With Made in Britain an attractive brand image again, and overseas markets offering greater opportunities because of the sheer number of consumers than the domestic market alone, more and more UK businesses are looking to export as growth and demand from euro zone countries ramps up.
However, with the euro falling against sterling and more currency gyrations anticipated in an uncertain world,how can smaller businesses manage their exchange costs?
“To operate in new markets, how a company will process payments is the foundation for success,” explained Myles Dawson, UK country manager for Adyen, a payment platform which enables businesses to accept payments from any country using one single interface. It supports all relevant sales channels across online, mobile and point-of-sale. In China, Adyen works with brands such as booking.com and Airbnb. “In today’s global economy, payment methods and behaviours can differ greatly from country to country. This makes scalability a hugely important factor when an SME is considering which payment platform to choose in order to enable it to deliver payment pages tailored to each region,” Dawson added.
For a business to expand and grow its revenues across new markets, it needs to understand the local payment landscape and offer the preferred payment methods in that specific country, he said. This means seeking a payment solution partner that has the local expertise and specialised technology to be able cater to each unique country.
Adyen provides one single infrastructure that can support a bespoke payment pages for each region. This offers access to the most used payment solutions available in a specific territory enabling smaller and medium sized businesses to offer a better selection of payment methods that customers there are culturally more inclined to use, thus maximising conversion rates.
“To give an example, several countries in the north of Europe rely more heavily on payments through online banking than on traditional credit and debit cards,” added Dawson. “By ensuring that the most popular channels are available, a company can provide an optimum shopping experience. In the Netherlands, ‘iDEAL’ is very popular with almost 55 per cent of payments being made via this method. Without this option, SMEs would not be able to provide Dutch customers with the payment choice they expect.”
“The cost of currency transaction can have a significant impact on your bottom line. If you understand the true cost to of buying foreign currency, switching to a better rate could generate an easy and immediate saving that drives better profitability,” said Alex Hunn, founder and CEO of freemarketFX – a currency exchange authorised and regulated by the Financial Conduct Authority.
He added: “Many businesses miss out on saving because they do not challenge their providers or compare overall rates once they have adopted a supplier. Spot checking your FX provider versus others could quickly reveal more attractive rates or at least reassure on the value you are currently receiving.”
Hunn has created a marketplace that allows his customers to reduce the currency bought from banks and brokers by aggregating their currency requirements with their peers. This increases efficiency and significantly reduces cost, offering savings of up to 75 per cent on foreign exchange costs, he claims. As a result, SMEs should be on the lookout for a solution that offers ready-to-use payment pages that have already been optimised for conversion.
Read more about foreign exchange:
- What SMEs should be aware of when trading in restricted currency markets
- XE.com foreign exchange converter
- Protecting the bottom line through currency hedging
Another simple option is to use PayPal. Internet Fusion is a UK-based, online retailer of clothing and equipment for the action sports lifestyle. Founded and run by action sports enthusiasts, the company supplies only the best products and leading brands through its 14 niche websites (which include Blackleaf.com, Webtogs.com, and FitnessFootwear.com).
The firm sells significant amounts in English-speaking countries with an outdoors culture: Australia, United States and Canada. It also has a large European market.
In developing its international success, Internet Fusion has had to tackle overseas pricing, postage and payments. “It’s crucial to meet customers’ expectations, especially regarding delivery and import duties,” commented director Ian Bristow. “We don’t want customers to receive an unexpected bill for duty and we don’t want to be caught out by unexpected courier costs.”
Internet Fusion’s approach to international sales is to start with locally familiar ecommerce platforms like eBay, alongside its .com or .co.uk websites. Once a market has proven its potential, the firm develops a local website. “We’ve become quite adept at exploiting different countries using eBay,” said Bristow. “Its Global Shipping programme works really well, calculating the correct amount of duty and handling all of the paperwork.” Internet Fusion offers PayPal as a payment method on its websites and, this year, started to use PayPal to process its credit card payments as well.
“One of our challenges had been accepting payments in different currencies,” Bristow told us, “but PayPal has helped massively with that. Now we can take payments in Norwegian krone, Australian dollars, US dollars or whatever else and it’s all been very, very easy to do.”
It’s not simply the payment mechanism that PayPal has helped with. Having PayPal on a website attracts customers too, according to Bristow. “It helps that PayPal is so well known. Customers feel an extra reassurance that PayPal is there to resolve any issues.”
A third of Internet Fusion’s revenue now comes from international markets and around of sales are process through PayPal. “We’ve so much more to do,” said Bristow. “We’ve really just scratched the surface with international trade and we know we can succeed and grow significantly in the rest of the world.”
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