Operating as an e-commerce trader, one key element that can scale your business to new heights is selling across borders. But geographically speaking, these are still a few barriers to overcome, like finding a trustworthy logistics partner and enabling cross-border transactions.
Since an online store already uses electronic payments, you might be thinking: “Can’t I already accept payments from anywhere in the world?”. Well, that is a good thing to check because it depends on where your customer is based and what type of payment methods they are using. Therefore, when you expand your business to sell to customers in other countries, consider what their needs will be and find the cross-border payment partner who will meet them.
Why a Cross-border Payment Partner Matters
Although the offerings from a digital payment service that enables cross-border payments are easy to use, it’s important to understand why you need particular services in the first place. Several factors play a role in the process of receiving a digital payment. Let’s explore it in the following example.
A client buys a product. Firstly, a customer lands on your website, makes a purchase and initiates a payment. The client must understand two elements clearly: what will the cost of an item be in their local currency; and what are their options regarding payment methods? Usually, your customers will want the option of paying through a direct payment (EFT) or by card.
International buyers might also like the option of paying via a link or using a digital wallet.
Next, operating between different countries means that the currencies need to be converted. This happens between the sender’s bank account and the recipient’s bank account. The first bank will need to convert your funds from the original currency to your destination currency, South African Rands (ZAR).
Lastly, the destination or recipient bank clears the funds by verifying the payment details, ensuring the funds are sufficient and transferring the final amount.
Factors to consider when expanding your online store’s footprint thus include currency, local pricing, payment method and the competitiveness of your provider’s fees on exchanges and support 24/7 for customers in each region or country.
Questions to Ask When Conducting Research
As with any decision you make, you have to conduct your own research, as your choice depends highly on your business’s particular needs.
Here are some questions to help guide your research.
What Is Their Global Coverage?
Finding the right provider means finding the provider whose presence aligns with your market expansion goals. If you aim to expand sales into Botswana and Zambia, but the cross-border payment partner doesn’t operate in those countries, they are not the one for you. Understanding what country each provider serves can also give you direction for expansion in the future. For example, if your provider also has a presence in Nigeria or even other countries in Europe or Asia, you can consider targeting buyers in those locations as well since you would already have the digital infrastructure for reaching new customers there if interest is enough for your product.
What are the Processing Times and Fees?
Everything costs money. Just as you pay bank fees on certain transactions on your business bank account, processing transactions and converting foreign currencies into local currency has a fee.
Compare what the various fees will be and understand that this affects not only how you need to price your products in the different markets.
You also need to understand what the transaction time is. If you want your money sooner rather than later, it is worth comparing both the costs and the processing times.
What Are The Compliance Risks?
Compliance is essential across the globe. It protects you, the business owner, and your customer. When you trade across borders, that means that you are dealing with more legislation and regulations on both sides.
Your payment partner should at the very least adhere to local regulations like:
- Exchange Control Regulations (1961): These govern the movement of currency across borders for residents, managed by the SARB’s Financial Surveillance Department (FinSurv)
- Financial Intelligence Centre Act (FICA) (2001): Mandates that financial institutions report international funds transfers exceeding specific thresholds
- National Payment System Act (1998): Controls the administration and supervision of payment, clearing, and settlement systems
- Customs and Excise Act 91 of 1964: Governs payments involving the import and export of goods
- SADC-RTGS System: Bank-level rules that manage regional payments within the Common Monetary Area (CMA)
How Are Your Customers Benefiting?
As mentioned, considering your customer’s convenience is important. Presenting pricing in local currency is made possible by multi-currency pricing. Ensure your provider has this offering.
Remember to also enquire about the various payment methods available.
What Support is Available?
Cross-border commerce means different time zones. Should a buyer struggle with their payment, they must be able to reach out to a reliable support department.
The main motivation in choosing the right partner is to ensure that it makes your life as easy as possible and your business streamlined.
Cross-border Payments for South Africans
Leveraging cross-border payments enables international trade and local economic development. With the positive reception of the African Continental Free Trade Agreement (AfCFTA) and recent developments being accelerated to improve the flow of customs and clearance, governments and corporates are escalating their efforts to support the small businesses that trade in this area.
A great example of this is the partnership between Standard Bank and UnionPay.
“African businesses are increasingly selling beyond their domestic markets, and the ability to accept trusted international payment methods is becoming essential to that growth,” says Mr Bill Blackie, Chief Executive for Business and Commercial Banking at Standard Bank Group. “By enabling UnionPay e-commerce acceptance across nine African markets, Standard Bank is helping merchants reduce payment friction, reach more customers and participate more effectively in cross-border digital commerce.”
Mr Feng Chen, General Manager at UnionPay International Africa Branch, commented that UnionPay International is committed to expanding the reach and usability of our payment network across Africa. “Our collaboration with Standard Bank enables more merchants to accept UnionPay online and gives UnionPay cardholders greater choice and convenience when transacting with African businesses. Together, we are supporting safer, simpler and more connected digital commerce across the region.”
Operating as an e-commerce trader, one key element that can scale your business to new heights is selling across borders. But geographically speaking, these are… Read More
