Napoleon Bonapartre once described the British as a nation of shopkeepers (although given our keep topic colonial exploits at the time, he was perhaps kind not to refer to us a nation of shoplifters!) and in many ways this remains quite true in 2022. Despite a relatively humble population size, the UK boasts the 4th largest e-commerce market in the world which is only getting larger.
And moreover, a good proportion of the UK’s eCommerce stores are boutique, DIY, and cottage industries operated either as start-up businesses or as ‘side hustles’. Put simply we still just love to sell our wares whether domestically or internationally.
Whereas the traditional corner shop or high street store limited the seller’s clientele base to whoever happened to be passing by, an online store presents proprietors with the opportunity to sell to the whole world. Global trade and access to an international market offer many opportunities but also present a myriad of challenges including export fees and postal costs – not to mention the issue of getting paid internationally which we will look at today.
Any online, e-commerce store that operates via a platform such as Amazon or Etsy, has effectively outsourced this issue (and pays a hefty commission for this) as all payments are made via the site’s own payment gateways. However, a business or seller who wishes to be able to sell their products or services directly via their own website needs to think about how their customers will pay them. The solution is to install and set up a payment Gateway that facilitates both domestic and international payments.
We will firstly take a look at how this works and will then take a look at 3 of the most popular payment gateways for eCommerce.
Any business that operates in the UK lives and breathes British pounds. We pay our suppliers in GBP, pay our staff in GBP and pay our taxes in GBP. As such we value and price our goods or services in GBP too.
However, when a customer from France, the US or Dubai lands on our website, they want to know how much our wares are going to cost in their own, local currency. Of course, it is simply not possible, practical or wise for a business to set bespoke prices for every currency on earth and as such a business instead needs to rely on a payment gateway that offers dynamic currency conversion.
Dynamic Currency Conversion (DCC) works like this;
- The shopper clicks the checkout option on your site, and then presents their payment card at the payment terminal.
- The terminal recognizes where the shoppers card was issued and the relevant currency
- Where the shopper’s currency differs from the seller’s stated currency, the terminal offers the shopper the chance to choose between paying in the local currency or their own currency.
- Where a shopper accepts the DCC by choosing their own currency, foreign-exchange conversion is then applied to the transaction.
DCC offers a seamless and efficient service that bolsters international trade. However, relying on the DCC function of a payment gateway does hand over a lot of control as it allows the payment gateway provider to set their own foreign exchange rates. Most payment gateway providers will mark foreign exchange rates up in order to make a profit on the transaction. However in most cases it will be the buyer, rather than the seller who bears the brunt of the DCC markup – sellers can usually count on receiving the full stated amount in GBP minus of course, the transaction fee itself.
In case it needs an introduction, Paypal is widely considered as the original online payment gateway and truly revolutionised the marketplace over the last few decades.
The big advantages of using Paypal are its ubiquitousness (it’s available in 203 countries, and pretty much everyone already has an account) and the reputational security it offers. It is also easy to install on both WordPress and Wix hosted websites.
In terms of handling international payments though, Paypal does offer DCC is known to charge both buyers and sellers fees that add up. They also set their own foreign currency exchange rates which they set to their own benefit at the expense of buyers – as such using Paypal may deter some customers from completing the checkout process.
Often touted as a potential rival to Paypal’s dominance, Stripe was launched in 2010 and is already valued at $20 billion.
Stripe is able to offer payment options in 135 global currencies and also gives payees the option of paying in their own local currency. However, this means that Stripe then handles the currency exchange rates and like Paypal, sets the rates at levels that favour them over both the buyer and the seller. Stripes international payment handling fees range between 1.4% and 2.99% placing them on a par with Paypal.
Taking its name from the Surinamese expression for “start all over again”, Adyen was founded in 2006 with the mission of re-envisioning online payments.
Whilst perhaps not as well known as either Paypal or Stripe, Adyen has won the admiration of a lot of online business owners on account of its functionality. Its transaction fees vary quite a lot depending on the payment method although the rates it offers on Maestro, Mastercard, and Visa are between 0.3 and 2% making them lower than Paypal and Stripe in most cases.
Like Paypal and Stripe, Adyen also applies a mark upon DCC. However, its foreign exchange rates have been found to be better than those offered by both Paypal and Stripe.
As we have seen, e-Commerce in the UK is well and truly booming despite the challenges it poses. There are many different payment gateways out there to help a business process its payment and the best thing about it, is that a business is free to install and use as many of them as it likes which ultimately empowers their customers with the freedom of choice to use whichever payment method suits them.
About Logicsofts: Logicsofts is a IT service provider doing a range of services like professional website design and SEO service, Mobile Apps development, Digital marketing, IT consultancy, website management support, cloud services, etc at astoundingly affordable prices. Speak to our specialist for more information: +4402079935898
Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which plays a vital role in any business to grow and mutate as per the data results.
Follow me on LinkedIn, Facebook and Instagram