THE NEW GLOBAL MERCHANT

Now that you can reach buyers worldwide, make it easy for them to buy from you

For all the hype about the age of Internet commerce – the breathtaking stock valuations of Internet companies and the statistics forecasting off-the-chart growth in every imaginable Internet-related category – what is often overlooked is the international opportunity presented by e-commerce. If your company has a Website, you are already able to sell in more countries than any traditional multinational bricks-and-mortar company.

But while the technology exists to allow you to sell to anyone in any nation (or at least anyone who has Internet access), you still face many of the concerns that have bedeviled international trade since the Phoenicians first set sail across the Mediterranean several thousand years ago. After all, language and monetary differences continue to exist. Then there’s the matter of ensuring that you as the merchant are paid securely and conveniently.

The universal motto

“Think global, act local” should be the motto of any company seeking to sell on the Internet. In the context of the ‘Net, acting local means offering your Website not just in English but in multiple languages and, more important, giving potential customers the ability to pay for goods in the currency of their choice. In other words, if you think Internet users in France might buy your product, your Website needs to be in French and your pricing in French francs.

As the Internet becomes more universal, Internet consumers will gravitate to Websites that are in their language and currency. Already, the U.S. accounts for slightly less than half of all Internet users, and this will continue to diminish rapidly during the next few years as the rest of the world becomes wired. Yet the majority of U.S. companies have Websites that are written only in English and offer pricing only in U.S. dollars.

Fortunately, it’s not difficult to make your site multilingual – all it takes is some extra programming and good translators. One way to do this is to hire a traditional translation company. One enterprising California company, Uniscape, is especially focused on Internet companies, with an army of translators and multilingual programmers.

The more difficult challenge is offering your products online in multiple currencies. To accept payment online in any currency – even your local one – you have to overcome several hurdles. For starters, you simply must accept credit cards. Credit cards are the currency of the Internet. According to industry newsletter The Nilson Report, 85% of Internet transactions in 1998 were consummated with credit cards. When the final numbers are in for 1999, that number is expected to exceed 93%. And as people become more comfortable with the idea of using their credit cards online, this number will only continue to grow.

There are two fundamental elements to accepting credit cards through a Website: a payment gateway and a merchant account from a credit card company. The payment gateway is essentially a piece of software that connects your Website to the credit card company’s for authorization and settlement of transactions. Its physical-world equivalent is the typical black-box terminal you see in restaurants and stores through which your card is swiped before your purchase is completed.

Payment gateways can be either proprietary or subscriber-based. Proprietary gateways are available for purchase; leading providers include Trintech and OpenMarket. Buying a proprietary payment gateway can easily cost more than $500,000, including integration of the software, and this does not take into consideration ongoing maintenance. Therefore, it’s cost-effective only for merchants that can reasonably anticipate conducting several hundred thousand transactions a month.

Subscriber-based payment gateways are far more efficient for small and midsize merchants, and for larger merchants that are just getting their feet wet in e-commerce. Subscriber-based payment gateways are owned and operated by a third party. By far the largest payment gateway operator is Authorize.net, which supports more than 50,000 merchants. Other payment gateway operators include Cybersource, Cybercash, and Planet Payment, which specializes in international multicurrency transactions.

As a subscriber, the merchant pays an initial set-up fee of $250-$500 and a modest monthly fee thereafter. From a programming standpoint, the merchant’s Website needs to be integrated with the payment gateway, but this should not require more than an hour or so of a programmer’s time. If the shopping cart itself is purchased through the subscription model, such as that of DXStorm, the integration may already be completed.

Obtaining a payment gateway, however, is only half of the equation. The payment gateway needs to be able to send Internet transactions to the credit card companies. To do this, a merchant must have a merchant account issued by each credit card company permitting the merchant to accept the credit cards issued by the company. The merchant account is the complement to the credit card account number embossed on a consumer’s card. Together with the amount of the purchase, a credit card company can know everything it needs to know about a particular transaction by receiving a merchant account number and a credit card account number.

Merchant accounts are issued separately by each of the major credit card brands. For most Internet transactions, it is usually sufficient simply to accept the big three: Visa, Mastercard, and American Express. Together these brands account for almost 90% of the global credit card market, so it is likely that any potential customer would have access to at least one of these options.

Still, local preferences should be considered. For example, if your product is geared to Asian customers, you should consider accepting the JCB card, which is popular in Japan and China (including Hong Kong).

From dollars to pounds to francs…

Generally, your merchant account is denominated only in your local currency. This means that a foreign customer buying from your Website will be billed in your local currency as converted by the customer’s card company into the customer’s currency. For example, a British customer making a $100 purchase from a U.S. Website would receive his credit card bill with a statement saying “$100 U.S. converted into pounds sterling at x-rate = …” As a result, the customer never knows exactly how much his purchase from an U.S. site will cost until the credit card bill arrives in the mail.

To truly act like a global company, you should offer customers the ability to pay in the currency of their choice, not in that of your merchant account. One way to do this is to ask the credit card companies to issue merchant accounts denominated in various currencies. Credit card companies generally reserve this option for larger merchants. But several merchant services providers have emerged to accommodate multicurrency transactions for small and midsize businesses as well. These companies operate in a variety of methods, but the salient feature is that the customer can view and pay for a particular product in the currency of his or her choice, while the merchant receives payment in its local currency.

Clearly, the solutions are falling into place to permit any merchant to economically reach an international audience through the Internet. With multilingual Websites and multicurrency payment solutions in a secure real-time environment, any merchant can become one of the new breed of global merchants.