By Caroline Hometh
The new frontier in the bankcard business is international processing, and the new buzz word is multicurrency conversion (MCC). To be successful in this evolving international marketplace, sales professionals need to not only recognize the lingo, but also know what it means.
For example, the word "domestic" can no longer be used as it has in the past. To a European or Asian merchant, domestic currency is not the U.S. dollar; it could be the euro, the yen or the ruble.
We cannot view ourselves as the center of the financial universe anymore. We have to think globally - actually, do more than just think it. We have to expand our payment vernacular and successfully apply it.
What is MCC? In the payments industry context, it is basically the ability to authorize and settle transactions in a number of international currencies. However, MCC processing is complicated, and my next article will focus entirely on all aspects of this process.
MCC processing offers multiple benefits to merchants. First and foremost, customers can shop and purchase goods online in a currency they are comfortable with, and this translates into a decrease in shopping cart abandonment.
Customers who are confused by unfamiliar currencies often abandon online purchases and seek merchants who offer products in currencies they understand. MCC means more sales.
For global merchants who have expenses in a particular currency, receiving settlement and funding in that currency also helps simplify the exchange process.
For example, e-commerce merchants may have suppliers in Europe or Asia, so they have to pay out to those suppliers in their respective currencies.
That means they have to convert dollars to the appropriate currency. MCC processing eliminates the need for double conversion as well as worries about dollar fluctuations in the marketplace.
From a merchant level salesperson (MLS) standpoint, the benefits of MCC processing are substantial. Revenue from global transactions is considerably higher than domestic transactions - sales partners at one of the leading international payment processors average 60 basis points per merchant.
Then there's the risk of losing a merchant to a competitor who offers MCC. Merchants like keeping things simple. They prefer to aggregate all of their processing under one umbrella.
If they can get international processing with one of your competitors, they'll give that individual their domestic transactions as well. Putting MCC processing in your toolbox will surely increase your merchant retention.
What should you look for in an MCC processing partner? Flexibility tops the list. It is imperative that your partner has the ability to work with multiple sponsor members (banks).
By rule, MasterCard Worldwide and Visa Inc. work with banks. MCC processing providers work with both global proprietary members and sponsor members.
ISOs tend to be sponsored members of MasterCard and Visa and rarely proprietary members because they are not financial institutions. MCC processors rent bank identification numbers (BINs) and become sponsored members of the card brands with different banks worldwide.
This is key because ISOs and acquirers have to obtain a sponsor bank to play in the international arena. If a reseller establishes its own BINs worldwide, the costs are enormous. Partnering with providers who have already established BINs eliminates those costs.
Infrastructure costs are equally critical. Picking a reputable partner with a proven track record alleviates the challenges associated with developing an MCC processing system, establishing international BINs with sponsoring members, revising underwriting and risk systems to address merchants from different regions, and incorporating a single, back-end reporting operation that facilitates easy integration, just to name a few.
The list goes on. Mistakes can and are being made in the industry. Perform your due diligence when selecting the right provider.
Be aware that other challenges are associated with offering MCC processing, such as doing business with people from different cultures and encountering unfamiliar languages and different business practices.
Establishing trust with international merchants can also be quite difficult. Partnering with a respected and established MCC processor will break down those barriers.
Training is also paramount to selecting a provider. Look for one that offers formal training that covers sales, pricing, international business practices, different applications and underwriting.
These training sessions must teach you which currencies you can authorize and settle in as well as those which can only be authorized but not settled. They should also teach you about currency management and international marketing and treasury concerns.
MCC processing is the next evolution in the payments industry. And as our industry has evolved, MLSs have proven they can overcome whatever challenges arise and create lucrative merchant portfolios.
Savvy sales professionals will embrace the international market with that same entrepreneurial spirit and expand their merchant base to global proportions.
Carrie (Bardeen) Hometh is a respected industry professional in the international marketplace with over two decades of global experience and expertise. She currently serves as Senior Vice President of Sales and Marketing for Payvision, a leading international payment solutions provider that offers a comprehensive suite of products and services that include global acquiring, multicurrency processing and alternative payment solutions. she can be contacted at firstname.lastname@example.org.
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