Asian Payment Processing: Hong Kong and Singapore Merchants Struggle to Gain Footholds in International Markets
Sep 18, 2019
For Hong Kong and Singapore companies, the road to securing Asian payment processing for international customers has been tough.
Global payment solution providers like Stripe have only just entered the market in these jurisdictions. But, because they are unfamiliar or don’t like high risk, merchants have been charged extortionate fees. Costs that erode profit margins for online retailers based in this continent.
Many Asian merchants struggle with declined transactions taken through their online stores for customers in Europe or the US. As a result, they are unable to scale globally. In addition, this limits their website’s scope to small Asian markets for in-demand products such as consumer electronics.
However, there are bone fide ways to target new markets with the ability to process international payments. This post will explain how you can achieve higher approvals for US, UK and European credit card transactions. We will also show how to expand your business into foreign regions.
It is difficult to get merchant accounts without a presence in the region
Asian merchants in particular struggle to get approved for merchant accounts for several reasons. They often have no physical presence in the jurisdiction they are applying for and no bank account within that same region. So, they rejected out for US and European merchant account providers. Also, many companies can’t produce verifiable know-your-customer (KYC) documentation required for acquiring banks’ anti-money laundering checks.
What do you get when you couple high-risk business models (e.g. subscription) in industries known for payment risks (high ticket or luxury items)? The answer is excessive risk. And, it becomes clear why many Asian merchants struggle to gain acceptance.
Without merchant accounts, online vendors from Hong Kong and Singapore struggle to accept credit card orders in foreign currencies such as USD, GBP or Euro. As a result, they delay or cancel any notions for international expansion.
Racking up declined transactions thanks to foreign consumers’ banks’ anti-fraud measures is commonplace. For example, a cross-border purchase made in Hong Kong or Singapore dollars look very suspicious to an American bank.
Therefore, Asian merchants with online businesses must invest heavily in their websites, offering multiple languages and currencies for customers. If you want to make a good impression ensure you have telephone numbers easily accessible for each region such as an 800 number in the US, a comprehensive refund policy, and clear terms and pricing on your website. These elements meet compliance standards of international card networks such as Visa. It will also improve your chances of securing an offshore merchant account.
Once you’ve taken care of your website, it’s time to turn your attention to your overall business structure.
Re-structure your business
What many Asian merchants fail to realize when they initially apply for international payment processing capabilities is that it’s physically impossible to gain a merchant account without a business presence or bank account in the region you are applying for. We’re not just talking a virtual office shared with thousands of other businesses. A real office with a real physical location is a huge advantage. Not only do you need a business presence in the region of application, in most instances you also need salaried staff. You also need at least one director who is a permanent resident or native to that country.
It seems like a large expense for a small to medium-sized business, but it does come with its advantages.
For instance, if an online store based in Hong Kong sets up a subsidiary office (and a bank account) with an EU native in Cyprus, they would then have to ability to process payments for the remaining 30 countries that make up the Europe Economic Area (EEA) with just one merchant account. Also, transaction costs will be lower and sales conversions will skyrocket. There are several companies that offer done-for-you packages to help you incorporate and become compliant with European regulations. Also, there are several tax friendly jurisdictions which can benefit your business.
Some payment service providers promise big benefits. But, they neglect to adhere to strict requirements in these regions. Well, be aware that you may have committed to an illegal provider who may start to siphon funds from your payments after a few months of processing. Experimenting with these types of service providers is not worth the risk.
It pays to get an offshore merchant account
Getting a merchant account in the right manner can prove very beneficial. Both credit and debit cards transaction approval rates will soar, because the issuing bank’s anti-fraud software will recognize the merchant account provider. These trusted banking relationships allow you to build up reserves in foreign dollars. You can also offer products to customers in multiple currencies within just one jurisdiction (such as Europe).
You can also use more liberal countries such as Canada or Panama as a stepping-stone to build up enough processing history with a recognized merchant account provider. This option will allow you to win over similar providers in tougher jurisdictions to crack, like the US.
However, Asian merchants need to remember an acquiring bank’s vetting process has many requirements. Prepare copies of invoices, licenses and agreements from suppliers and fulfillment warehouses in order to pass the KYC checks.
Additionally, compliance needs special attention for Asian merchants.
Be compliant to gain better Asian payment processing
As an Asian merchant, you need to satisfy credit card networks as well as banks when it comes to compliance.
Your website’s checkout must adhere to the highest possible levels of security (including SSL encryption). By adhering to the internationally accepted PCI DSS compliance requirements, you ease the pressure on your company to meet both card and payment solutions provider’s standards.
Once you’ve secured the checkout, it’s time to review where and how you are storing your customers’ intimate credit card data, if at all. It’s crucial to use a well-known PCI-compliant third party provider to store those sensitive details for a couple of reasons.
First and foremost, without doing so you will likely fail to meet the requirements of a merchant account provider. But secondly – and perhaps more importantly – you will protect your business from liability in the event of your online store is subjected to a cyber-attack carried out by hackers looking to gain the credit card information of your customers.
Offshore credit card processing can transform your Asian business
Online stores based in Hong Kong or Singapore have long-suffered the consequences for being unable to secure better payment processing for their US and European customers.
This doesn’t have to be the case. By investing in well translated English websites that meet all of the necessary compliance requirements, Asian merchants are less likely to suffer the same fate as some other high-risk operators within the continent.
Furthermore, merchants need to expand their physical presence before they can do the same for their virtual entities. Real businesses with local directors and bank accounts get approved for offshore merchant accounts a lot faster! In some cases, it only takes one subsidiary to secure the payment processing for dozens of other countries.
Thus, it always pays to make the investment in more physical locations. Simple corporate structures facilitated with the help of online incorporation agents is one place to start. They are experts, and can help you find a suitable director and staff members for your company. Local employees can assist with supporting your customers in the region.
We are experts at helping merchants secure international payment processing. By having an online store (be it consumer electronics, luxury goods, etc.) and business set up you are off to a great start.