Whenever a company decides to expand into a new jurisdiction, there are many factors that need to be considered, including the local laws, the potential customer base, logistics, and the payment methods that are available and preferred in the area. As receiving payment is, effectively, the reason why a company would expand into a country, it’s an aspect of international expansion which deserves to be one of the highest priorities and requires a lot of consideration.
While there are more globally adopted payment methods, such as the use of credit and debit cards, each country’s population will have their preferences. As online banking and alternative payment methods have developed a stronger foothold thanks to increased mobile and internet penetration, there is an increasing list of payment options that an online company can offer, but not all options are available in all jurisdictions.
So, when considering the payment methods to offer as well as which currencies to be made available for transactions, international online companies have a lot to consider.
Finding the balance between home-based customer needs and international customer needs
When expanding from a nation of origin into an international market, the two main aspects to consider for a company regarding payment methods are the currencies which can be used by customers and the different payment options. The company’s initial offering of both of these will most likely not be entirely applicable in a new country due to the vast array of different currencies and payment methods utilized across the world’s biggest markets.
Regarding the currencies that a company opts to accept payments in and advertizes their wares in, there are benefits from sticking with its native currency and offering the new market’s national currency. Customers will, naturally, prefer to make payments in their own currency as it gives them a better idea of the actual costs upfront, and most customers understand that international exchange rates can vary greatly and can incur a fee. That said, from a company standpoint, offering services and goods in their own native currency is by far the simplest method when it comes to accounting. There is a middle ground, in which goods and services are listed in the new country’s currency but are paid for at checkout in the company’s native currency, but some customers will be put off by the switch and associated fees at the final hurdle.
Using a company’s native or a new region’s currency after expansion can go either way, but the best way to get around any potential hiccups on this front is to offer payment methods that are recognized, safe, and trusted in the new country. There are more common payment methods and services used around the world, but each format has a varying degree of preference in each country. This is why researching the new area’s preferred methods is vital to any international expansion. The company needs to keep the methods that are popular with their original market as well as additional options that apply specifically to the new customers.
As the world advances and becomes more online-inclined, the use of the established methods, such as debit cards, credit cards, and bank transfers, are giving way to a new age of alternative payment methods. It was found that by the end of 2019, 55 percent of all online transactions will be made using alternate payment methods, which include the likes of PayPal, Neteller, Klarna, Alipay, and over 200 more globally. These methods are becoming more trusted than the basic method of inputting bank details due to the added securities offered, but still, they will not be the preferred methods in all countries.
A prime country to examine for this is the North American nation of Canada. It’s a buzzing market within a developed nation, and while its neighbor to the south is mainly targeted for international expansion, more and more companies are seeing the potential of expanding to Canada. However, Canada does offer many questions regarding payment solutions, with the nation having its own currency, the Canadian dollar, as well as its own payment method preferences. While MasterCard edges the market as the preferred credit card, payment methods such as Instadebit, Interac Online, PayPal, and prepaid cards and vouchers are also commonplace. So, how do companies tackle these hurdles to appease the Canadian audience as well as their original consumer base?
Example 1: 888 Casino Canada
888 Holding, the company that runs 888 Casino, is based in the Great British territory of Gibraltar. Its host jurisdiction uses the Gibraltar pound, which is pegged to the Great British pound and is valued equally. When expanding its offering of online casino games, such as live poker, keno, roulette, video poker, and baccarat to Canada, 888 Casino decided to stick with its games being played in its native currency but cater to an array of popular local payment methods while also offering clear means of currency conversion.
On the gaming website, users can see that currency conversion takes place via 888 Casino or the selected payment provider, as well as the exchange rate being clearly stated and available for confirmation before the deposit is finally approved. As for the payment methods themselves, the website has almost every base covered, from Visa and MasterCard options to local debit cards, Apple Pay, ecoPayz, Canadian favorites Interac Online and PayPal, as well as many others.
Example 2: Amazon Canada
Amazon is one of the biggest eCommerce websites in the world, growing from an online bookstore to selling pretty much everything. Moving into any nation with a healthy economy all-but guarantees Amazon additional business. For its move internationally from the USA into Canada, the website changed its storefront to offer goods in the native Canadian dollar. Everything on the website is viewed and purchased in Canadian dollars, but also offers the chance for other users to buy from Amazon Canada in their local currency by exchanging it into Canadian dollars. However, the website has stuck to offering more traditional payment methods, with just credit, debit, or gift card payments available.
These two companies have found great success in the Canadian market despite approaching the payment front very differently. 888 Casino Canada opts to keep payments in their own currency while offering a range of local favorite payment options, while Amazon Canada offers very few payment options but with purchases made in the local currency. As long as one of the two bases is covered, an international online company should be able to find success in a new jurisdiction.