Taking advantage of cost consolidationAccepting payments in multiple currencies is important (as shown above). For an e-commerce shopping portal, its multi-currency transactions come from suppliers and customers. To ease operations, they can and should outsource the task of handling payments to third-party payment gateways or hubs (we will talk extensively about why outsourcing is more effective in a future article). But the key takeaway is that international payment processing involves transaction fees, exchange rates and operating costs.
- Transaction fees are costs involved in dealing with different financial institutions that in turn, maintain relationships with foreign banks to execute cross-border transactions. Each transaction is rarely just between sending and receiving banks, with many institutions involved. As each institution charges its own transaction fee, they can add up quickly.
- Exchange rates are costs involved in determining the margin of currency conversion to compensate for market changes and risks
- Operating expenditure involve costs related to system or platform development and maintenance.
Driving growth by getting the right statisticsIf an e-commerce firm has funds moving between multiple countries involving different currencies, it can be very easy to lose track of things. A reliable third-party payment platform has enough experience processing international payments to furnish reports, insights and meaningful data through a simple and seamless interface. With these reports, a firm can see where its sales are coming from in real time. This allows the firm to adjust its budget accordingly to drive investment in the right places. E-commerce is a necessity. That is a fact. If you have a global business, it is important to understand the payment flow and how to work it to your advantage. Reach out to us for tips on effective international payment processing.
¹ Data from eMarketer (Statista)