Cross-Border e-Commerce: Top 5 Payment Related Challenges

What is cross-border E-commerce?

Cross-border e-commerce refers to the buying and selling of goods or services between countries. In cross-border e-commerce, transactions occur across international borders, involving consumers and businesses from different countries. Consumers can purchase products from overseas retailers or sellers, often facilitated by online marketplaces or dedicated e-commerce websites.

When trading overseas, be ready to face challenges in managing international shipping, customs, taxes and payments. Once you've streamlined payment processing and currency conversion, upholding trust through secure online transactions and transparent communication regarding shipping details and fees becomes crucial.

For your business to succeed, you need to consider regulatory compliance and legal standards where your business is registered and in all your target markets.

Selling your products online and reaching customers beyond borders, not just in one country, entails various challenges.

The primary payment-related challenges in cross-border e-commerce that you need to be aware of:

1. Local Markets and Payment Methods

The hurdle in expanding across borders lies in payment methods. While business objectives and online sales may have a global reach, payments remain intricately tied to local preferences. Local payment methods worldwide exceed the number of trading days in a year.

Diverse local or alternative payment methods encompass a range, spanning from bank transfers and cards to e-wallets, mobile wallets, cash-based payments, and buy-now-pay-later (BNPL) options. Given that local payment methods often serve as the primary mode of payment in numerous markets, it's crucial to distinguish which ones align most effectively with your business and cater to your customers.

2. Transactions: Currency, Fees and Payments

If you operate in multiple markets, it's essential to have a comprehensive understanding of the entire financial flow within your business, encompassing both incoming and outgoing payments. This enables you to resolve issues and anticipate and address them beforehand.

Currency: Dealing with currency poses a significant challenge for brands engaged in international sales.

Fees: If you use only one Payment-Service-Provider (PSP), you'll be charged the same fee for every payment, no matter how much it is. This fee can add up fast, especially if you're a small business owner.

Payments: Expanding internationally can complicate payment processes. Imagine this: incorporating 12 different payment partners into your technology infrastructure results in managing 12 distinct contracts, integrations, and project plans – all before receiving any payment.

With 12 unique settlement dates and the need to establish processing and settlement pairs for each accepted local currency, the payment process can swiftly become cumbersome and inefficient.

3. Security: Data Protection

Fraud poses a growing risk in any business market, but there are certain markets where the threat of both unintentional and intentional fraud significantly escalates, presenting a considerable .

While complete elimination of the risk is unrealistic, considering the safeguards in place is crucial to minimizing its impact. This must be weighed against the potential consequences of false declines in customer experience.

Navigating this balancing act is tricky. Decision-making should take into account various factors, encompassing the distinct risk profiles of each market, your sales volume, and your market ambitions. Access to detailed data on payment flows is essential for making well-informed decisions in this complex landscape.

4. Regulatory Compliance

The landscape of business, fraud, and regulations is, whether it's the implementation of Strong Customer Authentication in Europe, the diverse regulatory approach in the US, or the introduction of new e-commerce laws in China.

Keeping pace with these changes in a single market is already challenging, and this complexity amplifies as you expand into multiple markets. Violating regulations can lead to severe repercussions such as fines and penalties or even more dire consequences.

5. Logistics Challenges: Supply Chain, Shipping, Returns, and Customs Clearance

 online businesses form partnerships with local shipping companies to handle deliveries within their own borders. If the idea of expanding your market globally has crossed your mind, consider broadening your collaboration to include additional shipping and logistics providers.

One of the most significant challenges for cross-border e-commerce is managing the complex and often varied customs clearance procedures in different countries. This process involves dealing with diverse regulations, tariffs, and documentation requirements, leading to potential delays, increased costs, and complications for e-commerce businesses as they seek to move goods across borders efficiently and facilitate payments to numerous partners within their supply chains.

How does DutyPlus address these challenges?

Say goodbye to shipping hassles with DutyPlus, where embedded finance serves you as the solution to streamline and automate cross-border payments, resulting in faster parcel transit times and reducing your carbon footprint by ensuring timely payment of duties and taxes, causing fewer returns.

Local Markets & Payment Methods: With global banking and other partner networks, DutyPlus enables businesses to integrate various localised payment methods.

Cost-efficient currency exchange: DutyPlus plays a crucial role in cross-border payments by offering the ability to make more efficient payments. Spend less money on currency exchange with our cost-effective FX rate that you can lock up on the current date and use in.

Security and Regulatory Compliance: Stay compliant and safeguard payment-related data with DutyPlus when it comes to cross-border payments, conducting Anti Money Laundering (AML) measures, and running KYC/KYB risk assessments on your business and your customers to avoid unnecessary fines.

Supply Chain: Streamline and automate payments across the supply chain and involved partners, resulting in faster parcel shipment, smoother customs processes and reduced returns.

Shipping: Fewer delays result in smoother shipment of parcels from point A to point B when crossing borders.

Reduced Carbon Footprint: Fewer returns and paid on-time duties and taxes, resulting in reduced unnecessary transportation.

Smooth Customs Clearance: The audit trail eliminates manual handling and errors to stay compliant and avoid fines through the ability to prove a single payment on each parcel in the manifest.

If you are interested in knowing more about how DutyPlus can be tailored to different industries in the supply chain, reach us by filling out the ‘contact us’ form, and one of our agents will get back to you shortly.

Empower your cross-border business with DutyPlus to manage complex payment flows, ensuring compliance, transparency and control. DutyPlus transforms a DDU into a DDP shipping.