Guide to International Payment Gateways
By: Ronald De Bos
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A lot goes into an ecommerce operation, and the industry is always changing. Still, payments are at the heart of today’s digital commerce. And as any business who’s struggled to accept global payments can attest, facilitating this essential facet of ecommerce is anything but straightforward.
One option available to support businesses in maximizing payment success in global ecommerce is the international payment gateway. Get to know this technology and determine which sort of international payment solution might be right for your operation.
What is an international payment gateway?
An international payment gateway is a service that processes payments for businesses—everything from credit cards to alternative methods like digital wallets and Buy Now, Pay Later options. International gateways do so with a particular focus on handling ecommerce transactions from multiple countries and currencies.
In effect, the gateway—true to its name—acts as a mediator between a business’s ecommerce website and the financial institution that issues funds for and backs a customer’s payment. By ensuring transactions are secure and efficient across borders, these gateways help businesses tap into markets anywhere in the world.
In reality, though, no two payment gateways are created equally or even with all of the same functions. Knowing what to look for in a payment solution can help ensure you find the right option for your business.
What should you look for in an international payment gateway?
The best international payment gateway is akin to a gatekeeper or, better yet, a passport, giving your business access to global markets. Here’s a detailed look at some of the foundational aspects of a payment gateway to watch out for and evaluate:
- Currency Handling: Ensure the gateway can handle multiple currencies seamlessly. A good gateway doesn’t just accept multiple currencies but also offers dynamic currency conversion, giving customers a view of prices in their preferred currency. This not only boosts trust but can minimize cart abandonment and increase conversions. Many shoppers will simply leave a site that does not display their local currency.
- Security: It’s vital that the gateway adheres strictly to PCI-DSS standards, ensuring top-notch protection for transaction data. Advanced features like tokenization, which substitutes sensitive data with non-sensitive placeholders, and integrated fraud prevention tools are indicators of a gateway that prioritizes security.
- Localization: As you expand your business internationally, you’ll encounter markets with unique preferred local payment methods. Ensure your chosen international payment solution not only supports these methods but can significantly increase your transaction success rate, making the shopping process smoother for local customers. As we’ll explore below, some solutions go well beyond payment methods when it comes to localizing ecommerce experiences, offering local currencies, dynamic local pricing, advanced fraud prevention, tax compliance, and more.
- Pricing: While understanding a solution’s fee structure, it’s crucial to assess both immediate and potential long-term costs. Some gateways may lure businesses with low per-transaction fees, only to charge hefty monthly or setup fees. A transparent pricing structure that aligns with your business model is essential.
- Flexibility: The importance of the ease with which the gateway integrates with your ecommerce platform cannot be overstated. A gateway should offer APIs for customization, ensuring that as your business grows and evolves, your payment processes can adapt accordingly.
- Support: Robust customer support can make the difference between resolving an issue in minutes versus days. A gateway that offers 24/7 support, combined with a wealth of resources and a proactive approach to solving problems, is invaluable, especially in the dynamic realm of ecommerce.
How to choose the right international payment gateway
Just as every business has unique needs and goals, there’s no one-size-fits-all solution when it comes to payment gateways. Here are some vital considerations to help guide you toward the best fit for your enterprise:
Evaluate Compatibility: A payment gateway might come packed with features, but if it doesn’t mesh well with your ecommerce platform, it can lead to unnecessary complications. Ensuring a seamless integration not only simplifies operations but also ensures a smoother checkout process for customers.
Prioritize Security: In an age where fraud is common and cyber threats are ever-evolving, having a solution that emphasizes security and anti-fraud measures is non-negotiable. Delve into the specifics with any potential provider. How frequently do they update their security protocols? Are there any recorded breaches or issues?
Consider Costs: While it’s tempting to gravitate towards the most economical option, it’s essential to balance costs with features. Sometimes, investing a bit more can provide a significantly better customer experience, fostering loyalty and trust among your consumer base—not to mention greater revenue from increased conversions.
Assess Your Needs: Begin by listing out the countries or regions you’re targeting. Different payment gateways have strengths in various regions. For example, while one might excel in European markets, another could be tailored for Asian consumers. Understanding these nuances can make a huge difference in user experience.
Beyond the Payment Gateway: the Merchant of Record Model
Strengths and abilities, of course, can extend far beyond basic geographical considerations. While many payment gateways focus primarily on supporting payment processing, there are solutions available that add much more to the equation.
For many businesses, the best way to accept international payments is by leveraging a solution that’s more than just a payment processor. While effectively serving as a payment gateway, a merchant of record (MoR) solution can also handle the risk and responsibility associated with processing a financial transaction. That is, in addition to facilitating communication between customers’ financial institutions and an ecommerce business, they serve as a back-end partner for the merchant, handling things like:
- Sales Tax and VAT Management: MoRs handle the calculation, collection, and remittance of sales taxes, VAT, and other related duties.
- Fraud Prevention: They often have systems in place to identify and manage fraudulent transactions.
- Compliance and Regulations: One of the key roles of an MoR is to stay compliant with global ecommerce regulations, ensuring that the business adheres to regional laws and standards.
- Currency Management: While it might not be their primary role, MoRs often deal with currency conversion, reconciliation, and other related financial complexities of international commerce.
The merchant of record model offers a particularly beneficial solution for businesses looking to expand internationally—and quickly—given the intricacies involved in selling goods across borders and into new jurisdictions.
Digital River Helps Simplify and Streamline Your Global Ecommerce Growth
Much more than an online payments platform engineered to maximize conversions, Digital River offers a simple integration that can cover all of your payment, tax, fraud, and compliance needs. Taking on the risk and complexity of global expansion as your merchant of record, Digital River makes it possible for you to focus on what you do best—growing sales.
Digital River delivers localized checkout experiences, mitigates fraud, maximizes conversions, lowers costs, and much more. Digital River customers can also benefit from tapping into one of the industry’s largest global logistics networks. Learn more today about how Digital River can simplify your payments and accelerate your global ecommerce growth.
