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Going Global

Prerequisites

Before international expansion, understand:

Cross-border transactions cost more and decline more. Local acquiring fixes both but adds complexity. Know what you're getting into before you expand.

Most merchants assume their US processor "supports international." It does—at 3%+ effective rates and 75% auth rates. That's cross-border, not local.

What Matters​

  1. Cross-border vs. local acquiring. Cross-border = your US processor charges foreign cards. Local = you have a local entity and processor in that market.
  2. FX is a hidden cost. The exchange rate markup can exceed the processing fee.
  3. Payment methods vary by region. Cards aren't king everywhere. iDEAL in Netherlands, Boleto in Brazil, UPI in India.
  4. Compliance varies. PSD2/SCA in Europe, data localization in some markets, different consumer protection rules.
  5. Start with one market, prove it, then expand. Going global all at once is a recipe for operational chaos.

Cross-Border vs. Local Acquiring​

Cross-Border (Your US Processor)​

You use your existing US merchant account to accept international cards.

AspectReality
SetupNone. Already works.
CostHigher interchange (1.5-2.5% more) + FX markup + cross-border fees
Auth ratesLower (75-85% typical vs. 90%+ domestic)
ChargebacksHarder to fight across borders
Best forTesting a market, low international volume

Local Acquiring​

You establish a local entity and merchant account in the target market.

AspectReality
SetupEntity formation, local bank account, separate processor onboarding
CostLower interchange (domestic rates), better FX control
Auth ratesHigher (local issuer trust, no cross-border friction)
ChargebacksEasier to manage with local representation
Best forSignificant volume in a market (usually 20%+ of revenue)

When to Switch from Cross-Border to Local​

Consider local acquiring when:

  • Market represents more than 20% of total volume
  • Auth rate gap exceeds 10 percentage points vs. domestic
  • FX and cross-border fees exceed 1% of market revenue
  • Local payment method support is required

FX Strategy​

Foreign exchange is where money disappears quietly.

Where FX Costs Hide​

Cost TypeWhat It IsTypical Range
Card network FX rateVisa/MC base rateUsually fair
Processor markupAdded to network rate0.5-2%
DCC marginIf you offer cardholder's currency2-4%
Settlement timingRate at auth vs. settlementVaries

DCC (Dynamic Currency Conversion)​

DCC lets cardholders pay in their home currency. Sounds nice. Usually isn't.

AspectReality
Who profitsYou and processor (DCC revenue share)
Who losesCardholder (2-4% worse rate)
Customer experienceSavvy travelers decline it
RecommendationSkip it. The margin isn't worth the reputation hit.

Multi-Currency Pricing​

Show prices in local currency. Charge in local currency if you can.

ApproachComplexityBest For
USD onlyLowTesting, B2B, US-centric
Display local, charge USDMediumMarketing localization
Charge in local currencyHighSerious international presence

Cross-link: FX and Settlement for operational details.

Regional Payment Method Requirements​

Cards aren't universal. Know what matters in your target markets.

Europe​

MethodCoverageNotes
CardsPrimaryVisa/MC dominant, some local schemes
iDEALNetherlandsBank transfer, 60%+ of Dutch e-commerce
BancontactBelgiumLocal card scheme
SEPA Direct DebitEU-wideFor recurring, requires mandate
Klarna/BNPLNordics, GermanyPopular for fashion/retail

Latin America​

MethodCoverageNotes
CardsPrimary but differentHigh installment usage
BoletoBrazilCash voucher, 20%+ of Brazilian e-commerce
OXXOMexicoCash payment at convenience stores
PIXBrazilInstant bank transfer, rapidly growing

Asia-Pacific​

MethodCoverageNotes
CardsVariesStrong in Australia, weak in SE Asia
Alipay/WeChat PayChinaRequired for Chinese consumers
UPIIndiaDominant, low cost
GrabPaySoutheast AsiaSuper-app payments

Decision Framework​

Before entering a market:

  1. Research top 3 payment methods by volume
  2. Verify your processor supports them (or find a local partner)
  3. Calculate total cost including method-specific fees
  4. Test checkout flow with local testers

Canada PAD Agreements​

If you're expanding to Canada and want to debit bank accounts, understand that Canadian Pre-Authorized Debit (PAD) is not US ACH.

Key Differences​

AspectUS ACHCanadian PAD
AuthorizationCan be verbal, flexibleRequires written agreement
Agreement contentVariesSpecific required elements
CancellationVariesSpecific customer rights
Dispute window60 days typical90 days for personal, 10 days for business

PAD Agreement Requirements​

Your PAD agreement must include:

  • Amount (fixed or variable with limits)
  • Frequency (one-time, recurring, sporadic)
  • Start date
  • Payor's bank account information
  • Cancellation rights and process
  • Recourse statement

Keep PAD agreements on file. You'll need them for disputes.

Compliance Variations​

Europe (PSD2/SCA)​

Strong Customer Authentication (SCA) requires 3DS for most transactions.

ExemptionCriteria
Low valueUnder €30 (cumulative limits apply)
Trusted beneficiaryCustomer whitelisted merchant
TRALow-risk based on fraud rate
RecurringSubsequent charges on same subscription

Data Localization​

Some markets require data to stay local:

  • Russia: Payment data must be stored in Russia
  • China: Various data localization requirements
  • India: Payment data storage rules (evolving)

Consumer Protection​

MarketKey Difference
EU14-day cooling-off period for online purchases
UKSimilar to EU post-Brexit (for now)
AustraliaStrong consumer guarantees beyond contract terms

Test to Run​

8-week market entry pilot:

Weeks 1-2: Research

  • Identify top payment methods in target market
  • Calculate cross-border cost vs. local acquiring estimate
  • Research compliance requirements

Weeks 3-4: Setup

  • Enable cross-border for target market
  • Add top 1-2 local payment methods if supported
  • Localize checkout (currency display, language)

Weeks 5-8: Measure

  • Track auth rate by market vs. US baseline
  • Monitor chargeback rate
  • Calculate effective cost per market

Success criteria: Auth rate within 10% of domestic. Path to local acquiring if volume justifies.

Scale Callout​

VolumeFocus
Under $100k/mo internationalCross-border is fine. Focus on checkout localization and top 1-2 local methods.
$100k-$1M/mo internationalEvaluate local acquiring for top market. Add regional payment methods.
Over $1M/mo internationalLocal acquiring in major markets. Multi-currency treasury. Regional payment method coverage.

Where This Breaks​

  1. Underestimating operational complexity. Each market means different support hours, language, dispute processes, and compliance requirements.

  2. FX exposure without hedging. If you price in local currency but have USD costs, currency swings eat margin. Talk to your CFO.

  3. Assuming card dominance. In many markets, not offering the local method means losing 30-50% of potential customers.

Analyst Layer: Metrics to Track​

MetricWhat It Tells YouTarget
Auth rate by marketLocal friction levelWithin 10% of domestic
Effective rate by marketTrue costTrack trend
Payment method mixLocal method adoptionMatches market norms
Chargeback rate by marketRegional fraud/dispute patternsBelow threshold
FX impactCurrency costTrack monthly

Next Steps​

Planning international expansion?

  1. Research payment methods - Know what matters in target market
  2. Calculate cross-border costs - Understand true cost
  3. Run the market pilot - Test before committing

Already accepting cross-border?

  1. Evaluate local acquiring - When volume justifies
  2. Add local payment methods - Improve conversion
  3. Optimize auth rates - Reduce cross-border declines

Entering Europe specifically?

  1. Understand SCA/PSD2 - 3DS requirements
  2. Review exemptions - Request where you qualify
  3. Check compliance - Regional requirements