Navigating Global Trade and Cross-Border Payments By Maria Sparagis

by Cruz Alvarado on October 24, 2018


Summary: Going global and what every merchant must know about cross-border payments

Over my decade-long career in high-risk payment processing, I’ve witnessed merchants struggle with cross-border transactions. Reasons include bad business structure, lost revenue due to hefty fees, and inflexible payment solutions.

If you are tired of low conversions from international orders, here are a few solutions.

Is Your Business Prohibited or Restricted

Third party solutions (e.g. PayPal or Stripe) offer low fees and multiple currencies. However, none of that matters if your business model is prohibited or restricted, because it will be shut down. Account closure is equally common for businesses prone to high chargebacks or monthly dollar volume.

Sudden shut down of processing stifles revenue and ultimately your business. It will affect business operations and payroll. If you are currently in this predicament, it’s time to diversify your payments with an offshore merchant account. To do this a legitimate business setup in your targeted foreign jurisdiction is needed.

It’s Time for an Offshore Merchant Account

Keeping domestic operations while catering to international customers is challenging. Not all cards are created equal. For example, a Hong Kong-based online merchant targeting North American credit/debit card holders may see a majority of orders declined, as they may be labeled “suspicious” by issuing banks in the US and Canada.  

Also with the right acquiring bank in the European Economic Area (EEA), you should be able to accept Euros and Norwegian Krone. Furthermore, conversions will increase because they support local credit and debit cards from those regions.

Be Realistic and Follow the Law

Setting up cross-border operations takes time. Establishing a company in your chosen foreign jurisdiction could take weeks. You must also follow applicable laws. Don’t forget; you may also need a bank account to receive funds from your merchant account.

Once the company formation and banking setup are done, apply for a merchant account. A credible acquiring bank will do the necessary know-your-customer (KYC) procedures. Be prepared to submit processing statements, government-issued ID, a bank reference letter and other information.

Be Vigilant About Fraud

Two months of processing history may not enough to secure an offshore merchant account. Additional supporting documentation is likely required.

Working with a payment provider that can walk you through all the steps will save a lot of time and money. A foreign payment provider may still decline your business because of high chargeback and fraud rates.

So develop a three-month plan to reduce your risk. Use fraud software to stop false transactions and blacklisted countries with a fraudulent reputation or that you don’t ship to.

Likewise, merchants need to be careful about merchant service partnerships. It is not uncommon to hear horror stories about foreign payment providers disappearing and running away with settlements and reserves. Merchants should perform due diligence on every partner as well as ensure all applications and contracts make sense and can be legally enforced.

These are just a few considerations when boosting cross-border payment conversions. With that in mind, do your research, think globally, and be cautious every single step of the way.

Maria Sparagis is Founder and President of, a payment solutions provider for high-risk merchants. 

This article appeared in issue 44 of FeedFront Magazine, which was published in October 2018.

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