Unlock new global markets by understanding these key terms in international small business payments and services.
Whether you are looking to receive international online payments, or are figuring out how to offer your customers their locally preferred payment methods, here are the terms you need to know to get started with international payments. By understanding these common terms and what payment services you’ll need, you can get your small business international payments up and running in no time.
International Small Business Payments: Key Terms You Need To Know
International Small Business Payments Services
Small businesses use a range of services to send and accept international payments. These services vary in terms of their functionality, the resources required and the costs.
Before deciding the best option for you, consider how payments can integrate with your existing technology and business systems. You will also need to factor in your payment providers pricing models, where customers are and how they prefer to pay.
- Merchant Accounts – This business bank account allows your business to accept debit and credit cards in person and online. A merchant account is set up between you, your bank and your payment processor to manage the settlement of credit card and debit card transactions.
- Credit Card Terminals – In a physical setting, a small business should select a credit card terminal that supports EMV, magstripe, and contactless (NFC) payments. Mobile or wireless terminal devices can also be used for accepting payments anywhere.
- POS Systems – POS systems can handle much more than payments. These systems help merchants use data to manage sales, track inventory and boost revenue. Some offer integrations for marketing activities and loyalty programs to run campaigns created using current and accurate customer and product information.
- Payment Services Provider (PSPs) – A payment services provider (PSP) allows you to accept online payments. This includes accepting credit cards, debit cards, cash cards and ewallets without setting up a merchant account.
- eCommerce Platforms and Plugins – eCommerce platforms such as Shopify, WooCommerce, Wix, Prestashop and others dramatically simplify online selling. They offer websites or plugins that integrate business applications and allow you to sell your products. Through a single ecommerce platform, you can manage inventory, marketing, payments, and fulfillment. This streamlined approach creates an engaging and personalized online customer experience and makes it easy to get started selling.
International Small Business Payments Players
A transaction involves several steps to move funds from your customers to you, and international transactions only add more steps to the process. To understand the entire cross-border transaction process, you must know which players are involved and what they do.
- Issuing Bank – This bank maintains your customer’s account and pays out to your merchant account. When this bank is notified of the transaction, it checks to ensure that your customer has the necessary funds or credit to authorize the transaction.
- Acquiring Bank – This is the bank at your end of the transaction. When the transaction is settled, the acquiring bank accepts the funds from the customer’s account into your merchant account.
- Merchant Services Providers (MSPs) – If your business wants to accept payment methods other than cash or checks, you’ll need to work with an MSP. MSPs offer the features and functionality to process credit cards online for a small businesses and other payment services. There are different types of MSPs for merchants to choose from, including merchant account providers, payment gateways, and payment services providers.
- Merchant Account Provider – A merchant account is a business bank account that allows your business to accept debit and credit cards face-to-face or online. A merchant account involves you (the merchant), your bank (the merchant bank) and your payment processor that manages the settlement of credit card and debit card transactions.
- Payment Gateway Provider – A payment gateway acts as a virtual credit and debit card reader. It transfers data between your payment terminal, website, or mobile device – to the payment processor that continues processing the transaction until the money reaches its final destination. There are additional considerations for selecting a payment gateway for international card payments. Although large credit card schemes like Visa and Mastercard are used globally, customer cards can be limited to domestic transactions or customers may prefer to use local card schemes in some countries.
- Payment Services Providers (PSPs) – A payment services provider (PSP), or payment provider, gives you the ability to accept online payments, including credit cards, debit cards, cash cards and ewallets, without setting up a separate merchant account with a bank. Instead, your PSP acts as a financial umbrella, letting each merchant have their own sub-account. PSPs put all their customers into a single account with subaccounts for each customer and keep you safe by assuming the financial risks of their client businesses.
Turn International Small Business Payments Into Your Growth Engine
Consumers today are more comfortable purchasing beyond their borders. Cross-border ecommerce is estimated at 22% of ecommerce shipments, a figure that’s even higher for certain countries and industries (Statista).
With this, small businesses have countless opportunities to grow their sales and profits overseas. Choosing the right payments partner can help bring markets closer. Offer customers the payment methods they recognize and secure the process by adhering to compliance and regulatory requirements.
The best international small business payment providers can exponentially grow your global customer base, reduce cart abandonment and protect your business too. Reaching millions of new consumers located internationally to develop your customer base and grow globally.
Digital Commerce 360. “Global online sales reach nearly $4.29 trillion in 2020.” April 2021, https://www.digitalcommerce360.com/article/global-ecommerce-sales/.
FuturePay, The Big Ticket, What’s Stopping Shoppers? https://futurepay.com/wp-content/uploads/2017/01/FuturePay-The-Big-Ticket-Report-2017-1.pdf
Statista. Cross-Border eCommerce. https://www.statista.com/statistics/867991/cross-border-e-commerce-share-world/
Photo by Karolina Grabowska for Pexels
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