We live in a global economy and cross-border transactions are, for some of us, an everyday occurrence. It is important to know what choices are available to us for accepting international payments and settling in foreign currencies.
The Credit Card Associations of Visa and MasterCard are global institutions and credit and debit cards that bear the logo of either one are accepted in every store or ATM that accepts that type of card. It does not matter where or by whom the card has been issued. The difference is in the processing rates that merchants pay for accepting cards issued abroad.
Credit card processing companies, licensed to provide US-based
merchant processing accounts, settle the funds in US dollars. Payment cards, issued abroad, on the other hand, settle in the local currency. When a
credit card processing transaction is authorized and cleared, the funds will be settled in US dollars and a conversion fee may be charged to the merchant.
If your organization is going to be
accepting credit cards, issued abroad, on a regular basis, you will need to make sure that you sign up with the right processor. It is important that, before setting up your
merchant account, you check what your prospective credit card merchant processor's conversion rate is. You may find that a provider that offers higher processing rates, actually has the cheapest solution for your needs, because they don't charge any conversion or cross-border fees. US-based credit card processing companies can provide
merchant services solely to domestic business entities, with an address and bank account within the United States. They will settle your funds in US dollars.
In order to get your
credit card transactions processing settled in a foreign currency, you will need to get an offshore
credit card merchant processor. The bigger companies among them have relationships with multiple processing banks, located around the world and can settle your funds in a number of foreign currencies.
Before selecting the offshore option, however, it will be a good idea to look at the numbers and see if it is worth it. Also, it should be mentioned that this option is available only to
PC based credit card processing operations.
First of all, you should be advised that offshore
credit card payment processing services are expensive. They offer processing rates that are substantially higher than domestic
eCommerce merchant account rates. They also have substantial set up and maintenance costs. The cost differential can be so great that you might be better off establishing a US-based
merchant credit account and settling in dollars which you can then convert into the currency of your choice.
