How to Accept International Payments Online

The ability to accept international payments online opens up a global marketplace and countless opportunities for online businesses. For online businesses operating exclusively through large online marketplaces, such as Amazon or eBay, international transactions are enabled by the marketplace platforms themselves. However, many online businesses prefer not to limit their sales channels to just one online marketplace – online businesses often incorporate alternative sales channels, including their own business website, to make sales to consumers. Online businesses looking to maximize their sales potential have many online payment processing options to choose from, although, a business should carefully consider the way in which international payments are accepted.

International Merchant Accounts

Setting up and using an international merchant account, also known as an “offshore merchant account,” is just one means for completing international transactions online. An international merchant account is a specific type of bank account created in a foreign country. Your merchant account temporarily holds the funds you capture from the sale of your goods via credit and debit card and, after about two business days, the funds are then transferred from your international merchant account to your domestic business account.

International merchant accounts are great in one respect because they enable automatic payment processing, and often include features tailored towards small businesses, such as the ability to track payment trends. To accept online payments with an international merchant account, you simply pay an initial fee to cover any necessary software, create a merchant account linked to your business bank account, and then use HTML or Javascript to link your merchant account to your website or an online marketplace.

International merchant accounts also have their drawbacks. Because you must supply personal and financial information to set up your account, you may confront a risk of fraud or identity theft. Moreover, in the event of any serious problems or a legal dispute, the recourse is both difficult and limited because the matter must be settled internationally. As a result, international merchant accounts may get the job down, but they often prove a last resort for businesses looking for international processing solutions.

Online Payment Aggregators

More common than international merchant accounts is the use of an online payment aggregator, such as PayPal. Payment aggregators allow businesses to avoid the need to set up an international merchant account by processing transactions through the aggregator’s merchant account on behalf of other companies. One benefit to using a payment aggregator is that they often enable users to collect payments in hundreds of different countries in many types of currencies. Additionally, payments are relatively secure and easy to track.

The high cost of using an aggregator is the biggest drawback for most businesses. Many online payment aggregators charge a flat fee for each transaction, plus around three percent of the transaction amount.  Businesses should also generally expect some additional delays with respect to accessing funds through an online payment aggregator (as opposed to an international merchant account), and understand that many online payment aggregators have unfavorable policies on chargebacks and disputes.

These are all important considerations to keep in mind in deciding how to structure international processing for your business.