Reasons to Accept Foreign Currency Transactions
Transforming your business into an international ecommerce shop means you can expand your customer reach, increase sales, and improve customer relationships. Shoppers today are increasingly comfortable with buying from ecommerce sites based outside of their home countries. However, when they purchase from foreign businesses, they want secure international transactions without a foreign transaction fee.
You can convert more customers when you give them options to pay in their native currencies, compared to showing them a price in a currency they're not familiar with, or tacking on a foreign transaction fee that increases the price of the product.
If your ecommerce business doesn't take foreign transactions, you could be missing out on valuable business. Learn how having an international ecommerce payment gateway can be a big help, both for your business sales and for increasing trust with customers.
Global Ecommerce Is Growing
More shoppers are going online to buy than ever before. A 2018 report by Forbes shows global ecommerce is expected to be the largest retail channel in the world by 2021, higher than retail sales at physical places like grocery stores and apparel retailers.
Business Insider reports almost 40 percent of global ecommerce traffic comes from search engines. If you sell online, you should look at your referral data to determine where users are coming from (search engines, social media, etc.), and which countries they live in. If a significant portion of visitors are finding your business through search, and some live outside your home country, you may be able to increase conversions by making international transactions easier for online shoppers.
Businesses based in the United States have huge potential for transacting global sales. A report by Business.com shows the U.S. is the second-largest ecommerce country in the world, second only to China. Annual online sales in 2017 averaged $340 billion, accounting for a total global ecommerce share of 7.5 percent.
Because the U.S. has such a huge ecommerce presence, international shoppers are likely to trust U.S.-based ecommerce channels. If you run your business in the U.S. and sell online, you're already at an advantage for capturing international transactions.
Global Security Standards Make Customers Feel Secure
Ecommerce sites may be based in different countries, but security and claim standards are similar for many businesses. For example, 29 countries signed Electronic Commerce: Selling Internationally a Guide for Business by the Federal Trade Commission, including Australia and New Zealand, countries in Europe, and countries in Asia. Guidelines include:
- Businesses use fair advertising and marketing practices.
- Businesses disclose full information about terms, conditions, and costs of transactions.
- Businesses use secure methods for online payments and protect consumer privacy during ecommerce transactions.
In 2018, the General Data Protection Regulation (GDPR) went into effect. GDPR standards ensure that businesses that sell to customers in Europe protect customer data, adding an extra layer of security for ecommerce businesses selling to European customers.
Standards and practices like these enhance the security of purchasing from other countries. Nielsen reports by 2019, 12 percent of global sales are projected to be through online channels, and that 57 percent of consumers have made a purchase overseas in the past six months.
However, conversions are dependent on user-friendliness, including foreign currency transactions. Conversion potential is lost when one's own currency is not an option for payment. A report by Marketwire shows more than 92 percent of consumers prefer to shop and make purchases on sites that price in their local currency. One-third of consumers are likely to abandon a purchase if pricing is in U.S. dollars only.
More Advantages to Offering Native Currencies
When your business doesn't accept foreign currency transactions, you run into some risks. In addition to customers abandoning a purchase altogether, some customers may make the purchase, but then dispute it later if they're confused by a charge. Even if a transaction goes through smoothly, fluctuating exchange rates may actually diminish the value of your sale and hurt your profits.
You should accept foreign transaction in native currencies because:
- You eliminate a foreign transaction fee for customers.
- You can improve customer loyalty with an easy and simple payment process.
- You can reduce chargebacks, since payments are clear.
- You can differentiate your business from competitors that don't accept native currencies.
- You ensure accurate pricing every time.
Presenting payment options in a native currency makes customers feel comfortable and secure during the transaction. If your ecommerce store is experiencing a high bounce rate at the payment page, that's a sign your customers are not confident in the payment processing you offer.
Enable Foreign Transactions for Your Business
If your business sells to customers in other countries, simplify your payment processing with international transactions. Humboldt's international ecommerce payment processing enables you to accept nearly every international currency available. Contact us for a consultation.