10/22/2023 0 Comments Daniel webber size![]() In some cases, the merchant decides the currency for the consumer, either by defaulting to the marketplace currency or picking a currency based on where the customer is located. With so much potential variation, it’s perhaps no surprise that there is significant differentiation in how major merchants around the world handle cross-border transactions.ĭepending on whether the priority is simplicity, consumer choice or additional profit for the merchant, different companies tackle the issue of what currency to use at very different points in the process – with potential dramatic variations for consumers. Consumers are more likely to abandon their cart if they cannot make a transaction in their local currency, but by handling the currency conversion themselves, merchants can also potentially capture more of the fees, rather than passing these to a card issuer. FXC Intelligenceįor merchants, then, there is big opportunity to increase conversions and therefore revenue. Peru, Australia, Switzerland and Austria. Variation in transaction costs between countries: Foreign currency vs home currencyįull costs of overseas transactions in foreign currency versus home currency for issuers in Brazil. And while it is usually cheaper to pay in their home currency, this is not always the case. ![]() The breakdown of these costs varies, but can typically be made up of FX margins, cross-border issuer fees and credit card processing fees – as well as, potentially, taxes.ĭepending on where a shopper is in the world, and where they are buying from, the amount they are likely to pay in additional costs can vary dramatically. In the first option, most of the fees were taken by the card network, but in the second the merchant was the party that profited. In one example we looked at using FXC Intelligence’s cross-border transaction data, a UK shopper buying a $100 product from the USA faced fees totalling 5.71% if they paid in USD, but 5.36% if they paid in GBP. ![]() countries are ranked by the highest to lowest median full cost across all the issuers in each country. Price variation of cross-border purchases across different countriesįull costs of cross-border transactions in a foreign currency covering over 100 countries. Instead a varying selection of other players are also involved, often including a payment processor, card network, issuing bank and acquiring bank.ĭepending on how the shopper pays – whether by choice or as a result of the options presented by the merchant – they may face different FX margins, which will ultimately increase their overall purchase price. When a shopper makes a cross-border purchase, it isn’t just their bank and the merchant’s bank involved in the transaction. Taxes may only impact consumers in some corridors, but almost all cross-border ecommerce purchases face the risk of other forms of hidden costs. And in some cases when the bank statement arrives, this can result in a significant shock, with taxes and other FX transaction costs together being as much as 40% of the purchase price.įor card issuers, it’s therefore important to provide a breakdown of charges on statements, but for merchants it’s also important to provide clarity and transparency to cross-border shoppers about the taxes they may be charged. With a strong and growing ecommerce market, how does Payoneer plan to build on its current position, and how is it leveraging networks within its customers to build on its offering?įXC Intelligence CEO Daniel Webber has a detailed discussion with Payoneer CEO Scott Galit to find out more.Ultimately, however, it is the consumer that bears this additional cost – often without being provided any clarity on what they will actually pay. Set to launch its own ticker symbol in Q2, pending a few final hoops, Payoneer has been growing its already strong ecommerce play, with a deal with eBay that will see it help sellers in key marketplaces be paid, as well as an expansion of it partnership with Mastercard, providing virtual cards to small businesses. Payoneer has released its first quarterly results after its merger with Betsy Cohen’s SPAC FTAC Olympus Acquisition Corp, providing an initial sense of how the company is doing compared to its growth projections for the next few years.
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