opinion

From Sale to Scale Across the Globe

From Sale to Scale Across the Globe

Is business booming and you’re thinking about expanding your customer base? Have you considered establishing an entity in another region of the world? Maybe you’re wrestling with whether it’s worth the investment, and how to even make it happen. Don’t worry, you’re not alone. We are asked about this quite often.

The most common example is an EU business looking at setting up shop in America, seeking better access to U.S. dollars. Many U.S. merchants whose sales volumes are increasing in the EU wonder if they should invest in a local presence to better support and cultivate their European growth.

A local team can help you manage local regulations, while providing around the clock support.

How high should sales volumes be before it makes sense to set up a local entity? There are several factors to consider before setting up shop in another country. We’ve developed five steps to help you make the decision.

Step 1: Consider the cost, which includes creating new corporate documents.

Step 2: Visa and Mastercard rules require that you have a physical presence and can provide evidence, such as a signed lease agreement.

Step 3: Appoint a local director. If you’re setting up in the U.S., they will need a social security number and a U.S. bank account, along with supporting documents, such as a utility bill or bank statement, to prove they are local.

Step 4: You need to operate as an active corporation, so you’ll need a VAT number in the EU or a tax ID in the U.S.

Step 5: Evaluate your expansion plans with your accountant and/or internal audit team to ensure you’re setting things up efficiently and limiting your tax exposure.

There are great benefits to establishing a local presence. One is improved conversion rates on credit card transactions. EU traffic converts 3 to 5 percent higher when routed through an EU acquiring bank, and roughly the same rates apply for U.S. traffic through U.S. acquirers. You’ll find better pricing as well. For example, EU legislation regulates the rates that banks and processors can charge for intra-European traffic. Plus, it is easier to offer payments in local currency. A local team can help you manage local regulations, while providing around the clock support.

Certain internet content could face more restrictions in different regions of the world, and having your company perceived as local in a more restrictive region could help. A local presence also gives you easier access to local currency, reducing currency exposure when having to pay local vendors and suppliers, and enabling you to deploy hedging strategies to help limit the risk associated with this exposure.

EU businesses establishing a U.S. presence don’t have GDPR covering their interactions with U.S. consumers (although California enacted a similar data privacy law and nationwide U.S. regulation could come soon). U.S. acquiring banks typically approve merchant accounts faster than in the EU. At Segpay we have a lot of experience with this, having set up entities in Canada, the UK and the EU to comply with various card brand location rules and EU regulations. We most recently opened an Ireland location to ensure a smooth post-Brexit transition for our large base of EU merchants.

So, if you’ve gone through the five steps above and think an international entity makes sense for your business, congratulations! There will be challenges, but the benefits are many.

Cathy Beardsley is president and CEO of Segpay, a global leader in merchant services offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of only four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

opinion

How to Halt Hackers as Fraud Attacks Rise

For hackers, it’s often a game of trial and error. Bad actors will perform enumeration and account testing, repeating the same test on a system to look for vulnerabilities — and if you are not equipped with the proper tools, your merchant account could be the next target.

Cathy Beardsley ·
profile

VerifyMy Seeks to Provide Frictionless Online Safety, Compliance Solutions

Before founding VerifyMy, Ryan Shaw was simply looking for an age verification solution for his previous business. The ones he found, however, were too expensive, too difficult to integrate with, or failed to take into account the needs of either the businesses implementing them or the end users who would be required to interact with them.

Alejandro Freixes ·
opinion

How Adult Website Operators Can Cash in on the 'Interchange' Class Action

The Payment Card Interchange Fee Settlement resulted from a landmark antitrust lawsuit involving Visa, Mastercard and several major banks. The case centered around the interchange fees charged to merchants for processing credit and debit card transactions. These fees are set by card networks and are paid by merchants to the banks that issue the cards.

Jonathan Corona ·
opinion

It's Time to Rock the Vote and Make Your Voice Heard

When I worked to defeat California’s Proposition 60 in 2016, our opposition campaign was outspent nearly 10 to 1. Nevertheless, our community came together and garnered enough support and awareness to defeat that harmful, misguided piece of proposed legislation — by more than a million votes.

Siouxsie Q ·
opinion

Staying Compliant to Avoid the Takedown Shakedown

Dealing with complaints is an everyday part of doing business — and a crucial one, since not dealing with them properly can haunt your business in multiple ways. Card brand regulations require every merchant doing business online to have in place a complaint process for reporting content that may be illegal or that violates the card brand rules.

Cathy Beardsley ·
profile

WIA Profile: Patricia Ucros

Born in Bogota, Colombia, Ucros graduated from college with a degree in education. She spent three years teaching third grade, which she enjoyed a lot, before heeding her father’s advice and moving to South Florida.

Women In Adult ·
opinion

Creating Payment Redundancies to Maximize Payout Uptime

During the global CrowdStrike outage that took place toward the end of July, a flawed software update brought air travel and electronic commerce to a grinding halt worldwide. This dramatically underscores the importance of having a backup plan in place for critical infrastructure.

Jonathan Corona ·
opinion

The Need for Minimal Friction in Age Verification Technology

In the adult sector, robust age assurance, comprised of age verification and age estimation methods, is critical to ensuring legal compliance with ever-evolving regulations, safeguarding minors from inappropriate content and protecting the privacy of adults wishing to view adult content.

Gavin Worrall ·
opinion

Account-to-Account Payments: The New Banking Disruptor?

So much of our industry relies upon Visa and Mastercard to support consumer payments — and with that reliance comes increased scrutiny by both brands. From a compliance perspective, the bar keeps getting raised until it feels like we end up spending half our time making sure we are compliant rather than growing our business.

Cathy Beardsley ·
profile

WIA Profile: Samantha Beatrice

Beatrice credits the sex positivity of Montreal for ultimately inspiring her to pursue work in adult entertainment. She had many friends working in the industry, from sex workers to production teams, so it felt like a natural fit and offered an opportunity to apply her marketing and social media savvy to support people she truly believes in and wants to see succeed.

Women In Adult ·
Show More