The future of cross-border payments – Digital River's approach

When entering new markets, local know-how plays a crucial role in cross-border commerce, so what should businesses look out for when they decide to expand their footprints overseas? 

It’s important to understand the sheer complexity of cross-border expansion when determining your strategy to enter new markets. Brands who take on a ‘do it yourself’ approach find that, in order to offer the breadth and depth of payment types, fulfilment solutions, fraud solutions, banking relationships, and more that must be in place to sell across the globe, they need to contract with, integrate with, operate, and manage at least 8-15 separate service providers. 

Back-office operational challenges – such as reconciling all payment types, invoicing between customers and various selling entities, and managing a rapidly evolving tax and regulatory landscape that changes with each new market you sell into – represent the kind of unquantifiable operational risks that businesses take on when they try to piece together a solution for global online selling on their own. 

Brands can simplify these complexities by finding a partner who can take on those risks and help to grow their cross-border revenue quickly, easily, and cost-effectively, with a single solution.

What are some of the biggest challenges brands face in cross-border payment processing? How can they overcome these challenges? 

How you accept, process, reconcile, and manage payments – especially on a global scale – has a direct impact on conversions and revenue. Payment preferences vary from country to country and even region to region. Customers expect currencies and payment methods to be tailored to their preferences, and they want localised, seamless, and secure checkout experiences. Plus, it’s crucial to maintain PCI, PSD2, and SOC compliance to protect your shoppers and your brand. Brands selling across borders must have the right back-office technology in place to handle all these complexities. 

Using an online platform that allows for local payment processing can increase your authorisation rates and lower global merchant processing fees by leveraging already-established local entities and expansive acquiring networks. With the right partner, you can gain instant access to leading intelligent transaction routing technologies and redundant local acquirers – saving you significant time and expense while boosting your global revenue. 

What are the key features and solutions that boost authorisation rates while keeping transactions secure and seamless? 

Brands need to be equipped with the right billing optimisation toolkit – including strategies like dynamic transaction routing, retry logic, and machine learning – if they want to boost authorisation rates, increase customer satisfaction and engagement, and optimise revenue in the long run. These tactics allow merchants to automatically route payments in a way that maximises the likelihood of authorisation and reattempt payments after they have been declined by choosing the optimal time and date to improve the chance of success. 

Mitigating risk on a global scale and ensuring secure ecommerce experiences require best-in-class fraud protection technologies. To get the best of both worlds, look for a two-pronged solution that combines the power of dedicated fraud experts to review flagged transactions and a customisable, flexible fraud prevention engine. Machine learning can be used to analyse data from millions of online transactions around the world, and powerful algorithms that differentiate between legitimate customers and fraudsters can protect your brand against fraud attempts, low acceptance rates, and lost revenue. 

Brexit changes affect both UK-based merchants selling cross-border as well as international businesses operating in the country. What areas of ecommerce have been most impacted by this? 

Tax management has been one of the most challenging complexities coming out of the post-Brexit trade agreement. There are new tax and duties requirements when selling into the UK, and VAT tax rules on cross-border shipping are constantly changing. Previously, shoppers were responsible for paying taxes on their ecommerce orders. Now, as countries continue to evolve the way they collect taxes, merchants are responsible for VAT registrations and paying taxes on low-value orders – and the thresholds for determining what is a low-value order varies by country. 

Taxes aren’t the only challenging aspect: shipments between the UK and EU member countries are subject to new customs clearing rules, causing delays in shipping. Interchange fees for accepting debit and credit cards are increasing, forcing brands to rethink pricing strategies. For D2C brands, the biggest challenge lies in keeping up with these ongoing changes and making sure back-office systems are set up to handle them successfully.

What is Digital River’s approach to optimising authorisations with local processing for cross-border transactions, ultimately helping merchants maximise revenue? 

This interview was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About Jacquelyn Kyle

Jacquelyn Kyle is currently Senior Director of Strategy and Corporate Development for Digital River. Prior to joining Digital River, Jacquelyn was a Strategy and M&A leader within Deloitte Consulting, developing and executing global acquisition strategies for marquee clients. Prior to Deloitte, she was VP of Corporate Development for UnitedHealth Group Community & State. Jacquelyn holds an MBA from the University of Minnesota, Carlson School of Management, and a Bachelor of Science in Finance from the University of Illinois, Urbana-Champaign.

About Digital River

With more than 25 years of experience, Digital River has mastered global commerce. An industry disrupter from the start, our Global Seller Services simplify global commerce expansion to help companies of all sizes grow their revenue by offering shoppers a localised buying experience in OVER 200 DESTINATIONS worldwide. Using our flexible APIs that combine payments, tax, fraud, and compliance into a single integrated solution, brands INCREASE CONVERSIONS, turning browsers into buyers as they virtually sell anything to anyone, anywhere in the world. The CHOSEN PARTNER of more than 3,500 global brands across the Americas, Europe, and Asia, Digital River is global commerce simplified.