business for webmasters and continues to get more complicated in the global economy.
There is no one answer for every webmaster, and having a good payment partner that understands your particular issues and needs is crucial to maximizing your profits. It’s important to discuss international currency with your payment service provider to find the best option for your business.
And remember to think globally to maximize your profits.
It took only three years for Cathy Beardsley to turn startup SegPay into a profitable company. As president and CEO, Beardsley oversees the day-today operations and long-term strategic planning for the company. SegPay is one of four companies approved by Visa USA to operate as a high-risk Internet payment service provider (IPSP) in the U.S. Since 2005, SegPay has offered online merchants a state-of-the-art billing platform that provides real-time payment processing around the globe.