The Top 3 Cross-Border Payment Methods
I just had an interview with one of our merchants from Nigeria. He’s doing a dropshipping business, selling products worldwide. He is currently facing a payment issue and needs to find an effective way to handle multi-currency payments.
If you manage or are thinking of starting your own online business, you will probably encounter the same challenges as this client in managing cross-border transactions. The ability to provide an efficient payment flow may significantly impact the user experience and customer retention.
In this article, we will go through the advantages and disadvantages of various payment processing alternatives to help you make the best business decisions.
1. Credit and debit cards
Credit card payments are the most commonly used payment method in consumer-to-business transactions because they are simple and secure. Credit card payments are at the top of many nations’ list of cross-border payment choices. This means that your customers expect to be able to use their credit cards to make transactions. If you do not give them this option, they will most likely go elsewhere.
On the other hand, credit cards come with some drawbacks. Most credit card issuers charge a cost of 2–4% of the payment amount, plus a fee for cross-border payments, plus a fee for currency conversion. Accepting credit and debit cards also increases the risk of fraud and other security issues. Because credit cards are easily stolen, accepting them raises the risk of fraudulent card use.
2. Bank transfers
Here is how the wire transfer works. It uses accounts at each bank to send an instruction to debit an account in Bank A and credit an account in Bank B. Because the funds are transmitted through a credit union or bank, it is a great alternative for retailers who need to pay their international suppliers because it is a secure and trustworthy payment method.
Unfortunately, moving money over the world by bank transfer usually comes with a fee. Furthermore, because not all banks have direct contact with one another, they must process the transaction through an intermediary or a correspondent banking network.
3. Digital payments
Digital wallets are seeing an increase in eCommerce-related transactions, particularly in countries where credit cards and bank accounts are still relatively uncommon. Digital payments may offer lower rates and faster fund clearance. They are very easy to use, particularly when transferring funds from one financial system to another. Digital payment platforms that integrate with accounting and bookkeeping software make it easy for businesses to file tax returns, track expenses and income, and comply with local financial regulations.
Currently, there are several new digital payment options available in the market, such as e-wallets, online payment solutions, and buy now pay later (BNPL) services such as PayPal, Klarna, and iDEAL.
The downside of digital payments is that some are only available to specific countries, currencies, or groupings of countries. For example, the merchant told me that in Nigeria PayPal can only send money but doesn’t support receiving money. As a result, they need to find other alternatives. In addition, different digital payment systems offer varying levels of security, so merchants need to do their homework before settling on a service provider.
Cross-border payment methods with Shoplazza
As a SaaS pioneer, Shoplazza is dedicated to helping our clients globalize and scale up their online presence with our technology and ecosystem advantages. To help our merchants collect payments more conveniently, Shoplazza offers various payment methods that sellers can plug into their stores, depending on location, currencies, and specific needs. For example, Shoplazza is now linked with Payoneer Checkout, allowing merchants to accept payments via “Payoneer” by integrating Payoneer Checkout into their checkout page. This allows merchants to improve their consumers’ purchasing experiences and allows merchants to begin accepting payments from customers all around the world.
If you consider starting your online business, sign up for Shoplazza today and enjoy a free trial for 7 days!
