How payment technology can be used to ease the challenges of international expansion


James Butland VP of Global Banking Airwallex gives his view on how payment technology can help small businesses owners overcome the challenges of international expansion.


So, you’ve developed your start-up successfully over a number of years, securing a strong base in your home market. That’s brilliant, particularly when you consider that more than half of European businesses fail in their first five years, according to the European Commission.

So, what now?

You’re probably turning your attention toward international expansion and how to achieve it successfully. But when it comes to expanding overseas, there can be a temptation to assume that duplicating your business model in a new territory will be comparatively simple. After all, your product has been developed and approved by the market, your customer service operation is going smoothly, your corporate branding and key messaging is defined—there should be much less to think about this time round, right?

Think again. Just because you’ve successfully built a business in your home country, don’t imagine setting up operations elsewhere is simply an add on to your current business model. It isn’t.

If you are considering foreign expansion there are many things you should be thinking about from the quality of translations, product market fit, regulation and of course money.

Money matters

You’ve probably already thought about this but you need to think about how you actually take payment in other markets, about pricing your products and services in different currencies, about international tax rates and local tax regulations, among other things. The list is extensive and you can’t rely on banks as they are happy to give SMEs a poor deal with buried exchange fees and charges. Lloyds Bank has even admitted to this – adding undisclosed charges to overseas transfers made by its ‘less sophisticated’ SME clients.

However, as the wholesale disruption of the payments industry has begun, SMEs are now able to partner with innovative fintech businesses that solve some of the challenges they may face. For instance, before too long ago, it was a requirement for businesses to set up a local entity if they wanted a bank account to receive local currency into. Now solutions like Airwallex provide local bank details without having to go through this process.

New geographies, new challenges

Next, let’s look at how important your organisation’s payment infrastructure is to its expansion abroad.  Taking advantage of new opportunities overseas involves a plan of action that takes into account the country’s culture, regulatory environment and political and economic influences.

The payments world is particularly location sensitive. The EU might have a multinational legal system and one currency but its members approach buying very differently. For instance, in the Netherlands online shoppers use iDeal as their preferred payment method, and in Germany, people use invoices, digital wallets and direct bank transfers. Businesses need to take these differences into account, making sure they are offering their preferred payment method for ease and convenience.

Further afield, some countries – like in the UAE legally restrict people who have recently opened bank accounts from making payments, which delays transactions and frustrates customers in new markets.

Customer convenience

Ultimately you need to make sure payment transactions are frictionless to help your organisation grow. The alternative is that your customers abandon payment – meaning you don’t make a sale.

When you go into a country ill prepared, lacking local information and insights and technological support, the cost can be high. You need to cultivate a smooth experience for customers, making it easy for them to buy your products and services by having systems and processes in place; and being able to keep pace with new technology. 

Essentially, you need to really commit to a new territory if you want it to be a success: do your homework, adjust your service and offering if needed and find technological partners to support you.

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