By Dave Janse, Vice President for Foreign Exchange and Multi Currency Processing, Ingenico ePayments
Online shopping has become the primary interface with the retail world for the vast majority of consumers. Retail is in the midst of a dynamic new era where eCommerce has broken down regional borders, bringing consumers and merchants to one international marketplace, existing entirely in the digital space.
Foreign exchange (FX), or the conversion of one currency into another, is the lynchpin that underlines international trade, but it’s still an area where many merchants lack the necessary level of expertise, which ultimately leads to lost sales and disgruntled customers.
In my experience, I’ve seen far too many global eCommerce businesses who think of payments as a commodity – they simply sign a contract with a bank or payment service provider (PSP) without really analyzing whether their payment partner can fully support their FX needs.
Here are five things every merchant needs to know when it comes to FX:
It goes without saying that in this global economy, where people are shopping across borders by paying in their own currencies, I believe FX is critical. Localizing websites and offering customers the currencies they prefer to pay in is the most obvious option, as it reduces customer drop-off and increases customer satisfaction. It’s also one of the most important ways in which global online merchants can take control of their transactions.
Offering multiple currencies doesn’t mean you need to get paid in multiple currencies. A good PSP will be able to offer remittance in select, preferred currencies while also providing transparent exchange rates for cross-currency settlement.
There are additional ways that merchants can leverage FX to their own benefit. For example, when a European customer books a hotel room in USD, their card-issuing bank will use an inflated FX rate in order to collect EUR. As discussed previously, the typical spread levied can be upwards of 4%
But what if you, as the hotel, took control of this process? By offering consumers the option to pay in their native currency, while creating a competitive local price, merchants can increase revenue and eliminate confusion around the all-in cost. Your customer is happy because they won’t find any nasty surprises on their credit card bill, and you’ve just managed to create an incremental revenue stream, rather than give it the banks.
So how can merchants wade through the tricky waters of foreign exchange? You need to analyze your situation and find someone to help you implement a FX strategy that suits your business needs, as well as look at currency pricing and what your PSP is charging you. The choice to localize in your target markets is ultimately up, but think about it – if you can get additional growth by optimizing your payments and leveraging FX to your advantage, what are you waiting for?
Dave Janse, Vice President Foreign Exchange and Multi-Currency Processing
In his role as Vice President Foreign Exchange and Multi-Currency Processing, Dave is responsible for Ingenico ePayments’ foreign exchange business unit, supporting e-Commerce partners with all aspects of multicurrency processing, foreign exchange pricing, localization and growth strategies. His aim is to simplify the processes and risks associated with currency conversion and provide merchants with pan-industry best practice advice on localization and currency remittances to increase their global business.
Dave joined Ingenico ePayments (formerly Global Collect) as Head of FX EMEA in 2013. Prior to joining Global Collect, Dave was Head of Sales for GWK Travelex, responsible for all B2B services including FX and payment solutions. In this role, he also managed an agent branch network of 115 locations that provided cross-border money transfers and cash to bank payment solutions. After voluntary military service developed a successful career in various international sales and new business development roles.