4 Tips for Maintaining Your Sanity in the Global Payments Game

We all know that the web expands our shopping reach – from local to global. If I see a handmade necklace being sold by a local craftsman group in India, chances are I can buy that with PayPal. Simple, right? Maybe from the shoppers perspective, but…..

From a retailer’s perspective – say a large retailer offers a new “global inspirations” collection that curates goods from four continents and sells them in 4,500 stores across the world and online. How the retailer handles inventory management, pricing, payments, inventory and other aspects of the collection can vary widely depending on the stores, the regions, the currency, the laws and other government regulations. Not so simple. In fact, the complexity and the changing rules can be enough to drive retailers insane.

Luckily for retailers that have made global accessibility a priority, there are a few ways to create a foundation for global business that can help managers make sense of it all, reduce the insanity and create a global brand that customers will make one of their favorite “destinations.”

Move Toward Singular, Global Payment Systems

Outside the U.S., EMV compliance standards for bank cards are already in place. Backed by major card brands that cut across the global finance industry, “smart” payment cards with chips are now mandated for many payments within physical stores and at point-of-sale systems (including mobile).

For global retailers (or those expanding into new markets), now is the time to start standardizing on POS systems that support EMV across every region. In the U.S., retailers could start getting fined as early as October 2015 for having outdated POS systems.

If you’re like many global retailers, POS systems in different regions were initially installed as separate systems that integrate and “settle up” when data moves to the global finance software. New global payment platforms can make this unnecessary today, but few retailers want to rip and replace an entire system. Instead, do an analysis of each system, determine what needs to be updated, and create a plan that allows for a slow transition to one platform.

Plan for a Penniless Market

While EMV can be complex, there are also simpler payment aspects that can catch retailers doing global commerce off-guard – such as rounding rules.

Many countries, including Canada, Australia and Singapore, have eliminated one-cent pieces. While electronic transactions in those countries still include cents, retail cash sales are rounded either up or down. For example, in some regions, when purchasing a $2.97 cup of coffee, a consumer is charged $2.97 when paying with a credit card, but $2.95 when paying in cash.

Retailers who sell in penniless regions have a variety of rules and options they need to understand. Some countries round down all transactions, others have federal laws or round up or down every five cents. The payment platform you choose should allow you to determine the smallest unit of currency accepted for cash transactions, and still use the stated price for card transactions. Without this built into the system, payments made and currency collected won’t match and will wreak havoc on back-end financial reporting.

Know Regional Payment Acquirers

In the future, payment acquirers and processors – the financial institutions that process credit card transactions – could move toward the use of more standardized technology platforms so global retailers don’t need to integrate with multiple, different acquirer systems. For now, that’s not the case because payment acquirers are almost exclusively regional or even country-specific.

The main function of these partners consists of capturing the authorization and the processing of card payment transactions. The ways in which this data is transferred to the acquirers and processors, and how data is received back has to be connected at two points of interaction because of the multiple systems.

To reduce the challenges around interaction points, again, look to your global payment platform partners to help create secure connections between software systems. Understand the rules of commerce for each region so you can streamline purchase steps, including pre-authorization, acceptance, authorization and fulfillment.

Embrace Mobile Payment Technology

Adding to the level of complexity in the cross-channel commerce game are mobile payments. Retailers extending to mobile are being forced to connect yet another platform to their already disparate set of systems to support secure payments. Considering that research firm Gartner estimates that mobile payments will top $720 billion per year by 2017, it’s probably unwise to ignore the trend.

Extending systems to support mobile payments requires physical upgrades to POS systems and software changes to manage transactions. Before you jump into another partnership, talk to your existing retail technology partners to get a sense for the platforms available so that integration with your global systems can be managed.

Whether you have an established global brand or are planning for growth, there are many considerations that can make cross-channel commerce less confusing and more effective. Next time you order that alpaca sweater from Peru, think about all the complexities that are happening on the retailer’s side. Be thankful for payment technologies, and be hopeful for the future innovations to come.

Lori Mitchell-Keller is Senior Vice President and Head Of Global Retail, SAP.