Whether you have a physical store, an ecommerce site, or a combination of the two, it is in your best interests to invest in a payment gateway. This innovative software facilitates the secure acceptance of digital payments while providing customers with numerous choices in how they make payments, and safeguarding sensitive cardholder data. This is especially true if you sell internationally.

What is a payment gateway and how does it work?

Whether you sell domestically or abroad, below is how a payment gateway works. 

• The customer submits an order.
• Payment information is securely transmitted from the customer’s browser to your server. 
• The information is sent from the server to the payment gateway.
• The gateway passes the details on to the payment processor associated with your acquiring bank.
• The processor conveys the details of the transaction to the card association (Visa, Mastercard, etc.).
• The card-issuing bank verifies or declines the transaction with accompanying notification.
• The issuing bank forwards the response to the payment processor.
• The payment processor passes the details back to the gateway.
• The gateway transmits the information to the merchant and the customer.

Believe it or not, with the right gateway, that entire, highly secure process only takes a few seconds from start to finish!

Special features of an international payment gateway.

If you decide to accept international payments, you will definitely need a gateway equipped for the purpose. Just as you would do when you select any piece of hardware or software for your business, you need to choose wisely and with great care. Keep the following tips in mind before you partner with an international payment gateway. 

Look for a gateway steeped in the local area.

If you’ve ever accepted credit card payments before, you already know that each transaction is accompanied by a processing fee. If a customer used a card issued in a different country than where the payment is processed, you can expect an additional so-called cross-border interchange fee.

To avoid these charges, you need to find a gateway that is configured to process the payments in the same country or region where the shopper’s card was issued. In order for this

to happen, the gateway provider must be solidly connected with banks in all of the places where you sell goods. Additionally, the gateway’s software must be able to identify the region a payment stems from to route it to the appropriate local bank.

Look for competitive foreign exchange fees and multi-currency conversion.

Per-transaction and cross-border fees are not the only charges you will incur when doing business with international customers. In addition, you can expect to pay foreign exchange (FX) fees if you accept payments in your customer’s native currency (euros, for example). This fee is charged for converting the buyer’s currency to U.S. dollars.

Although the card companies set cross-border fees, it is the gateway providers who determine the rates you will pay for FX and multi-currency conversion. Before selecting the company or companies to whom you entrust your foreign customers, make sure you are getting the best deal possible without compromising security or quality of service.

Find a gateway that provides your customers the choices they want. 

If you can, do some research on the ground to learn what payment types are favored by the locals. Examples are AliPay in China and Boleto Bancário for Brazilian customers. Also, don’t forget other alternative payment types that are gaining popularity around the globe: ACH for U.S. buyers, SEPA in the EU, Direct Debit in the UK, and so forth. When you’re picking your payment gateway, look for one that accepts a wide variety of payment alternatives out of the box. Failing to do this at the start will leave you scrambling to team up with multiple payment providers to keep up with your competitors.

In addition to these international gateway-specific suggestions, it is also wise to keep the following general best practices in mind as you research the provider that is best for your business and customers.

• Cost. Before signing on the dotted line, obtain information on every charge, including set-up, Monthly, and transaction fees. These are based on both the volume and the value of the transactions you process, so be sure you clearly understand your business’s needs and goals.
• Types of cards accepted. Take pains to learn how your international customers prefer to pay so that you can provide the card choices they want.
• Holding time between payment approval and settlement to your account. The faster you receive your money, the better your all-important cash flow will be.
• Recurring billing if you want to sell products or services on a subscription basis. 
• Whether the gateway is hosted off-site or non-hosted.
• Demonstrated adherence to security standards such as PCI compliance.
• Integration with other systems such as your accounting or invoicing software.
• Monthly limits. Some gateways impose a maximum on the transaction amount that you can process each month. While this may not be an issue for all sellers, it could become a concern if you sell big-ticket items. In other words, get a clear idea of the types and sizes of the purchases you will probably want to process. Then, be sure your gateway is equipped to meet your needs.

Expanding your retail operations to include sales from global customers can give you an exciting and potentially lucrative way to transform your ecommerce store. Partnering with the right international payment gateway will provide you with all the tools you need to meet modern consumer expectations. The key to making this happen is careful research and a deep understanding not only of your own business but also of your new buyers’ preferences.