CNP Expo: Go East Young Man
May 21, 2015
Accepting payments in new markets is essential for growth in e-commerce, and many merchants are looking toward China and India for new customers. However, there are complex decisions that need to be made when entering a new market. And those decisions are daunting for merchants, according to Raymond Qu, CEO of Geoswift, but the few who make the leap will reap the rewards, especially in China.
“I think Americans are scared to go into a new market, because there are a lot of unknowns,” Qu said. “But I think that within the next few years, the China market will be 70 percent of their volume.”
Determining whether to process cross-border presenting in U.S. dollars, cross-border presenting in their native currency or setting up a local entity to process payments locally is the most significant decision that must be made for merchants considering China, according to LaTrisha Cantella, senior director of global payments and fraud detection for GoDaddy.
“We considered tax implications and local payment options for both native and cross-border and we finally decided to process cross-border, presenting in their currency,” she said
Cantella advised companies thinking about domiciling in China to be patient. The process of obtaining a local sponsor can take 12-18 months. As far as payment methods, she said, offering Alipay is a must.
In the less developed country of India, panelists disagreed whether processing cross-border or establishing an entity in the country was a better option.
“You need a local entity to process local cards, but not for net banking cards or traditional credit cards, as long as you have an Indian bank account and work with government entities to be compliant,” said Bharathi Ramavarjula, payments partnerships executive for Facebook. “We agree that you get a higher lift when processing locally, but, because credit cards are not as prevalent, we have found that we have success working with banks and debit networks to continue to increase debit authorizations.”
Cantrella, on the other hand, said GoDaddy’s experience has been that Indian consumers prefer to buy from Indian companies, so the best option is to process locally in India and to have a local call center. She said the company went from 60 percent approval rate to 90 percent approval once they started processing transactions natively.