Voice of the Industry

Online payments post-Brexit: navigating cross-border challenges in ecommerce

Thursday 18 March 2021 08:04 CET | Editor: Anda Kania | Voice of the industry

Brexit has brought new restrictions to sales in and out of the UK including some additional intra-regional fees. Here are a few tips from Worldline’s experts on what merchants can do with the new measures both in the UK and EU

There has been a boom in ecommerce worldwide over the last year, bringing plenty of growth opportunities on the horizon for online merchants willing to move cross-border. At Worldline, we have been helping both small and large merchants to optimise the opportunities ahead and help them with their cross-border growth. But with Brexit come new challenges for ecommerce merchants both in the UK and EU.

What has been the impact of Brexit on ecommerce? Grégoire Hivert de Termont, Country Head, France, and Ahron Van Drunen, Pricing Performance and Optimization Manager, Merchant Services explain key things online merchants need to know post-Brexit. 

Grégoire Hivert de Termont

‘As of 1st January, EU merchants selling to the UK have to add a further 20% charge to goods up to GBP 135 (≈ EUR 156) to account for VAT charged at the point of sale.

Meanwhile, businesses located in the UK that import or export goods from the EU will need to have an Economic Operator Registration and Identification (EORI) number. They can source this by working closely with their government.’

 

Existing interchange fees will also be revised, in addition to the various customs and VAT costs - more specifically for transactions originating from the UK and processed in the EEA.

Ahron Van Drunen

'Mastercard has announced that it will be increasing the intra-regional interchange fees more than fivefold for online EU purchases made by British cardholders. From October 2021, fees will rise from 0.2% for debit cards and 0.3% for credit cards to 1.15% and 1.5%, respectively. These fees will align with the already existing inter-regional interchange fee caps for EU merchants.

Retailers across the EU should not write-off UK operations due to increased costs of transaction processing and logistics. We recommend evaluating the impact of these fee changes on the transaction mix, and reviewing whether alternative strategies, such as localization tactics and like-for-like proceedings, could mitigate the impact of these cost increases.'

Considering the above, here are a few tips merchants can consider helping overcome these challenges. 

1. Localisation of payment methods is key

Based on Worldline’s data, one out of every five transactions never reach completion, often because the payment options customers would rather use aren’t offered at the checkout.  In the UK, for example, card payments and PayPal are preferred, but Buy Now, Pay Later options are also on the rise. Meanwhile, in the EU, Dutch consumers value iDEAL bank transfers when making their online purchases. In Belgium and France, shoppers opt for local card schemes, such as Bancontact and Cartes Bancaires. 

Working with an international payment provider, merchants can then introduce these options to their checkout and expect to see a positive increase in conversion rates.

 2. Check your chargeback mitigation process

Chargebacks could cost the average merchant 1.47% of their overall revenue. Therefore, it is important to put measures in place that will prevent unnecessary claims during this Brexit teething period. To avoid chargebacks, make sure you:

  • openly communicate how Brexit is expected to impact cross-border online shopping;
  • provide tracking information to keep customers up to date with delivery updates;
  • respond quickly to purchase queries;
  • list terms and conditions clearly on their website, including details about the refund process. 

3. Take advantage of the one-way charge system

If they haven’t already, larger merchants can also consider capitalising on the fact that the fees only occur in one direction by setting up an entity within the UK. By doing this, businesses can avoid fees altogether. But, of course, this would require a large upfront investment.   

In addition, card-present rates remain the same. So, if shoppers decide to pick up the item and pay in-store, lower fees will apply, namely 0.30% for credit cards and 0.20% for debit cards. This will only apply to large merchants with physical stores in the UK.

4. It’s still important to implement SCA

With all these changes coming into play, it’s important that merchants never lose sight of other looming regulations.  The most immediate of these being PSD2, which progressively came into force since January 2018, bringing the additional security measure, Strong Customer Authentication (SCA), with it. 

Habib Ansari, Country Head, UK

'SCA is essentially a balancing act between creating friction that minimises fraud risk, but not enough to lose customers.  SCA is an opportunity for growing businesses to innovate and have more control over their data, and working with a partner like Worldline can keep approval rates high during this transition.

Whether a merchant is UK-based or yet to comply in the EU, it’s important to seek SCA compliance sooner rather than later. Otherwise, they could see increased declines from European issuers, and it will eventually result in large fines due to non-compliance.'

5. Remember: you are not alone 

We understand that the ongoing changes caused by Brexit can be confusing. That’s why we act as more than a payments provider; we’re a partner – someone to provide a port of call for questions and explanations of payment rules, regulations, and fees as they unfold behind the scenes. 

How can we help?

At Worldline, our vision is firmly rooted in optimising a merchant’s online payment performance. We achieve this by continuously investing in our technology platform to secure the highest conversion rates. Plus our local presence across all major European countries and in the UK means we are always here to offer you the right level of support for your cross-border payment needs. 

We understand as a merchant you will have specific requirements depending on your circumstances. If you require more in-depth support with your cross border online payments processing for the months ahead, get in touch today.

About Worldline

Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry and #4 player worldwide. With its global reach and its commitment to innovation, Worldline is the technology partner of choice for merchants, banks and third-party acquirers as well as public transport operators, government agencies and industrial companies in all sectors. Powered by over 20,000 employees in more than 50 countries, Worldline provides its clients with sustainable, trusted and secure solutions across the payment value chain, fostering their business growth wherever they are. Services offered by Worldline in the areas of Merchant Services; Terminals, Solutions & Services; Financial Services and Mobility & e-Transactional Services include domestic and cross-border commercial acquiring, both in-store and online, highly-secure payment transaction processing, a broad portfolio of payment terminals as well as e-ticketing and digital services in the industrial environment. In 2020 Worldline generated a proforma revenue of 4.8 billion euros. 


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Keywords: Worldline, Brexit, ecommerce, local payment method, SCA
Categories: Payments & Commerce | Online Payments
Countries: Europe
This article is part of category

Payments & Commerce