Payment Security and Savings Tips for Online International eCommerce
A merchant’s entire business operation is similar to a grandiose machine, made up of several intricate moving parts, all meticulously placed and installed to ensure the business runs optimally. Remember the childhood game, Mouse Trap?
Payments are much like that. A vital part of the well-structured and oiled machine.
Customers are sending payments, sometimes in foreign currencies, to merchants operating in international markets.
Merchants are receiving payments in several currencies, depending on the markets where they operate.
Payments are being processed and converted, often “behind the scenes,” and deposited into merchant bank accounts.
Foreign markets require local VAT, GST, and other legal payment regulations to be adhered to.
Payments are sent to vendors, suppliers, manufacturers, logistics companies, and more.
Contracts are signed, wire transfers approved, and bank accounts storing balances, sending money, and receiving currencies.
WHAT THIS ARTICLE CONTAINS:
- The importance of local tax compliance (VAT, GST, etc.)
- Conversion safety, accuracy, savings (FX, transparent, flat conversion costs)
- Other Cost-effective Solutions (Virtual, Regulated Bank Accounts in Foreign Countries)
- Info regarding transaction and funds safety
New challenges will always arise in eCommerce, but merchants should settle for nothing less than these benefits:
Challenge: Paying foreign tax, like VAT or GST
COVID-19 is causing demand for eCommerce to increase in many countries around the world. As a merchant, you’re likely facing challenges, such as paying the Value Added Tax (also called VAT and GST) applied to products sold online.
Solution: Vat-paying and/or calculating products
Benefit: A feature that can identify and pay different types of taxes in various countries takes the guesswork out of it for you. You don’t need to be worried about tax hassles or ensuring taxes are paid on time and to the proper authorities – what you need is a feature that does this on your behalf!
Taking the Benefit Further
Most companies dealing in eCommerce should offer a weekly webinar or newsletter with additional tips to support merchants when it comes to local tax regulations and other tax-compliant processes. Some might even monitor customers transactions to ensure taxes are appropriately charged and paid. This is an additional benefit to you, the merchant.
What you’re getting that you don’t see: These technology and data systems provide helpful tax payment and compliance insights and significantly lower the risks money launderers and fraudsters pose to the financial industry.
Can you imagine traveling to a foreign marketplace where you want to do business and attempting to open a foreign bank account during COVID-19?
Challenge: Busting into International Markets, LEGALLY – AND with Confidence
Solution: A Virtual Bank Account – Monitored and Regulated by Leading Financial Institutions
Benefit: More customers! More revenue! Global expansion! Less paperwork! Loads of time and money saved!
From an online or virtual account you can access and manage your marketplace profits from a single dashboard. You apply for the account, receive a unique account number, and can send and receive domestic currency in the countries where you choose to expand.
Taking the Benefit Further
This benefit spans company-wide. For example, your finance department completely avoids the daunting task of managing multiple online banking platforms, having to reconcile funds, and potential hurdles with money sitting in different currencies in different countries around the world.
Choose a platform that allows you to view all of your profit using a single platform – no matter what country or currency you’re operating in.
Currency Conversion: Hidden FX Fees
Challenge: Retaining more of your the profit you worked to earn
Solution: Paying the same mid-market rate that your financial institution or payment platform negotiates – without an unreasonable markup.
Benefit: Transparency. Save money. More profit. Ability to project costs.
How much of your profit is being shaved off the top in foreign exchange fees?
The exchange rate is something all eCommerce and online merchants should be taking into consideration. There is lots of money to be saved when conducting cross-border commerce. Traditionally, many merchants are receiving profits from marketplaces after they’ve already applied conversion fees using their own rates.
How much did you pay? Did you get the best rate?
PingPong performs currency conversions for you at the mid-market rate. They’ve provided this service at a transparent 1% cost to merchants since the company’s inception.
How does your current payment platform compare? Trust us when we say, it won’t sit right to discover you’ve been receiving less profit to pay more fees.
Up until August 2020, Amazon, for example, charged anywhere from 3% to 5% of the original sum to convert currencies for customers like you.
This rate is high. Most sellers and online merchants are unaware of the revenue they could be saving in paying mid-market conversion fees.
Look at the savings generated for these profits, after each marketplace has applied conversion fees:
Taking the Benefit Further: You can use money from a virtual account to pay suppliers, invoices, and logistics companies, in their preferred currency, without paying additional conversion fees.
What you’re getting that you don’t see: FX rates fluctuate all the time – sometimes daily. You can control when you convert your cross-border profits back into USD (or local currency), based on the conversion rates. This means potentially greater money savings.
Transparent and fair, mid-market conversion rates free of tacked on markups can make a major impact on your cross-border profitability – especially when you look at those monthly and annual savings.
All the really important legal behind-the-scenes operations that go into keeping your money safe:
What platform are you using, and is your money safe?
Can you confidently answer that question?
As a merchant, where is your money held? Who has access to your money? Is your access unlimited? Can anyone, including the institution or company holding it prevent you from withdrawing it at any given time?
These are valid questions. So, check yourself.
Review your current financial operations.
How many of these items can you check off?
1. Are your funds held in bank accounts separate from your chosen platform’s business bank accounts?
PingPong keeps customer funds in legally separated, dedicated customer accounts. These accounts are not used by the company, only for customer transactions.
No third-parties are allowed to access your funds or account information without your permission.
Company partnerships with leading financial institutions like Citibank and Wells Fargo makes this possible, avoiding any impact to the customer should a business-related matter arise. These institutions are your payment processors. This type of payment model keeps your funds and marketplace transactions safely managed at all times.
Do some research. As a merchant, your funds are more secure with a company that proactively mitigates fraud and monitors risks of money laundering.
These factors ensure secure access to your money, an ability to handle logistics – like paying suppliers – and easily withdrawing and transferring.
2. Is the method you use to send, receive, and convert money being monitored by financial regulators?
It should be.
This additional layer of security gives merchants more confidence in their chosen payment platform. Important protocols and compliance regulations are standard in companies that are monitored and regulated. These measures strengthen security knowledge and precautions within every department of an organization.
PingPong applies for and legally obtains all appropriate licenses in the countries they operate. Furthermore, employees are expected to undergo specific AML and other training to protect customers, their businesses, and revenue from fraud and money laundering risks.
3. Do its customer service and compliance teams consist of experts with financial background and training?
It’s nice to know the people you’re trusting with your revenue have compliance and finance knowledge, right?
Experience working with reputable companies like CitiBank and PayPal (or others) can mean more detail and expertise is dedicated to ensuring the safety of your transactions and funds.
PingPong has a team entirely dedicated to identifying and foreseeing risks, taking this burden off its customers. This team handles:
- Risk Identification: Everything from operations, currency amount, time, customer and market behavior, and many other contributing factors are continually assessed.
- Risk Warning: Security measures are further customized and implemented on a per-customer assessment of each customer’s front-end risk verification.
- Risk Review: Audits are conducted digitally or manually; audit methods depend on various risk levels.
- Risk Handling: Protocols are in place to ensure risk sources are identified and funds security is ensured
In 2015, PingPong set a new standard for safely and cost-effectively conducting domestic and international online eCommerce. Competitors have been left with no option but to scurry to adapt their safety measures and payment models accordingly.
Plans for innovative products and additional features that support international online eCommerce are being developed on a rolling basis.
PingPong keeps merchant funds safe while providing the flexibility to quickly and easily transfer funds worldwide. This includes being experts on tax compliance regulations in the countries we operate. As a merchant, you can take additional comfort in the payment institutions’s legal requirement (and operating incentive) to strictly monitor and report abuse of its services.