Accepting International Credit Cards

Merchants offering customers multi-currency options encounter three major challenges:

Foreign Exchange (FX) Risk

The relative value of a currency with respect to other currencies is constantly fluctuating due to changes in political and economic factors. Unfortunately, these fluctuations can be quite volatile, moving relative values sharply in a very short period of time. Merchants are exposed to this volatility at three points of time in the typical transaction. First, there is the time lag between the sale (authorization) of the product and when the merchant settles in its native currency. There is also exposure in cases where products are returned for a refund or chargebacks are issued against the sale. These latter cases can be particularly troubling because the time lag between the two transactions can be as long as 120 days, allowing for huge swings in currency values. While fluctuations can both help and hurt the merchant, most merchants are not in the business of managing or “hedging” these changes to their benefit.

Pricing Management

Closely related to FX risk is the management of pricing on multi-currency platforms. Merchants are used to providing customers with static pricing. That means prices that tend to stay the same, once formulated. This is fine in a single currency model, but is very risky when offering customers multicurrency options. Once the price is formulated in its native currency, the price in other currencies must be adjusted to account for exchange rate fluctuations. In this manner, the merchant incurs little or no currency risk related to its pricing strategies.

Reconciliation

All payment transactions should undergo some type of financial oversight or review. However, merchants are often at the mercy of their processor’s reporting system. That means the level of difficulty in balancing transactions is directly related to the sophistication and elegance of the reports. Adding the complexity of ForEx transactions can be quite challenging, especially in cases where there are two occurring events such as a sale and an ensuing refund.

Fortunately, several companies offer comprehensive, integrated solutions that help merchants manage all of these challenges simultaneously. One of the best examples of these solutions is E4X, which offers a one-stop service that manages FX risks, pricing management, reconciliation, reporting as well as other related tasks. Large merchants can integrate this technology directly to their existing eCommerce platforms. Smaller merchants can gain this same technology by using eCommerce Solutions Providers  like Plimus, 2CO, ClickBank  and Reg.net, which have already integrated a foreign exchange currency management solution into their platforms.