International Payment Issues
Web Commerce Today, Issue 2, September 15, 1997
This article contains older information. Go here for newer information on shopping carts and transactions.
European customers (traditional or electronic) have various ways of payment, usually connected with the customs of the country they live in. Credit cards are quite accepted in England, Scandinavia and S. European countries, whereas credit cards have not really caught on in German-speaking Europe. What's a merchant to do? Offer the widest assortment of payment mechanisms.It is quite difficult for a European company to become a merchant and accept credit cards, without quite a history of success. If they do opt for that route, European merchants can purchase Kleline software, which seems to be the only European equivalent of CyberCash (but much more expensive).
Many Europeans use Eurocheques to pay for goods under around $300. Of course, sending a check puts a delay in the sales cycle, but at least the checks are guaranteed (and cost some $10 for the merchant to cash at his bank).
Most northern European countries pay bills not by checks, but by bank transfers. (Indeed, regular bank checks are unknown in Holland, Germany and other Northern countries.) Of course, this assumes that a customer is motivated enough to go to the bank and order a transfer to the merchant. But it is the most acceptable way of payment in the richer northern countries.
Another solution is Thomas Cook's transfer service: for $3.50 (checks) or $5 (bank transfer), they will open an account for someone who pays frequently in other countries. (The service is worldwide.) Of course, this is not the case in online commerce, since the customer is not going to open a Thomas Cook account just to pay an online merchant. However, a customer can go down to the local Thomas Cook office and buy a check in another currency for $10-12, and send to the merchant. That is indeed an acceptable solution.
The best solution for American companies selling to European customers online is to offer both credit card and directions for various payment alternatives on their Website. Tell customers that they can have their bank or Thomas Cook make out a check and send it to the merchant.
By the time that the pan-European "Euro" is instituted in 1999, many things will have changed in Europe, but for right now, payment issues are problematic.
Two other correspondents shared their experiences:
"I started out thinking that I would approach UK credit card merchants who couldn't put the phone down fast enough when I mentioned the word 'Internet'. I have finally have started using a company based in Netherlands called Multicards which accepts all main cards in either USD or GBP. Only $150 set up but 10% commission. Fine for start ups but too costly for long term real sales. (although the % level drops as you increase). A new company in UK called Netbanx charges GBP500 set up and high % charge as well. My next plan is to open a US bank account as online credit card is in a different league to the rest of the world - especially for the small guy." -- Mike Grenville, UK. mikeg@emr.prestel.co.uk
"Ever since, over ten years ago, I lost more in fees than the face amount of a check when it came back marked "Refused, against the currency regulations of Israel," I've refused payments in foreign currencies. Foreign banks will make drafts in US dollars, and credit cards automatically translate between currencies. If my clients don't have credit cards, they can get a draft in US dollars. Either way, the headache is on them and I don't have to worry." -- Shel Horowitz, US shel@frugalfun.com
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