The Green Sheet Online Edition
October 26, 2009 • Issue 09:10:02
Complexities of multicurrency processing
Multicurrency processing is the ability to send a transaction to interchange for authorization in international currencies. That said, there are many layers to this rapidly expanding global service, and being able to peel those layers away is essential to offering an effective solution.
First and foremost is understanding what a merchant wants and needs. One merchant may wish to offer customers a handful of currencies, yet settle in European currencies. Another merchant may come along and have a completely different list of currencies required to sell and settle in.
To provide merchants with the most suitable multicurrency processing solutions, you must identify their specific business requirements and then match them with your best options.
What's in the tool box
Therein lies the next complexity - understanding your options. For example, a European acquirer may offer many currencies to authorize in. But depending upon where the customer is located or where the individual's card was issued, the transaction may settle using a different interchange category - domestic, intraregional or even inter-regional.
The size of your merchant also comes into play. When a business has a large, complex, multinational footprint, it may be better off registering in different parts of the world.
Therefore, the company may need a variety of settlement solutions and may desire domestic global acquiring. A smaller merchant may not need these options and may only want to settle in U.S. dollars (USD).
It is important to have all types of solutions in your multicurrency processing tool bag. You cannot tell merchants how to conduct business, but you can present yourself as a knowledgeable sales consultant who understands their needs and provides effective multicurrency processing solutions.
It's a small world
In the past, processing was a fairly simple undertaking. Merchants located in the United States sold and authorized in USD. The complexities they faced involved different terminals and different applications, but they always settled in USD. Most U.S. acquirers were licensed with MasterCard Worldwide and Visa Inc. to do business only in the U.S. region.
Now, with the widespread acceptance of multicurrency processing and international acquiring, licensing with the card brands in different regions and meeting complex merchant requirements come into play.
That also necessitates understanding where customers are located in the world and what kind of treasury requirements merchants have.
Here in the United States, when a merchant sells and settles in USD, there are no treasury concerns. Merchants who want to sell in different parts of the world have to make business decisions about what types of currencies to use and where those monies should be wired.
Should they keep their transaction settlements in the same currency? Do they want to manage their own currency fluctuations? Do they have suppliers who need to be paid in certain currencies? As you see, processing issues for these merchants are much more involved than those of typical U.S. domestic merchants.
To overcome these complications, find a multicurrency processing partner that truly understands the issues and is willing to educate you on them. As with selecting any type of strategic alliance, you have to do your due diligence.
For example, you may have a merchant who is approved in the United States but will not be accepted by European or Asian acquirers.
Different geographical regions represent different cultures with distinct business mores. Your multicurrency processing provider needs to have knowledge of differing cultures, understand the nuances of their business practices and have an established reputation of offering effective global solutions.
Take the time to compare multicurrency processing to what you are used to selling. For example, to be effective at selling to restaurants, you have to ask the right questions and understand dissimilar needs, such as the demands of a fine dining establishment versus those of a quick service restaurant (QSR).
And you have to offer the appropriate solutions with credibility.
The same goes for the international arena. The approach is the same, but the questions are different. Does your client need to translate a Web site's language? Does the site need Internet protocol geolocation technology tools (which recognize where a customer is coming from and can default to the customer's language)?
If the customer's address is located in France, he or she will probably want to read Web sites in French and make purchases in euros.
Smart merchants who want to sell online worldwide are going to look for ways to make their global customers feel as welcome as possible and provide them many options.
For example, does a business want to use "international flags" on its Web site whereby a customer clicks onto a country's flag and the currency is defaulted to that country? Does the site need a drop-down box to allow customers to select a certain currency?
In the restaurant sphere, a trained merchant level salesperson (MLS) knows to offer one type of program for fine dining establishments and another to QSRs. And that same MLS needs to be proficient with the new vernacular of multicurrency processing and know which questions to ask.
It is important to also recognize that multicurrency processing doesn't work for all types of merchants.
It is not recommended for small merchants who don't possess the necessary infrastructure, but it is recommended for the "sweet spot" categories: digital downloads, hard goods, electronics, travel, card-not-present and catalog transactions, and high-risk categories (emotional content).
What's in store
Despite the complexities, it is essential to offer multicurrency processing in today's competitive and shrinking domestic marketplace.
If you have e-commerce merchants in your portfolio, you must consider getting into the multicurrency processing game, or you will lose your merchants to competitors already established on the playing field.
Multicurrency processing is a rapidly expanding segment of the industry, and the experts don't foresee any decrease in momentum. In the current economic climate, multicurrency processing is one of the few arenas that is red-hot.
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 email@example.com.
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