Scaling a business into international marketplaces is exciting — until you see the foreign transaction fees add up. Avoid them by working with a global payments partner.
You have an idea for a business, you make it happen, and then watch as the sales come in. For any online seller, scaling your eCommerce business to the next level is an exciting moment. With many online retailers, that next big step means taking your transactions to the international market. Whether you want to work with more affordable suppliers or tap into a new customer market, growing your eCommerce business on a global level is an ideal way to increase sales and profit. But it’s also a move that can come with a number of hidden fees.
If you’re ready to scale your eCommerce business into the international market, start off on the right foot by focusing on the following tips.
Entering a foreign market means dealing with foreign exchange. Foreign exchange — also known as FX or forex — is the conversion of one currency into another, like converting Chinese yuan (¥) into U.S. dollars ($). During a foreign exchange transaction, you need to consider the current exchange rate. This is how much one currency exchanges for another. For example, $1 U.S. dollar might be worth ¥6.74 Chinese yuan. Exchange rates change by the minute, so it’s important to keep an eye on rates and make sure you adjust your pricing structure accordingly periodically.
When banks transfer or receive money from different countries, they typically charge a foreign transaction fee. While they can climb as high as 5%, a typical foreign transaction fee comes at a rate of 3%. Though this might feel like a cost that comes with scaling your business to international markets, these fees can eat away at your profit margins over time. Additionally, fees aren’t always immediately obvious. When it comes to your sales, you don’t want to be left in the dark about how much you’re really making on any given transaction.
Small eCommerce businesses looking to expand into foreign markets should consider offering, advertising, and pricing their products in that market’s local currency. Why? Because it’s what shoppers prefer. In fact, 76% of shoppers look for sites that price all products in their home currency. A survey by E4X found that pricing in local currency — or providing a currency conversion on your site — boosts eCommerce sales. Retailers who only provide product prices in one currency may be missing out considerably on sales. While it’s an important step, keep in mind that some payment platforms charge currency conversion fees any time a payment is captured in a different currency than yours — fees that can quickly add up.
When it’s time to grow your business in international markets, start off with a global payments partner to save you time, money, and stress. LianLian Global, for example, allows you to exchange funds and convert multiple currencies at a fraction of the cost of traditional banking methods. With no surprise fees, this type of cross-border wallet allows you to get paid or convert USD, CNY, EUR, DBP, PLN and, HKD to streamline funds and payments in any international market. Additionally, with this approach, you’ll have full transparency throughout the process. Know exactly when payments are accepted, processed, and received.
Expanding into foreign markets is one of the best ways your small eCommerce businesses can scale — as long as you don’t get hurt by neverending international fees. By doing your homework and working with a cross-border payments partner, you can set yourself up for success from your very first international sale.
Take your business international with LianLian Global today.
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