Is your MENA payment gateway also your gateway to a global market?
Originally published in Inc. Arabia, 6 August 2017
Your e-commerce operation might be taking you places you’d never expected to go.
The reach of the Internet is staggering—just here in the Middle East, 57% of the population is online, according to Internet World Stats. That’s a market of 142 million people.
The e-commerce playbook is full of wisdom and tactics about finding your market and helping your market find you.
And the wonder is, it’s not so different for an e-commerce operation selling locally or one trading across borders. In fact, international growth is a natural progression for electronic commerce services, no matter how large or small the merchant.
So that’s the easy bit then. As is often the case with financial issues, the path to getting your money safely into your bank account can be less clear than how to tap into a whole new overseas market.
In a world of more than 120 currencies, how do you manage the financial logistics of offering products for sale in local currencies across the world? And how then do you manage your overseas customers wanting to pay in their own local currency?
So you’ve potentially got everything from Guatemalan quetzales to Mongolian tugriks coming in, in a mishmash of payments. Do you decide yourself how and when to convert them to your home currency? Do you leave it to banks to convert at the point of the transaction, and, shuddering, shoulder the expense?
Or do you just give up and insist that your customers pay you in your own currency? If you do that, there’s a pretty good chance that the problem will go away. Along with your customers.
Check with your online payment partner. Every e-commerce website accepting online payments has one, and it might well be that yours can help. The good ones have grown alongside their merchants and will try to match their merchants’ mindset of ‘local going global.’
This means that they won’t have a single solution or structure that they expect you to fit into—rather, they will have a variety of options that will flex and expand with you as you expand yourself.
Often, the evolution looks something like this:
First, your payment gateway enables you, the merchant, to bring all of your payments in all of their currencies straight into a single bank account. You might be starting out of Dubai, for instance, and pooling the receipts from your buyers from different countries in AED into one single account in Dubai—at this stage convenience wins over any other consideration.
But then, as you become more acclimatized to managing your cash flow in a range of currencies, your payment gateway flexes again.
It enables you to keep your payments in the currencies of your choice. Because as you reach a certain scale, it can make more sense to pool money from your international buyers in specific currencies so that you can pay directly to your international vendors—drivers, manufacturers, traders or agents—in their currency of choice.
This helps avoid incurring two hits of conversion costs: the first when you convert money received from your international buyers to your local currency, and the second when you convert your local currency back into the currencies in which your vendors have to be paid.
And then your operations in overseas countries start to take on a life of their own. Your payment gateway flexes yet again—and now you can settle your local currencies in the home countries of buyers, either because you see high growth there, or in order to comply with local country regulations. Your collections are run locally. You’ve gone global.
E-commerce has made it straightforward to access overseas markets – but it’s not without its complications.
Choose your payment gateway wisely, though, and it’ll live up to its promise of opening the door to new markets.