By Caroline Hometh
Shakespeare wrote that "a rose by any other name would smell as sweet." And when it comes to global processing, different terms don't always mean different processes. This article contains a mini dictionary of popular terms used in the rapidly growing realm of worldwide card-not-present processing.
The synonyms in this section indicate the perspectives of the parties that coined them.
Here's an example: Suppose a customer from France wants to shop with a U.S. merchant in a different currency than USD, say euros. The merchant wants to function in USD but wants the international customer to have a comfortable, positive shopping experience. So the merchant asks to authorize the transaction in euros but settle in USD.
Why the need for different terms to describe the same thing? The industry has struggled to define international processing, and marketing departments of leading processors have coined different phrases. They all mean the same thing: the customer shops in one currency and the merchant receives settlement in his or her own base currency.
When an acquirer has, or has sponsored, bank identification numbers (BINs) in multiple regions, it becomes a global acquirer. International acquirers can offer merchants domestic or intraregional interchange in those regions.
For large, public, multinational companies that have Sarbanes-Oxley restrictions (a way of accounting that requires every transaction be transparent and thoroughly auditable), hedging a payment at the time of authorization and using that exchange rate through its life cycle is crucial for transactions that involve multiple currencies. Every exchange rate pair (the two currencies involved) must be defined. MCM is also necessary for smaller companies because they require no fluctuations in currency for their merchant transactions as well.
Dynamic currency conversion (DCC) refers to a special type of terminal application, written and certified by terminal manufacturers. It pertains to a card-present process that occurs at the POS. (Remember, other terms discussed herein concern the card-not-present arena.) DCC recognizes that the cardholder is presenting a card that has been denominated by an issuer in a country foreign to the merchant. It enables consumers to purchase in their own currencies. And card companies require the exchange rate be printed on the receipt.
No matter what terminology you prefer, it is important that the international processing partner you select fully understands all terms in use. It is also crucial that your acquirer possess a strong working knowledge of processing options to meet your merchants' needs and, more importantly, can speak to merchants, understand their specific international processing requirements - and make the appropriate recommendations to successfully serve them.
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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