Operations

An Easier Way to Accept International Credit Cards

Posted on February 20, 2014 by Jeff Brodsly, CEO, Chosen Payments

The growth of global affiliate networks and online bookings have helped many operators attract and serve international clients. Most often, service is paid for via debit or credit cards.

But without the proper platform in place, clients and operators risk payment inconsistencies from foreign exchange rates and surprise processing fees. When a client sees charges on a statement that are higher than expected, the client will be confused, unhappy, and quick to complain about the charges. This may result in problematic chargebacks for operators, damage to the client relationship, and the wicked migraines of dealing with billing questions.

Vital Variables For International Card Transactions

To understand how international credit card transactions work, first consider these four variables:

• What currency the service is quoted in.
• What currency the cardholder pays in.
• What currency the merchant receives as payment.
• Whether there is any form of currency conversion.

For example, if a consumer from Japan who is vacationing in New York City buys a pair of $140 sunglasses from a store, you might expect the transaction to go like this:

The Japanese cardholder will get charged $140 and the merchant will receive $140 from their credit card processor into their bank account.

But it’s not as simple as that. Due to foreign exchange rates, fees associated with currency conversion, and fees associated with the processing technology, the customer may end up being charged a higher amount than expected; to use the example above, the Japanese cardholder may see a charge of something like $225, instead of $140, on their statement.

This prompts unhappy customers and potential billing inquiries that can bog down your service staff. These types of transactions happen daily worldwide, and the ground transportation industry is beginning to see such situations more often. So how do you remedy the situation?

Two Problem-Solving Tools

Some credit card processing companies have created platforms to streamline the foreign currency transaction process and meet the needs of operators and clients. There are two options I’ve seen grow more prevalent: Dynamic Currency Conversion (DCC) and Global e-Pricing (GeP).

To recap, the normal foreign transaction process (without DCC and GeP) looks like this:

Price quoted in operator’s currency ➞ Customer pays with foreign credit card in currency quoted ➞ Transaction processed in operator’s currency (foreign exchange rate and processing fees are unknown to customer but will be paid by customer) ➞ Associations convert transaction from customer’s currency to operators currency and issue a conversion fee paid by the customer ➞ Operator gets paid the amount quoted at beginning of sale, but the customer may see a higher charge on the statement than projected1 from surprise fees.  

Dynamic Currency Conversion Gives Clients Options

DCC solves the problem by allowing operators to offer services quoted in USD while offering customers a choice of paying in USD or their local currency. The customer still gets charged a conversion fee, but it’s disclosed upfront and requires the customer to accept, similar to the way an independent ATM discloses the fee for cash withdrawals. Regardless of whether the client pays in USD or foreign currency, operators get paid in USD (or the currency of their choice), generally within three days.

With DCC, clients can see the final amount that will be charged in their own currency, the foreign exchange rate used for conversion, and disclosure of any fees before authorizing payment. This eliminates unpleasant surprises, reduces client complaints, and expedites expense processing for business travelers, all of which increase customer satisfaction and generate repeat business.

As of this writing, 36 of the world’s most widely accepted currencies can be used with DCC.

Global e-Pricing

Global e-Pricing offers an even better experience for consumers because it requires fewer fees from them. With GeP, the consumer is only quoted in their local currency with no conversion or other related fees assessed to them.

Operators set a fixed price in the respective currency and receive a settlement of whatever the conversion rate (between price in foreign currency and USD) is on the day of settlement as provided daily to the credit card processor by Visa and MasterCard. The operator may be assessed a fee by the processor, which is built into their end-of-month processing fees rather than off the top of the settlement. Now let’s take the example of the Japanese tourist booking limo service in NYC and the operator using GeP.

The customer would received a price quote in YEN during the reservation booking process, pay in YEN exactly what they were quoted with no added fees; the US-based operator is funded in USD equal to the price paid in YEN, according to that day’s conversion data.

This exposes operators to some risk because they may end up getting a lower payment in USD than projected, based on the currency conversion, but they may also benefit if the conversion rate offers more value to the USD.

GeP offers the most convenient situation for the international client. It reduces billing inquiries and improves the client experience. GeP also offers faster funding for the merchant on foreign transactions than DCC. There are 150 currency options that may be converted to USD with GeP.

Deciding Between the Two

Without DCC or GeP, a customer will pay in their currency but without knowing the foreign exchange rate and conversion fees until they receive the final charges on their statements, creating potential issues. With DCC or GeP, the customer gets a clearer transaction experience. How do operators choose between the two?

Ask yourself this important question:

Do I care about transparency and customer experience more than getting the exact amount of USD funded to me?

If so, go with GeP. If not, go with DCC.

Whether you opt for DCC or GeP, you can boost your international travel business by providing an “in country” shopping experience on your web reservation page by providing accurate prices in foreign currencies.

As more products that can help international limousine operators come out, I will continue to inform you of your options, which will hopefully improve your business.

Jeff Brodsly is the CEO of Chosen Payments, a credit card transaction processing company based in Moorpark, Calif. He can be reached at (855) 4-CHOSEN; [email protected] or for more information go to
www.liverypayments.com.
Jeff Brodsly is the CEO of Chosen Payments, a credit card transaction processing company based in Moorpark, Calif. He can be reached at (855) 4-CHOSEN; jeffb@chosenpayments.com or for more information go to www.liverypayments.com.
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