Estimated read time: 8 minutes, 3 seconds
Selling internationally can get complicated very quickly if you’re trying to manage cross border payments yourself. Foreign exchange rates, regulatory rules, payment systems, various bank accounts, establishing entities in different countries, and tax collection and remittance are just a few of the concerns you’ll need to stay on top of as your business expands into more countries and regions.
And typical payment service providers won’t help you with most of those concerns.
Luckily, FastSpring isn’t just a payment service provider — we’re a merchant of record, which means you can outsource the entire cross border transaction process to us, and we’ll handle all the complexities that come with it.
Read on to learn:
FastSpring handles the entire payment process from checkout to remitting end-of-year taxes for SaaS companies. To learn more about how FastSpring can help you scale quickly, sign up for a free account or request a demo today.
Why Cross Border Payments Are Key to Taking Your Business Global
A cross border transaction is a transaction that happens between parties in two different countries.
And if you want to sell globally as a software company — even a small one — the majority of your transactions likely will be cross border.
For example, 70% of FastSpring’s transactions are cross border (and that’s including the European Union factored as one “country”; if we separated out all the countries within the EU, that percentage would go up).
This adds dramatic complexity, suboptimization, and unpredictability when using a traditional payment service provider.
Why Cross Border Payments Are So Complicated, Even With Typical Payment Providers
There are many payment service providers (PSPs) out there, all offering different levels of payment processing services and related add-ons.
But if you want to use a standard PSP to accept international payments, you have two main options.
1. Create your own entity structure around the world. This means having a true physical presence in many geographies and managing the significant legal and financial costs and headaches that come with that.
2. Don’t create your own entity structure around the world, but be treated as a non-local business in the majority of the markets in which you sell. This comes with additional disadvantages, such as:
- International surcharges on credit card payments (typically 1-2%), increasing the expected cost while lowering the predictability of your processor fees.
- Lower approval rates on credit cards as a non-local acquirer. In some regions (such as Latin America), this means as much as a 20%-30% differential in approval rates due to the relatively low prevalence of “international credit cards” (i.e., those that can be used to purchase from foreign merchants) among buyers in such regions.
- Dramatically lower ability to accept local payments methods, as many local payment methods require that you be a local business to be able to accept them (for example, Pix – one of the most popular online payment methods in Brazil).
Even if you choose to create your own entity structure, you will need to work with many PSPs (or legal entities) to be treated as a local business in each market.
And even if you work with one PSP that is worldwide (such as Stripe), you’ll need to maintain separate accounts with separate fee structures and contract with separate legal entities of the PSP in each region.
Further still, if you want redundancy in your ability to accept cross border payments — which everyone should have to ensure they never lose sales to payment system down time — this at least doubles your complexity in each region.
You could instead choose to only expand into a few new countries or regions, but if you limit the number of places where your software or digital product is sold, that will limit sales accordingly. You can’t get fast, meaningful revenue expansion with slow, piecemeal geographical expansion.
Luckily, there is another, much simpler option.
Let FastSpring Help as Your Merchant of Record!
FastSpring’s ability to simplify cross border transactions for your business goes far beyond standard PSPs because we’re a merchant of record (MoR).
While PSPs and MoRs may look similar at first, there are some big, fundamental differences between PSPs and MoRs.
A payment service provider does bridge some gaps for companies selling digital products and software, such as handling back-end specialized services and networks (including payment gateways, payment processors, and merchant accounts) so you don’t have to connect directly with all of those yourself.
But PSPs stop shy of becoming the entity that worries about risk considerations, regulatory rules in many geographies, card brand rules, and even tax calculation, collection, and remittance — responsibilities that a merchant of record does take on for you.
That’s because a merchant of record becomes the entity that is technically selling the product.
Because an MoR already has the necessary infrastructure set up, it’s already a complete payment solution that lets you quickly outsource the entire checkout process, including fraud prevention, tax compliance, and even sales tax and VAT remittance.
As a merchant of record, FastSpring is uniquely positioned to support cross border commerce, offering you the following conveniences:
- One vendor and one account.
- Greater access to local payment methods.
- Higher approval rates due to local acquiring.
- Predictable flat rate pricing model with no cross border fees.
- 24/7 buyer transaction support.
- Elimination of tax registration, filing, and remittance worldwide.
- Elimination of need to monitor changing tax laws and requirements worldwide.
Increase Revenue, Decrease Complexity, and Mitigate Risk With FastSpring
Once you implement FastSpring, you gain almost instant access for your SaaS, software, or other digital products to be sold in more than 200 regions, with support for 21+ languages and 23+ currencies.
FastSpring manages all the hard parts of cross border transactions so you can focus on building the fantastic products that will help you become the next great global brand.
FastSpring manages all the hard parts of cross border transactions so you can focus on building the fantastic products that will help you become the next great global brand.
We Make It Easy to Integrate FastSpring With Your Business
Beyond the financial services that PSPs and MoRs provide — and the regulatory, risk, tax, and other additional responsibilities MORs take on — PSPs and MoRs offer varying levels of tools to help integrate their services with your business.
With FastSpring, here are just a few of the great features included when we serve as your merchant of record.
Extensive B2C and B2B Selling Features
Sell in all the ways that customers want to buy. Our platform accommodates one-time purchases or recurring payments, subscription downloads and cloud-based offerings, trials with and without payments, and more.
We support these flexible selling models and options with both best-in-class self-serve checkout functionality and localized, custom B2B quotes and invoicing.
Industry-Leading Customization Features
Just because FastSpring takes on the complexities of cross border payments doesn’t mean you have to sacrifice branding and customization options.
Besides being able to create a seamless trial, checkout, fulfillment, and subscription experience for your customers with our webhooks, APIs, and no-code customization options, we also offer a FastSpring-managed JavaScript library and robust checkout localization tools.
Partnership-Style Support
While providing the above-mentioned tools that allow developers to dig in themselves, you’re not on your own to set up your online store.
FastSpring’s MoR services include 24/7 multi-tiered support that are prioritized by urgency instead of business size; global VAT, GST, and sales taxes handled by experts, to the tune of $54M+ filed and paid every year; and multi-layer fraud prevention and compliance management that adheres to SCA, PSD2, CCPA, GDPR, Economic Nexus, and dozens of local regulations across varied jurisdictions.
Get Started With FastSpring
FastSpring handles the entire payment process from checkout to remitting end-of-year taxes for SaaS companies, with award-winning support to help along the way.
To learn more about how FastSpring can help you scale quickly with cross border transactions, sign up for a free account or request a demo today.
Other Articles You Might Be Interested In
Have more questions about the financial institutions and systems that merchants of record and other payment platforms work with to make international transactions and payments work? We cover more about the important differences between PSPs and MoRs and explain some of the ecommerce details that need to happen in the background for cross-border payment services to work and compare features such as transaction fees and payment options in 2Checkout vs. Stripe vs. FastSpring: Comparing Payments, Taxes, and Platform Features (+ Pricing).
Worried about regulatory requirements, international bank transfers, currency conversions, credit and debit cards and digital wallets, different currencies, transaction costs, and all the other details it takes to make international financial transactions happen? Find out why a merchant of record makes all of this easy in What Is a Merchant of Record? (And Why Should You Care?).
Looking for a global payments provider and merchant of record to serve as a complete cross border payment system? Learn more about FastSpring’s global payments.
If your software or other digital goods business’ roadmap includes becoming part of the global economy, you can move beyond only accepting domestic payments with a new payments provider. Learn more about why merchant of record FastSpring is so well equipped to remove the friction of cross border transactions on our merchant of record page.
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