With the emergence of several technological advancements in the industry, U.S entrepreneurs who live overseas have access to multiple payment processing options. These include innovative payment platforms such as PayPal, Stripe and other similar ones.
Internet stores allow digital nomads to perform transactions
Digital nomads seem to be recently interested in launching startups like internet stores that allow them to remain connected and perform transactions while traveling around the globe. People say that all you need to have is a laptop and fast Wi-Fi connection while you work and travel at the same time. Is it really true?
Facing challenges to manage clients from all over the world
However, there are challenges to this new method of transaction. Processing credit card transactions eventually become tricky as you work from a distant location and have to manage customers from all over the world.
Christina Camacho who is the CEO of Current Payment Solutions in Miami gives her opinion on the challenges that digital nomads face, “Cross-border transactions are prone to declines and higher fees, and consumers incur additional bank charges for currency conversion”.
Hardships in accessing the money
Digital nomads can also face hardships in accessing the money that they have been paid. Even if you are able to process a transaction, banks will usually deposit your money in the country where your bank account was set up, instead of where you are traveling at the moment.
How to manage your credit card processes?
Do not let difficulties in processing your credit card transactions disrupt your work routine and leisure travel time! All you need to do is understand how your potential clients would prefer to pay you and find the ideal way of accepting their payments. Certain payment processing platforms are cost-effective and convenient for digital nomads who require smooth payment transactions.
Have a look at alternative payment processing networks
The first step requires you to be aware and knowledgeable about the markets in which you plan to sell and trade. Begin by doing some market research so that you know what to expect and what to consider. For example, many Americans have a tendency to choose Mastercard, Visa, and Discover or American Express, but there are better options for digital nomads who travel overseas often. Think of considering UnionPay credit card or the Visa Electron debit card for your next travel as they are more popular options.
PayPal is the most popular choice
In many countries, customers prefer to pay through their digital wallets. Due to the various facilities that PayPal offers, today it remains the most popular choice for customers and individuals seeking to buy and sell online.
Entrepreneur Jase Rodley who is the principal of Otium Boutique says, “PayPal offers a huge amount of convenience and protection”. Rodley hails from Australia and he provides digital marketing services to boutique hotels, but he runs his business from British Columbia as the cost of living is much lower there.
PayPal offers a lot of benefits
Available in over 200 countries and having the ability to support 25 currencies, PayPal offers convenience and facilitates payment transactions. Nevertheless, some merchants are unwilling to use PayPal because of the processing fees. All transactions that take place outside the country is charged 4.4% more and includes a fixed fee that is based on the type of currency. Rodley adds that “from a business owner’s point of view, the commissions from PayPal can be huge”.
Digital nomads love Stripe!
Offering a similar service to that of PayPal, Stripe is also famous among digital nomads. Supported in over 25 countries, Stripe only charges 2.9% more and 25 cents for any international transaction. It may add a currency conversion fee depending on the type of transaction. In addition, Stripe allows merchants to have access to a dashboard in their accounts where they can check what the conversion fee will amount to.
Other alternatives that suit high volume transactions
If you are involved in a business that requires controlling a huge number of international credit card transactions, then these payment processing platforms might not be the best option for your customers. Think of getting a merchant account with a provider that especially works with international markets most of the time. Examples of merchant account providers who work with merchants include Durango Merchant Services, Braintree Payment Solutions (owned by PayPal), ProPay and 2Checkout.
According to Jared Ronski, the co-founder of the payment processing firm MerchACT, “choosing the right payment gateway can be integral to international success. The more robust the gateway, the easier it is to automate and streamline currency conversion, accept multiple currencies and card brands, and to guard against online fraud without losing legitimate sales.”
He further adds, “the best practice for a digital nomad to process international payments is to work with a payment processing partner that has long-standing relationships with banking partners globally. It opens up many options in terms of finding the appropriate merchant account for the merchant’s online payment processing needs, and it provides a ‘partner’ relationship whereby the processor can assist with other important factors, like finding the right gateway”.
How does a payment gateway work?
A payment gateway is simply an e-commerce service that makes credit card payment processes easier for business owners. Gateways help in transferring information from a payment portal to a bank. An example of a payment gateway that has intensive experience in international transaction processing is Authorize.Net. This gateway is mostly involved in businesses markets of Canada, U.S., U.K., Australia, and Europe.
Another merchant processing company, Camacho’s Current Payment Solutions attends to the needs of merchants who carry out business and trade in various countries around the globe. Its payment gateway offers business people with the ability to conduct payment processing transactions in over 75 countries. It allows merchants to bill each customer in their local currency.
Camacho says, “If you were selling to Europe, you would bill in euros versus U.S. dollars”. Doing so will prevent cross-border fees to be applied. Camacho’s customers usually pay their monthly fees and an interchange-plus pricing. Thus, the merchant’s total amount is revealed to them during the transaction.
Choosing convenience for your payment processes
For any digital nomad, it is important to find solutions that will make them save time, money and effort. According to Rodley, “usually there is a convenience factor, a cost factor, and a time factor. Every business needs to make that choice for themselves”. However, there are times when even having the right merchant processor by your side to accept international credit card payments does not fit your type of business. In this case, it is better to request a wire bank transfer from your customer to your bank account. Rodley adds that this is “a clunky old system, but it’s secure”.
Rodley himself uses this method and he pays only $30 to accept the wire transfers of his clients. On the other hand, his customer should pay a small fee at his/her bank too. For such a “substantial-sized transaction”, $30 is inexpensive compared to a credit card fee.
Using Swipe fees is better than running out of cash
For domestic transactions, credit card swipe fees are charged around 1.5% for ordinary cards and up to 3% for premium reward ones. Yet, this will vary based on several criteria, including the number of transactions processed by a merchant as per the National Retail Federation. For digital nomads who work overseas, Swipe fees tend to be more expensive. Rodley mentions that while working in Asia, he previously encountered fees that charged up to 3.9 percent, which could be unprofitable for merchants.
Rodley admits that there are cases in which being charged with high fees for credit card payments are valid. Getting paid quickly improves the business’ cash flow and this surpasses the fees charged. For example, if a client has signed a monthly contract of $10,000, the wire transfer might be done only once a month to avoid complications and hassle. If the payment is late, Rodley might face a sudden cash crunch, disrupting his business routine. To prevent this from happening, he proposes to set up a weekly payment of $2,500 by credit card. Although he needs to pay the processing fees, it is a better option to avoid running out of cash suddenly. He would have to pay the processing fees, but it would be worth it to avoid running short of cash. He says, “Credit cards are much more convenient for me – and the client as well”.
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