By Tricia Lines Hill, First Atlantic Commerce, Bermuda
A growing number of eCommerce merchants are looking to expand into foreign markets, but growing from a domestic online business to a global one often sends panic across the top-level of an organization.
Merchants looking to expand into international waters not only need to adapt to the culture and their buying habits; they also need to accept multiple currency credit card transactions from their respective markets to satisfy their customers’ currency choices.
As such, globally expanding merchants will require international payment solutions that can offer multi-currency presentment to the merchants’ customers, and multi- currency settlement to offset any foreign exchange loss incurred by the merchants. (Like-for-like multi-currency solutions are relatively rare in the industry, with many merchants signing up for payment services that require the more expensive, and technically cumbersome, dynamic currency conversion to get to their desired ‘end’ settlement currency.)
Keep in mind also that the free movement of people, goods and capital in the context of a global economy and especially, within the European Union, continues to encourage competition in business, and affords global merchants the ability to set up in countries with the lowest prices and advantageous tax rates.
International payment solutions therefore, will need to fit with the merchant’s corporate strategy and provide the type of sophisticated, integrated payment processing solutions needed to aid in their global expansion.
In addition, as merchants grow their business, they will need to further manage online payment fraud and mitigate their chargeback risk through fraud control technologies.
Payer authentication systems provide issuing banks with the ability to authenticate cardholders during an online purchase, which reduces the likelihood of fraudulent use of payment cards and improves transaction performance. This ultimately benefits merchants, consumers and bank acquirers -- not just financially, but in terms of service levels, building loyalty and encouraging repeat orders.
It is a known fact that the Card Association 3-D Secure™ payer authentication services known as Verified by VISA and MasterCard SecureCode™ (processes that enable issuing banks to verify that the actual cardholder is the person executing an Internet purchase) provide for instant fraud reduction.
Yet, according to Cybersource’s UK Online Fraud report 2007, only 49% of retailers are using 3-D Secure™ services, which transfers liability for certain chargebacks to the issuing bank rather than to the merchant.
The same study
indicated that online retailers continue to
rely on the same basic tools to manage fraud
with more than 70% using Address Verification
(AVS) and Card Verification Number (CVN) as
their primary means of fraud screening.
Using AVS and CVN (which includes CVV2 for VISA and CVC2 for MasterCard) is an important tool in mitigating risk. In fact, it should be noted that AVS technology is not only useful for North American based merchants; it is a valuable tool for global merchants that do business in North America as they can employ AVS to assist with mitigating US and Canadian cardholder fraud. They can also monitor these customers should they want to block them from processing.
But AVS and CVN must be complemented by other fraud detection technologies to effectively mitigate fraud and chargebacks for merchant online businesses.
3-D Secure is currently the single most important fraud-screening tool that should be implemented by merchants.
And to strengthen the argument, while Verified by VISA (VBV) liability shift has always been guaranteed for ‘attempted’ transaction authentication -- even if the cardholder is not enrolled in Verified by VISA with their bank issuer, MasterCard SecureCode did not cover the ‘attempts’ liability shift. But in November, 2006, MasterCard International announced a global inter-regional merchant liability shift programme change, which covers all international SecureCode transactions under the merchant ‘attempts’ liability shift.
All merchants then benefit from worldwide chargeback liability shift on disputed payment transactions if they are enrolled in Verified by VISA and MasterCard SecureCode™ and have made an attempt to authenticate the cardholder prior to payment authorization.
IP geolocation is also a very good addition to a merchant’s fraud screening portfolio. Used to identify the geographic origin of an order based on the IP address of the customer’s browser, geolocation data provides specific information about the IP address associated with the originating browser transaction request such as the country, city, region, zip code, and domain name.
Not only can it assist merchants in ascertaining the geographic location of their customers and thus likelihood of fraud (as certain countries are more notorious for fraud than others), it allows the merchants to use the information for marketing purposes or advertising relevant product information according to that geographic region.
an international payment solutions provider
Merchants must choose wisely when looking to work with a payment solutions provider. Experience in the international market, reliable payment gateway services, payer authentication offerings and other fraud detection tools are paramount.
Depending on their needs, merchants should also look for other value-adds from their payment processing providers including personal service, ease of integration, and trouble-free access to settlement funds.
Merchants should give careful consideration to the corporate framework of any payment solution. For example, many ‘offshore payment solutions’ are dependent on the ‘aggregator’ model, whereby businesses do not have the ability to actually control their settlement funds from the time those monies are processed and captured.
Solutions that provide for direct merchant accounts with major banking institutions, however, are the ones that will likely provide greater expansion flexibility and control. And merchants who gain approval for credit card processing settlement accounts often go on to enjoy much larger relationships with their overseas banks, most of which provide a comprehensive portfolio of other banking services.
Single integration with a payment gateway for multiple bank access is also key and not often found in the industry. It makes sense for large merchants to send their internet payment transactions via one ‘gateway’ with settlement accounts across various banks and jurisdictions so that if there are, for example, ISP issues to a given bank and/or jurisdiction, the ‘volume’ can temporarily and easily be shifted to another acquirer on the switch.
Merchants should keep this in mind when exploring their options as they will likely look to multiple banks in multiple jurisdictions across the globe as they grow their business -- both for redundancy purposes and corporate strategy planning.
FAC, a leading offshore payment solutions provider, offers international, full multi-currency payment services and Verified by VISA and MasterCard® SecureCode™ payment solutions featuring chargeback liability shift for EUROs, US Dollars, CDN Dollars, Pounds Sterling, Hong Kong Dollars, Yen, Singapore Dollars, South African Rand, and Australian Dollars.
Based on the Card Associations' 3-D Secure™ technology, cGate®SecureVerify, FAC's PCI compliant service for Verified By Visa and MasterCard® SecureCode™, provides Internet merchants and bank acquirers with protection from fraudulent transactions, chargebacks and unauthorized payments made through a web site.
FAC also works closely with banks and merchants to ensure all parties have a high level of awareness regarding potential fraud. Several fraud detection devices are available though FAC, and the merchant can even employ fraud screening methods such as AVS and IP Geolocation without having to move from their current gateway providers.
Our AV-yeS pre-authentication and IP Geolocation services can be used as part of our gateway service offerings or as an addition to the merchant’s existing processing structure. They are easy applications and the merchant can be up and running within 48 hours.
Payment solution providers like FAC are a perfect fit for merchants looking for a competitive edge, while growing their business. We have the experience needed to leverage the benefits of a global environment with multi-currency, multi-jurisdictional settlement, as well as 24x7 technical support, and fast and easy integration.
But also, we provide a truly personalized service -- and that is a rare commodity in this business.