Taking your business international is a big step that presents major challenges. While this may fall under the category of “a good problem to have,” it requires serious preparation. Not the least of this involves figuring out what regulations must be followed. Just like our merchants, Segpay is required to comply with both the card brands and the regulatory requirements in all our merchants’ locations. For example, anyone processing EU and U.K. business transactions is required to have a local presence in both areas — just a local P.O. Box isn’t enough.
Remember back in 2016 when the U.K. voted to leave the EU, and all payment facilitators doing business in these areas had to prepare for Brexit? This meant having to apply for a second payment institution license in an EU country. When it became clear that Brexit was really going to move forward, Segpay had to choose its EU headquarters and we chose Ireland. With that decision, we began the detailed process of applying with the Central Bank of Ireland to become a licensed payment intuition. The process took time, resulting in us receiving final approval more than two years later in 2019, just months away from the Jan. 1, 2020 Brexit deadline.
Once you select where your EU headquarters will be, you need to complete all the regulatory approvals required, including the extensive reporting to your EU bank while also hiring an EU team that will be able to properly run your business there.
So if you’re thinking of expanding your business outside of the U.S. or even to another state, we want to offer a glimpse into what it takes. This month we share the challenges of setting up shop across the pond, and how to conquer those challenges.
THE CHALLENGES
Opening abroad? Get ready! Making the big move comes with a long list of requirements, and some are unexpected.
Once you select where your EU headquarters will be, you need to complete all the regulatory approvals required, including the extensive reporting to your EU bank while also hiring an EU team that will be able to properly run your business there.
In addition, the compliance and accounting team members are required to have specific payments experience and must be approved by your local bank. Not only do you need an office staff, but you also need to build a local board of directors for your EU entity. The challenges are many here, like: How do you find these team members? How do you create the corporate culture of your company in the EU office? What are the local laws and regulations regarding employment? How do you handle the local holidays? What are the benefits you need to offer? And where should you locate the office?
STEP BY STEP
Answering these questions can get overwhelming, so that’s when knowing the right person or having someone who’s knowledgeable on staff helps. We utilize a human resources director with global experience and as a first step, she recommends hiring an HR attorney. They can help develop an employee handbook, handle employee contracts and help your company get familiar with the local employment laws. While the U.S. tends to follow right-to-work laws, the EU is very different. For example, if we make a bad hiring decision there are laws in place that add protections to workers if they have been employed for over a year and even more protections to workers who have a tenure greater than a year. In Ireland, there is also a policy where employers can stipulate an employee’s notice period — the amount of time employees continue to work after resigning or being terminated. In a tight job market, some firms have a 60-to-90-day notice period, which delays the ability to hire new staff. When it comes to holidays, you will likely have to adopt a new holiday schedule and be able to offer competitive vacation time. Providing competitive health insurance and retirement benefits is also important for building long-term success.
PUTTING PEOPLE IN PLACE
Once you’ve developed your plan, you can move to searching for the best people for the specific roles you need in your new market. Recruiting off LinkedIn and other traditional sources is good, but we have found the best resource to be local recruiters. Speaking of local, where your office is located is very important. Factors to consider include local commutes, where your workforce is based and whether the office needs to be in a central location inside the city or in a suburb. Easy access for the team is very important for success.
COUNTRY CULTURE
How do you foster your U.S. corporate culture with your new team abroad? It’s an ongoing challenge for us here. Last month we opened a larger office space that the team can decorate and make their own. To stay in touch and on task, we have a morning stand-up call which has been a great way for the U.S. team and the Irish teams to connect daily. Simple things such as sharing company swag with the new team allows them to proudly spread the word in another country about where they work.
HEADING WEST: CALIFORNIA CULTURE
Even if you’re not setting up shop across the pond, these same steps are important for ramping up across the country or in any new state. Recently, our HR director opened an office in California. While I’m familiar with Florida laws, I was a bit murky when it came to California law. In some ways, it might as well have been a foreign country.
Our HR director offers this advice when opening an office on the West Coast: First, make sure to register with the state of California for unemployment insurance and understand the state-specific employment laws including all payroll laws. Make sure to get compensation coverage and create an employee handbook along with understanding the benefits related to operating in California. Most importantly make sure to understand the rules related to recruiting. For example, when interviewing candidates, you can only ask questions that will let you know about their knowledge, skills and ability to perform the job.
Whether it’s a different state or a distant country, expanding your company into new territories can be both exciting and challenging. With the right planning and preparation, however, those challenges will give way to the triumph and rewards of reaching a larger or even global client base.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@ segpay.com.