Payments Resources

Payments Resources
The Actual Costs in Using a Payment Gateway

Understanding the True Costs of Using a Payment Gateway

As the eCommerce market expands, so does the array of payment gateways available to merchants worldwide. Many are tempted by platforms advertising free or low-cost services, thinking they've secured a great deal. However, the reality of hidden costs of payment gateways often emerges only after transactions begin, potentially eroding profit margins.

Are you grappling with the complexities of global transactions? Consider Tazapay, your global payment gateway partner. With a network extending across 173 countries and a suite of fully digitised solutions for marketplaces and platforms, Tazapay helps you make the world your market.

To better understand this landscape, let’s explore the common costs and fees associated with payment gateways, particularly those involved in cross-border payments.

Platform Fees: Decoding the Cost Structures

Platform fees are relatively straightforward—they represent the costs of using a payment platform. Most reputable payment gateways impose some type of fee. These fees can vary, typically appearing as a combination of a flat fee plus a percentage of the transaction, or as a simple percentage-based fee.

For example, some payment gateways may charge fees such as $0.30 plus 2.9% per transaction, or $0.11 plus 3.95%, depending on the payment method. In contrast, Tazapay offers a more streamlined approach, charging either 1.8% or 3% for non-card transactions. To illustrate the differences in cost structures, consider the expense of a $50 transaction versus a $1000 transaction:

Using a $0.30 + 2.9% fee structure, a $50 transaction incurs a cost of $1.75, while a $1000 transaction costs $29.50.
However with Tazapay’s fee, starting from 0.8%, the same transactions would cost just $0.40 and $8, respectively.

Comparing these fee structures highlights significant differences. Opting for a straightforward percentage fee, such as Tazapay’s, can be more cost-effective, particularly for larger transactions where flat fees add up. This comparison underscores the importance of understanding payment gateway fees and how they impact your costs, especially in a cross-border payment gateway context.

Payment Gateway Costs

Understanding payment gateway costs is essential when considering the financial implications of various payment methods. These platforms may absorb fees, integrating them into overall platform fees, or pass them directly to consumers.

1. Bank Transaction Fees

Bank transaction fees play a significant role in the costs associated with direct bank payment methods like local bank transfers and bank redirects. Typically, local bank transfers might incur a surcharge for cross-bank transactions, while in-bank transfers often avoid these fees. Bank redirects, similar in operation to local bank transfers, usually carry minimal processing fees, influenced by national e-commerce policies.

For example, Singapore's PayNow service was free of transaction fees from its launch in July 2017 until January 2021, under a full subsidy. However, a nominal fee of SGD0.22 was introduced in 2022 to cover gateway pricing models adjustments.1

2. Card Processing Fees

Credit card processing fees are another critical aspect of payment gateway costs. Merchants may apply a surcharge for transactions using card networks like Mastercard or Visa. For instance, as of 2024, credit card processing fees for merchants range from 1.3% to 3.5%, depending on the card and transaction type.2

3. Wire Transfer Costs

The cost of wire transfers, particularly for international payments, is a notable part of gateway costs. Domestic wire transfers generally incur lower fees and are processed faster compared to international transfers, highlighting the variability of bank surcharges across different institutions.3

International Transaction Fees and FX Costs

When transactions span multiple geographic regions involving different currencies, international transaction fees and currency exchange costs, or FX costs, are inevitable. Payment gateways often manage these costs by adding a percentage-based fee over the market’s FX rate, or by setting their own buy and sell rates.

This adjustment allows payment gateways to cover the risks and operations involved in currency conversion, forming a significant portion of the payment gateway costs. Understanding these fees is crucial for businesses operating internationally, as they can impact the total cost of transactions significantly.

Gateway Setup Fees

Setup fees are a common initial cost associated with various online payment methods, including payment links and payment APIs. These fees often reflect the technical expertise required for integration and the complexity of the setup, especially in sophisticated online marketplaces and platforms.

In Malaysia, the variability in gateway setup fees is evident, with the top ten online payment methods charging anywhere from zero to RM300 per year.4 This range illustrates the diverse pricing models that payment gateways employ based on the services and technology they provide.

Making Informed Choices in Payment Gateways

With a clear understanding of the various payment gateway costs, including transaction fees, setup fees, and FX costs, you are now equipped to make more informed decisions when selecting a payment gateway that offers the best value for your money.

As you consider your options, take a look at Tazapay. Tazapay offers competitive platform fees at just 0.8 - 2.5% for non-card payments and 3.8% + $0.50 for card transactions. Moreover, it provides some of the lowest FX rates in the market and even promises to match any better rates you might find. Making the right choice for your payment gateway could mean the difference in creating significant savings and efficiency for your business operations.



Sources

1 2020 E-commerce Payments Trends Report: Singapore Country Insights (jpmorgan.com)

2 https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/

3 Wire Transfer Definition (investopedia.com)

4 Top 10 Online Payment Methods in Malaysia for Ecommerce - ZCOM MY Blog



Payments Resources
Payment Gateway Rails: How does Cross Border Checkout from USA to India Work?

Online cross-border transactions happen on the daily through a whole slew of digital payment gateways. They happen so frequently and so seamlessly that the cross-border payments industry is expected to reach $156 trillion USD in 2022¹.

Digital payments work so frequently and seamlessly such that it may only look like a few clicks between payment providers to an average Joe. But what belies these clicks are infrastructures held in place via API calls, always-on servers, and other functions that serve both B2B and B2C markets globally.

With this in mind, the discerning merchant based in India may be curious to know how their payments work when they export their products or services on the international market. After all, India’s export market is sized at USD 284 billion for goods and USD 205 billion for services in the year of 2020².

A market of interest to these Indian exporters would be the United States of America, who is India’s largest destination country valued at USD 64.2 billion in 2020². Exporters in India would stand to gain from targeting this country’s consumers by not only offering the product or service American buyers would need, but to also ensure that the checkout process is localised to their sticky buying habits.

Online Checkout: The American Buyer Makes their Payment

For platforms that would like to optimise their checkout to the US market, it should ideally have multiple payment methods such as card payments, digital wallets, local bank transfers, etc.

In the USA, cards have a very strong presence both online and offline, where credit cards are the most common payment method in the US consisting of 58% of the 2020 eCommerce payments market according to JPMorgan’s study3.

Some of the most used card networks are Visa, Mastercard, American Express and Discover. The ubiquity of credit cards and debit cards has made them an enabler of digital wallets in the US where consumers can link their payments and top up their digital wallets using card networks. Thus, making it the second most popular payment method there.

In addition, other payment methods include bank redirect apps and local bank transfers using banks such as:

  • JPMorgan Chase
  • Bank of America
  • Citibank group
  • Wells Fargo
  • Goldman Sachs
  • Morgan Stanley, etc.

Once the payment is made by the buyer, the payment gateway starts processing the payment. The process differs for different payment methods used to pay. If the buyer has chosen to pay by card or wire transfer, the funds would not be held at the local bank account but sent directly using the payment method’s payment rails.

On the other hand, if the buyer pays by local bank transfer, it will first be held by the payment provider’s local bank account before transferring the funds to the seller’s bank account in India.

Cross-Border Payment: Sending the Money from USA to India

Sending payments cross-border can be simply boiled down to sending money from an origin country’s account to a destination country’s account. In this instance, the origin country would be the United States and the destination country is India.

For bank transfers, cross-border payments are sent via SWIFT wire transfers. Outside of the bank transfer payment method however, card networks would have their own payment rails to send funds into. But platform fees may still vary from one payment method to another.

Generally speaking:

  • Bank Surcharges affect payments linked to the banks themselves. The surcharge amount varies depending on the bank.
  • Card Surcharges can go as high as 4%, and depends on the card’s network fees.
  • Wire Transfer Costs are expensive for international transactions, but tends to be cheaper for local transactions.
  • FX Conversion Costs may also be levied on top of payment method costs.

While it would be beneficial to keep these factors in mind, some payment providers like Tazapay may have cheaper platform fees due to partnering with local payment providers to keep these costs low.

Hedging Against FX Fluctuations by Holding USD in a Multicurrency Account

For merchants that deal with suppliers internationally, it may make sense to opt to receive payments in USD in order to hedge against fluctuations in their local currency.

This can be achieved by opening a multicurrency account in the merchant’s own country so that they can both hold USD, their local currency, and any other currencies that they may need when dealing with other businesses.

Payout or Disbursement: Releasing the Payment to the Indian Seller

The last step in international payments happens when the merchant based in India would receive their payment from the payment provider.

Merchants who built their own brand.com with integrations to the payment platform, have built their storefronts with tools like Shopify or WooCommerce, or use the payment platform directly can expect to receive their payouts by the next business day or a week depending on the buyer’s chosen payment method and whenever they request for the payout.

On the flipside, merchants who sell via an online marketplace may have a fixed time period to receive their payout as it is more economical for the online platform to club their payouts to a single day of the month. When this happens would be mentioned on the eCommerce marketplace’s Terms & Conditions page when the merchant first signs up with the platform to sell. These funds then get compiled and sent to the Indian merchant’s local bank account.

Some major Indian banks to look out for include:

  • HDFC Bank
  • State Bank of India
  • ICICI Bank
  • Yes Bank
  • Bank of Baroda
  • Bank of India etc.

Legislation and Compliance: Proof of Export with an FIRC/FIRA

After receiving any form of international payments, the Indian merchant needs to obtain an FIRC or FIRA to prove that there was foreign inward remittance into an Indian bank account. Obtaining an FIRC/FIRA is part of the legislative requirements set in place by the RBI in order to prevent money laundering or fraud from taking place within the country.

Obtaining an FIRC or FIRA would require the Indian exporter to request for the document from an AD1 (Authorised Dealer Category 1) bank that has processed their cross-border payment. RBI has provided a list of such banks on their website⁴.

With this knowledge on how cross-border payments work from the United States to India, you now know the importance of having an online checkout that not only caters to the American consumer in terms of ease of use, but also allows for a seamless transfer of money from one country to another.

Keeping these steps and features in mind will ensure that you are able to select a payment provider that helps you to decrease cart abandonment and passes time and cost savings to you. If you are looking for a payment provider, why not give Tazapay a try? With coverage of over 173+ countries and local payment options in over 70 major markets, satisfy your customers anywhere in the world by providing them a seamless checkout experience.

Sources:

  1. Three trends redefining the global cross-border payments market
  2. India (IND) Exports, Imports, and Trade Partners | OEC - The Observatory of Economic Complexity
  3. 2020 E-commerce Payments Trends Report: United States Country Insights
  4. RBI: Authorized Dealers in Foreign Exchange
Payments Resources
PayNow: Revolutionizing Singapore's Digital Payment System

In recent years, Singapore has rapidly evolved into a digital-first economy, with the island nation at the forefront of adopting innovative financial technologies. The emergence of digital wallets has signaled a shift in consumer preferences, with predictions suggesting they might soon eclipse traditional card payments. Central to this digital revolution is PayNow, a system that has transformed the way transactions are conducted in Singapore, promising a seamless, efficient, and secure method of payment.

What is PayNow?

Developed under the auspices of the Association of Banks in Singapore (ABS), PayNow is more than just a payment method; it's a cornerstone of Singapore's ambition to become a fully cashless society. This real-time payment platform enables users to send and receive money instantly using just a mobile number, NRIC/FIN, or UEN number, integrating seamlessly with the Singapore Quick Response Code (SGQR) for QR code payments. Supported by a consortium of major banks and financial institutions under the regulation of the Monetary Authority of Singapore (MAS), PayNow is a testament to Singapore's cohesive approach to financial innovation.

The Soaring Adoption of PayNow

Updating the statistics with the latest information, PayNow's trajectory in Singapore showcases the nation's accelerated embrace of digital payments. In 2020, Singapore witnessed a dramatic surge in real-time transaction volumes, reaching 138.38 million, a 48% increase from 2019. The value of these transactions also saw a significant jump of 40%, escalating from US$110 billion in 2019 to US$154 billion. The growth trend is projected to continue, with real-time transactions expected to climb at a compound annual growth rate (CAGR) of 23.2% to hit 392.94 million by 2025. This would elevate the total transaction value at a CAGR of 17.74%, underlining the increasing significance of digital payments in Singapore's financial landscape​ (Fintech Singapore)​.

The recent expansions into real-time cross-border payments further underline PayNow's evolving role in the financial ecosystem. 2023 marked a pivotal year as Singapore initiated real-time cross-border payment connections with neighboring countries. These developments, facilitated by the Monetary Authority of Singapore (MAS), aim to enhance convenience for cross-border fund transfers and small-value payments. The introduction of cross-border QR code payment linkages with Malaysia and Singapore, along with the establishment of a cross-border linkage between Singapore’s PayNow and India’s UPI, highlights the city-state's commitment to fostering financial inclusion and bolstering the ASEAN economy through improved payment connectivity​ (Fintech Singapore)​.

Unveiling the Benefits and Addressing the Drawbacks

Benefits

  • Real-time Payment Processing: The hallmark of PayNow is its ability to process payments in real-time. This immediacy is invaluable for both personal and business transactions, where speed can often be of the essence.
  • Universal Accessibility: PayNow's integration with a broad network of banks ensures that users can make payments across different financial institutions, breaking down the barriers traditionally associated with bank-specific platforms.
  • Stringent Security Measures: Security is paramount in digital transactions, and PayNow upholds the highest standards. Regulated by MAS, the platform employs robust security protocols, offering users peace of mind with each transaction.

Drawbacks

  • Technology Dependency: The reliance on smartphones and internet connectivity can be a limiting factor for some segments of the population, potentially excluding those without access to smart devices.
  • Privacy and Safety Risks: The convenience of using personal identifiers as payment addresses comes with potential privacy risks. There's also the ever-present threat of phishing and fraud, underscoring the need for constant vigilance.
  • Complicated Dispute Resolution: Navigating the process for resolving transaction disputes can be daunting, requiring engagement with recipients and financial institutions which can be time-consuming and frustrating.
pros and cons of Paynow

Expanding Horizons: PayNow in International Transactions

While PayNow excels in facilitating local transactions, its integration with international payment systems like Tazapay represents a significant leap forward. This synergy allows Singaporean businesses and consumers to participate in the global marketplace more effectively, providing a streamlined process for cross-border transactions. Through platforms like Tazapay, users can easily transfer funds internationally, opening up new avenues for commerce and personal transactions alike.

Tazapay: A Closer Look

Tazapay stands out by offering a simplified and secure method for leveraging PayNow in international transactions. By facilitating the transfer of funds to Tazapay's Singapore account via PayNow, and then on to the recipient's foreign account, it bridges the gap between local and global payment ecosystems. This process not only enhances the utility of PayNow but also offers businesses a competitive edge in the international market.

Understanding the Financial Implications

The cost-effectiveness of PayNow for local transactions is clear, with nominal fees and a structure that promotes accessibility. However, the dynamics shift when considering international transactions. The use of third-party platforms like Tazapay introduces additional costs, albeit often lower than traditional banking fees. For businesses looking to expand globally, understanding these financial nuances is crucial in selecting the most efficient payment methods.

The Path Forward with PayNow

As PayNow continues to evolve, its potential to shape Singapore's digital economy grows ever more significant. Its integration with international payment gateways heralds a new era of financial connectivity, enabling Singapore to further solidify its position as a global financial hub. The ongoing developments in digital payment technologies promise to enhance PayNow's offerings, ensuring that Singapore remains at the forefront of the digital payment revolution.

For businesses and individuals alike, the journey towards a cashless society is filled with opportunities. Embracing platforms like PayNow and Tazapay not only facilitates easier transactions but also opens up new horizons for global engagement. As we look to the future, the role of digital payment systems in driving economic growth and fostering global connections cannot be underestimated.

In conclusion, PayNow's journey from a local payment solution to a key player in international transactions encapsulates the essence of Singapore's digital transformation. Its continued adoption and integration with global payment systems underscore the importance of digital innovation in today's interconnected world. As we embrace these technologies, the prospects for seamless, secure, and efficient transactions are boundless, heralding a new chapter in the story of digital payments.

Product Info

Product Info
Local Payment Methods in India: How UPI Works In an International Payment Gateway

India stands at the forefront of the digital revolution, marking itself as one of the fastest-growing digital economies worldwide. With over 117 billion digital payment transactions recorded in 2023, and an average of 380 million transactions per day by December 2023, the country's trajectory towards digital integration is unmistakable. Central to this digital transformation is the Unified Payment Interface (UPI), developed by the National Payments Corporation of India (NPCI), embodying India's rapid embrace of digitalization to simplify financial transactions across the board.

UPI: The Cornerstone of Digital Payment in India

What Is UPI?

UPI stands as a beacon of innovation in real-time payment systems, facilitating inter-bank peer-to-peer (P2P) and peer-to-merchant transactions through a seamless two-click factor authentication process. Governed by the Reserve Bank of India (RBI), UPI's framework enables transactions via a smartphone application, heralding a new era of banking and financial services. Its resemblance to Singapore's PayNow underscores a global shift towards government-led digital payment solutions, fostering an ecosystem where transactions are not just secure but also universally accessible.

Embracing Digital Payments: User Trends and Preferences

In 2023, UPI transactions have seen remarkable growth, with the total transactions processed by UPI standing at 117.6 billion for the year. Specifically, for December 2023, UPI payments in India reached 12.02 billion transactions, with payments worth Rs 18.23 lakh crore being processed in just that month. This represents a 54% year-on-year growth in terms of volume and a 42% growth in transaction value annually​ (Economic Times)​ The adoption of UPI spans across diverse demographics, with its popularity not confined to urban centers but also penetrating rural areas, demonstrating the platform's wide acceptance and adaptability.

UPI's International Footprint: Bridging Global Transactions

International Payment with UPI:

The international operations of UPI have notably expanded beyond its initial reach. As of the latest updates in 2024, UPI's global footprint has extended to several new countries, making it a more versatile option for international payments. Specifically, France has recently adopted UPI, joining other countries like Bhutan, the United Arab Emirates (UAE), Malaysia, Singapore, Nepal, Oman, Qatar, Russia, Sri Lanka, Mauritius, and the United Kingdom in embracing this system. These expansions underscore UPI's growing acceptance and its potential as a global payment gateway.

This broadened adoption facilitates cross-border transactions, allowing users in these countries to leverage UPI for seamless and secure payments. The collaboration with various international partners and payment providers highlights UPI's versatility and its capability to streamline payment processes across different markets. This development is part of the National Payments Corporation of India's (NPCI) ongoing efforts to extend UPI's reach, reflecting the platform's potential to influence the global digital payment ecosystem significantly.

Cross-border Transactions with UPI: A Closer Look

For regions yet to establish direct UPI connectivity, international transactions are streamlined through third-party payment providers, acting as bridges between UPI and global markets. Here’s how the process unfolds:

Initiating Payment: Users initiate transactions by transferring funds to the payment provider's bank account in India via UPI. This is typically done by scanning a QR code or barcode within the UPI app, representing the transaction amount.

Global Fund Transfer: Subsequently, these funds are transitioned into one of the payment provider’s international accounts. The final step sees the funds disbursed to the recipient's bank account abroad, completing the international transaction.

This model exemplifies UPI's adaptability and its growing acceptance as a versatile solution for international payments, providing a seamless, secure, and efficient transfer mechanism across different geographies.

Choosing the Right Payment Provider

Given the diverse landscape of third-party payment providers facilitating UPI transactions internationally, businesses and individuals are advised to select partners offering comprehensive support for a wide range of localized markets. This ensures not only the broad usability of UPI across various international platforms but also enhances the efficiency and security of cross-border payments.

With ongoing discussions to further expand UPI's reach to additional countries, the future of international digital payments looks promising, positioning UPI at the forefront of the global digital economy's evolution.

Analyzing UPI: Benefits and Challenges

Benefits of UPI:

Seamless Payment Experience: UPI's integration with numerous payment apps and digital wallets, alongside its vast network of banks, provides a hassle-free transaction process.

Instant Transactions: The real-time processing capability of UPI ensures transactions are completed within seconds.

Security and Ease of Use: Enhanced with two-factor authentication and a unique UPI ID, the platform guarantees a secure yet straightforward payment experience.

Drawbacks of UPI:

Dependence on Internet Connectivity: The efficacy of UPI is contingent on reliable internet access, limiting its use in connectivity-challenged regions.

Security Concerns: Despite robust security measures, users must remain vigilant against potential phishing and fraud attempts due to the PIN-based authentication system.

Understanding Taxation and Compliance in UPI Transactions for International Businesses

Expanding into India's digital market requires a keen understanding of the country's tax and compliance landscape, especially for SaaS companies and digital eCommerce merchants leveraging UPI for transactions. Critical to this expansion is navigating the intricate documentation requirements, including obtaining a Tax Residency Certificate (TRC) and making a No Permanent Establishment (PE) Declaration, among others. These steps are vital for leveraging tax benefits under Double Taxation Avoidance Agreements (DTAAs) and ensuring smooth operation within the legal framework.

Furthermore, the implementation of GST on digital services and the significance of the Equalisation Levy on foreign e-commerce transactions underscore the evolving tax regime in India. These measures aim to ensure a level playing field between domestic and international players in the digital economy. As such, international businesses must stay abreast of these regulations to optimize their tax liabilities and maintain compliance. Download our eBook to understand this in detail

For businesses looking to streamline this process, leveraging platforms like Tazapay can provide significant advantages. Tazapay simplifies the complexities of tax collection, compliance, and remittance, enabling businesses to focus on growth and market penetration rather than administrative burdens.

Future Outlook: UPI’s Role in the Global Digital Economy and Tazapay’s Integration

As the Unified Payment Interface (UPI) continues to evolve, its influence is set to extend beyond the Indian market, marking a significant shift in the global digital payment ecosystem. UPI’s initiatives aimed at expanding its international reach and enhancing its features for global usability are pivotal. In this landscape of growth and innovation, UPI is well-positioned to facilitate seamless and secure online payments on a worldwide scale, embodying India's ambitious vision for a digitally empowered global economy.

In this evolving scenario, Tazapay stands out as a crucial player, offering an innovative solution that integrates UPI alongside other local payment options across 80+ locations with just one integration. This strategic collaboration enables businesses to leverage UPI’s simplicity and security while also accessing a broad spectrum of payment methods globally, ensuring they can meet the diverse preferences of customers worldwide. Tazapay's one-stop payment solution signifies a leap towards creating a more inclusive and accessible digital payment infrastructure, making it easier for businesses to engage in cross-border commerce without the hassle of managing multiple payment integrations or local entities.

eCommerce Tips

eCommerce Tips
How a 3DS-enabled Payment Gateway Helps Reduce Chargebacks on Your eCommerce Business

Security is a cornerstone of any successful eCommerce operation. Among the most effective tools in the arsenal against fraud and chargebacks is 3D Secure (3DS) technology. If you've made a card payment online, it's likely you've encountered 3DS—even if you weren't aware of it. Let's delve into how 3DS works and its role in minimizing chargebacks.

Understanding 3DS in eCommerce Payments

3DS is a robust authentication protocol designed specifically for card payments. It hinges on a three-domain model encompassing the Acquirer Domain (merchant’s bank), the Issuer Domain (cardholder’s bank), and the Interoperability Domain (technology facilitating 3DS communication). This protocol is vital for both payment authentication and additional security checks, offering several ways to authenticate:

  • App-based Authentication: Integrated within a merchant's mobile app, this method prompts users for authentication during a transaction, often using biometric features like fingerprints for quick and secure verification.
  • Browser-based Authentication: Occurs on websites through a browser, where users are typically asked to enter a one-time password (OTP) sent via SMS or email, adding an extra layer of security to the transaction process.
  • 3DS Requester Initiated: Designed for recurring payments or subscriptions, this approach verifies the cardholder’s information for scheduled transactions without requiring their active participation each time, streamlining the payment process for ongoing services.

The essence of 3DS is its requirement for consumers to authenticate their transactions, significantly reducing unauthorized payments and, consequently, chargebacks.

the 3 domains in 3ds secure

2DS vs 3DS Card Payments

While 2DS offers a simplified, two-domain model for authentication, 3DS presents a more comprehensive approach, including an additional security domain. The primary difference lies in the depth of security and the consumer's interaction with the authentication process, with 3DS requiring an OTP or similar verification method.

Considerations when Choosing Between 2DS and 3DS to Reduce Chargebacks

The choice between 2DS and 3DS impacts not just security but the overall customer experience. While both aim to secure transactions, 3DS stands out for its ability to prevent various forms of fraud, including 'friendly fraud'—where chargebacks are filed without legitimate grounds. Implementing 3DS can significantly enhance your efforts to mitigate such risks.

However, the effectiveness and preference for 3DS can vary globally. For instance, while some markets like the U.S. may still lean towards 2DS for its simplicity, others, like Singapore, have widely adopted 3DS, appreciating the added security layer of OTP verification. Knowing your target market's preferences is crucial to implementing the most effective payment security strategy.

Conclusion

Familiarity with 3DS and its application in a payment gateway can greatly benefit your eCommerce business by reducing chargebacks and enhancing transaction security. For those seeking a secure, robust payment gateway solution, Tazapay offers a comprehensive suite of features designed to protect your online transactions. Accredited by the Monetary Authority of Singapore (MAS) and equipped with PCI DSS certification, Tazapay ensures your business transactions are secure and trustworthy.

eCommerce Tips
Global Payments, Local Touch: Unlocking Growth with Local Payment Methods in Cross-Border E-commerce

The digital era has opened a world of opportunities for businesses to go global. Yet, the unique digital evolution of each region and country has profoundly influenced consumer preferences in online payments. This diversity has given rise to local payment methods, designed specifically to align with the distinct consumer behaviors across the globe. Understanding what these local payment methods entail and the reasons behind their emergence is crucial for businesses looking to thrive in the international market.

Exploring the Spectrum of Payment Options in Cross-border Transactions

As we embark on the journey to understand the intricacies of local payment options, it's essential to first navigate through the diverse payment landscape that cross-border payments encompass. These payment methods form the backbone of international commerce, facilitating seamless transactions across borders. Let's delve into the key payment options that businesses and consumers commonly utilize in a cross-border context:

Credit Cards: Universally accepted, credit cards stand as a cornerstone in cross-border transactions, offering convenience and security for buyers and sellers alike.

Wire Transfer: For direct bank-to-bank transactions, wire transfers offer a reliable method for transferring funds internationally, albeit often with higher fees and longer processing times.

Local Bank Transfer: Bridging the gap between traditional and digital, local bank transfers provide a method for customers to pay through their local banking systems, enhancing convenience without the need for international banking facilities.

Local Payment Options: Catering specifically to regional preferences and financial infrastructures, local payment options (or alternative payment methods) offer tailored solutions that resonate with the local consumer behavior, ensuring inclusivity and accessibility in the global marketplace.

What are Local Payment Methods? Why Did These Different Payment Methods Arise?

Local payment methods, distinct from the conventional international payments like credit cards and bank transfers, cater to regional preferences and needs. Known variably as alternative payment methods (APMs), their development is influenced by a myriad of factors including existing infrastructures, consumer behavior, and government policies. The contrast between the Philippines and Ghana illustrates this diversity perfectly; while the Philippines has embraced eWallets for their unbanked population, Ghana leans towards Mobile Money services provided by telecom companies, showcasing the tailored evolution of payment solutions across different landscapes.

Benefits of Adding Local Payment Options to Your Cross-Border Payment Strategy

Incorporating local payment options into your cross-border payment gateway is not just a nod to customer diversity—it's a strategic move that propels your business forward. This approach does more than just acknowledge the varied preferences of your global customer base; it actively engages with them, offering solutions that are attuned to their specific needs and circumstances. Here are the key benefits of integrating local payment methods into your international payment infrastructure:

Enhanced Customer Experience: By offering payment options that customers are familiar with and trust, you significantly improve the user experience. This familiarity reduces friction at checkout, increasing the likelihood of completing a purchase.

Increased Market Penetration: Local payment methods open doors to new markets, especially in regions with a high preference for non-traditional payment solutions. This inclusivity allows you to reach a broader audience, tapping into previously inaccessible customer segments.

Higher Transaction Success Rates: Local payment options often boast higher success rates for transactions, owing to their compatibility with the regional banking infrastructure and regulatory environment. This leads to fewer failed transactions and a smoother payment process.

Competitive Advantage: Offering a diverse set of payment options can set you apart from competitors, making your platform the preferred choice for customers seeking convenience and flexibility in their payment methods.

Regulatory Compliance: By integrating local payment methods, you align with local regulations and financial practices, minimizing legal and operational risks associated with international transactions.

Reduced Costs: Local payments can be more cost-effective for both merchants and consumers, avoiding the high fees associated with international card payments and currency conversions.

As the digital economy continues to connect markets worldwide, the strategic incorporation of local payment options into your payment gateway is essential. It not only respects and caters to the preferences of a global customer base but also capitalizes on the unique opportunities presented by the varied financial landscapes across regions. Embrace the diversity of payment preferences to unlock a world of possibilities for your cross-border business.

How Much Does it Cost to Include a Local Payment Method for International Payments?

Embracing local payment methods comes with its costs, a fundamental truth in the realm of international business. To ensure a smooth integration of these payment solutions onto your platform, it's crucial to evaluate the financial implications:

Setup Fees: Assess whether an initial investment is required to access the service.

Platform Fees: Understand the service's cost structure—whether it operates on a flat rate, transaction percentage, or a combination of both.

Payout Options: Consider the currency in which the provider will settle payments to your business account, and whether it aligns with your financial preferences or needs.

FX Rates: Analyze the exchange rates offered for conversions, especially if payouts are in a different currency than your primary business operations.

Gaining a comprehensive understanding of these expenses is key to selecting a payment gateway that aligns with your business objectives and budgetary constraints.

In navigating these costs, Tazapay emerges as a pivotal partner for businesses looking to expand their global footprint. Offering competitive pricing and seamless integration, Tazapay enables access to local payment options in over 80 countries, simplifying the process without the need for establishing local entities. This advantage allows businesses to rapidly adapt to market demands and consumer preferences, ensuring a cost-effective and efficient payment solution tailored to the needs of international commerce.

Payment Methods by Region

The landscape of local payment methods is as diverse as the regions they serve. Each area has cultivated solutions that resonate with its unique market dynamics:

  • Africa: Pioneering with Mobile Money and Voucher-Based Payments, reflecting the continent's mobile-first approach.
  • Asia Pacific: Embracing QR Code Payments, showcasing a blend of technology and convenience.
  • Europe: Adopting Trustly and Sofort, highlighting preferences for secure and efficient bank transfers.
  • Latin America (LATAM): Favoring Voucher-Based Payments, catering to a cash-preferred customer base.

This regional overview underscores the importance of choosing payment methods that align with the local consumer behavior and technological infrastructure.

Integrating local payment methods into your cross-border payment strategy is imperative for businesses targeting international markets. By offering payment options that cater to regional preferences, you can enhance customer experience, expand market reach, and improve conversion rates. With the support of partners like Tazapay, navigating the complexities of global payments becomes more manageable, allowing your business to thrive in the competitive landscape of international e-commerce.

eCommerce Tips
Navigating Cross-Border Chargebacks – Tips for Merchants

eCommerce gives merchants access to a global audience. Via digital payments, anyone in the world can be your customer. The simple shift to online shopping resulted in a complex, worldwide eCommerce marketplace.

But global access also creates challenges, specifically with disputes and chargebacks. Standard domestic chargebacks on a regular day are difficult and costly—the problem only grows more complex with international payments. From changing country regulations to different payment processing methods, many merchants struggle with cross-border chargeback defense.

Let's explore all you need about cross-border disputes and how you can manage global chargebacks.

What Is a Cross-Border Chargeback?

A cross-border chargeback is a dispute filed by a customer against a merchant in a different country. Usually, the dispute is related to a cross-border transaction, where a global payment or fund transfer occurs across international country lines.

When defining a cross-border chargeback, you must note the exact jurisdictions involved. For a single payment can traverse through several foreign entities (foreign banks, credit cards, currencies, etc). That's why a cross-border dispute simply refers to someone in one country requesting a sale reversal with a merchant in another country.

If you sell a product to someone in Mexico, it is a cross-border transaction. If the customer disputes the charge, it becomes a cross-border chargeback. The payment and the dispute occur between two different sovereign jurisdictions.

Why Are International Chargebacks a Challenge?

Introducing multiple countries into the dispute process creates several difficulties for merchants:

  1. Different regulations and rules: Each country may have its unique legal frameworks. Consumer rights vary by region. Even the methods for filing a dispute can change. That means you must work through multiple country-specific dispute processes. Evidence that may work in one country may not work in another. And reasons codes may not be the same. The lack of standardization makes your response to a cross-border dispute far more complex.
  2. Currency exchange rates: The exchange rate of a currency fluctuates over time. So the value of the initial transaction could be different from the final fund reversal. That creates financial confusion. It may be hard to determine the exact dollar value of a dispute. Aligning the dispute value to the transaction can also become a challenge. You may need to submit financial reports in two currencies. Plus, there are conversion fees you also need to account for. The variable nature of different national currencies makes it hard to manage cross-border chargebacks.
  3. Higher fraud risks: Fraudsters exploit the opaque process of cross-border payments. Limited data sharing between different regulatory bodies offers the ideal space where bad actors can operate. The physical distance also makes it harder for law enforcement to mobilize. And many criminals will target regions with less fraud prevention resources. That’s why the European Central Bank reports that 63% of the total value of card fraud in 2021 involved cross-border transactions. Such rampant fraud contributes to chargebacks and makes it harder for you to develop a response strategy.
  4. Communication barriers: The domestic dispute process includes several players (credit card issuers, banks, merchant accounts, the customer, etc). But for a cross-border dispute, you must also account for language differences. That can lead to miscommunication and delays, especially as you submit evidence. There are also problems that occur due to changes in time zones. Communication problems can complicate the dispute process.

Strategies for Managing Cross-Border Chargebacks:

Luckily, there are several steps you can take to better manage international disputes. The following tips can help you build a robust cross-border chargeback defense strategy.

  1. Know the rules: Familiarize yourself (or your defense team) with the regulations of each country you do business in. With a clear understanding of the local rules, it is far easier to resolve international disputes. For example, you could set up internal operating procedures for each country. Or, develop country-specific escalation paths. It also means you actively stay up-to-date with each country's regulations (e.g. GDPR in Europe).
  2. Invest in robust fraud detection and Chargeback Automation: Implement advanced fraud detection tools designed to recognize patterns associated with cross-border fraud. For example, many high-level digital solutions now use machine learning to track suspicious consumer behavior. Good fraud prevention also includes educating employees (e.g. proper authentication techniques on international purchases). In addition, make sure to implement a chargeback automation solution such as Chargeflow to help you automate the entire chargeback dispute process.
  3. Opt for transparent communication: Invest in accessible, easy-to-read store policies. You limit numerous chargebacks with clear shipping expectations, return policies, and product details. Set realistic expectations about customs inspections, duties, and local fees. Plus, a well-written outline of your store dispute procedures can help reduce the confusion of cross-border chargebacks for consumers.
  4. Find local partnerships: Search out and hire local experts. For example, legal advisors or payment processors such as Tazapay who are established in the area can bring a wealth of regional knowledge. That can make fighting a dispute in that jurisdiction far simpler.
  5. Hire multilingual support: If possible, offer customer support in the local languages of your major markets. Good customer service is one of the best ways to defend against chargebacks. Service reps who know the language are more culturally sensitive, can convey terms and conditions, and help reduce language-related disputes. More importantly, it can help improve customer satisfaction.
  6. Keep detailed records: Maintain meticulous records of all transactions. Ideally, keep copies of all consumer interactions in the required languages. That also includes financial data, which you can record in both currencies. The more compelling your evidence, the easier it is to win back lost revenues.
  7. Active monitoring: Regularly review and analyze your chargeback data. Look for patterns or recurring issues, and adjust your strategies accordingly. You can also use digital auditing tools to gain greater visibility over your chargeback operations.
  8. Use Dynamic Currency Conversion (DCC): Consider investing in card-holder preferred currencies. DCC solutions will convert all prices and transaction details to the buyer's currency. That makes tracking financial and dispute data far simpler. There is a drawback: DCC can expose you to unfavorable exchange rates.

News

News
Tazapay Named to the 2023 CB Insights' Fintech 100 List

CB Insights today named Tazapay to its sixth-annual Fintech 100 ranking (previously the Fintech 250) - showcasing the 100 most promising private fintech companies of 2023.

"Representing 24 different countries across the globe, this year's Fintech 100 is shaping the future of real-time payments, spend management automation, embedded finance, and more," said Chris Bendtsen, Lead Fintech Analyst, CB Insights. Together, they are not only increasing the pace of innovation, but launching new products and features to revolutionize the industry as a whole. I cannot wait to see what this cohort accomplishes next."

"Being recognized in the CB Insights' Fintech 100 list is an affirmation of our vision to revolutionize cross-border payments. We're committed to creating solutions that not only simplify transactions but also instill trust in global commerce. This acknowledgement fuels our determination to push boundaries further," remarked Rahul Shinghal, CEO of Tazapay

Utilizing the CB Insights platform, the research team selected these 100 winners from a pool of over 19,000 private companies, including applicants and nominees. They were chosen based on factors including - equity funding, investor profiles, business relationships, R&D activity, news sentiment analysis, competitive landscape, proprietary Mosaic scores, and Yardstiq transcripts - and criteria such as tech novelty and market potential. The research team also reviewed thousands of Analyst Briefings submitted by applicants.

In a rapidly globalizing e-commerce landscape, Tazapay emerges as a crucial enabler. Its platform provides seamless and secure payment solutions, empowering businesses to confidently operate on a global scale. Tazapay has bridged the gap for cross-border merchants and enterprises, facilitating payment collections from 173+ global markets. Furthermore, the introduction of local payment options such as local bank transfers, QR codes, e-wallets, vouchers, etc. enables businesses to tap into diverse customer segments within these markets, further widening and deepening their reach. Demonstrating commitment to growth and compliance, Tazapay secured a license from the Monetary Authority of Singapore (MAS) and successfully closed its Series A funding in 2023

Quick facts on the 2023 Fintech 100:

  • Equity funding and deals: The Fintech 100 includes a mix of companies at different stages of maturity, product development, and funding. The cohort has raised nearly $22B in equity funding across 381 deals since 2019.
  • Unicorns: There are 31 companies with $1B+ valuations on the list.
  • Global Reach: This year's winners represent 24 different countries across the globe. Forty-three percent of the selected companies are headquartered in the US. The UK comes in second with 12 winners, followed by Singapore with 7. Additionally, some emerging markets stand out with multiple winners this year. For example, India has 3 winners, while Indonesia and Egypt each have 2.

About CB Insights

CB Insights builds software that enables the world's best companies to discover, understand, and make technology decisions with confidence. By marrying data, expert insights, and work management tools, clients manage their end-to-end technology decision-making process on CB Insights. To learn more, please visit www.cbinsights.com.

About Tazapay

Tazapay is reshaping the cross-border e-commerce landscape by offering secure, transparent, and efficient payment solutions tailored for global commerce. Catering to industries such as travel, gaming, ed-tech, SaaS, and e-commerce, we're committed to fostering trust and facilitating smooth global transactions. As the e-commerce domain continues to expand, Tazapay remains dedicated to being the payment solution partner of choice for businesses around the globe. Learn more at www.tazapay.com

News
Tazapay Secures MPI Licence from Singapore's MAS, Bolstering Its Cross-Border Payment Capabilities

SINGAPORE, August 2, 2023 /PRNewswire/ - Following the in-principle approval earlier this year, Tazapay Pte. Ltd. (“Tazapay”) a leading fintech company specialising in cross-border payments, is delighted to announce the attainment of a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore (MAS). The approval from MAS further underpins Tazapay's commitment to robust regulatory compliance and operational excellence.

Singapore, known as a hub for international trade and commerce, offers the perfect vantage point for Tazapay to expand its reach and impact across Asia and beyond. The MPI licence allows Tazapay to extend its full suite of services, spanning account issuance, merchant acquisition, cross-border and domestic money transfers, and e-money issuance, to its growing client base.

Rahul Shinghal, CEO of Tazapay, shares his excitement, "Receiving this licence from MAS is a remarkable milestone in our journey. It not only signifies our commitment to delivering the highest standards of regulatory compliance but also paves the way for us to provide even more innovative and mission-critical cross-border payment solutions. As a Singapore-born and headquartered company, we view this achievement with immense pride and gratitude."

Even amidst a challenging tech winter, Tazapay continues to demonstrate resilience and an unwavering commitment to growth. The MPI licence acts as a catalyst for a host of forthcoming initiatives dedicated to augmenting the quality, security and user-friendliness of Tazapay's services. Coupled with the successful closing of our series A funding of USD 16.9 Million, Tazapay is better positioned than ever to transform the way cross-border e-commerce merchants operate especially in sectors such as travel, education technology, fashion & apparel, gifting and gaming.

With this milestone, Tazapay is ready to redefine cross-border transactions, offering a seamless and secure payment experience to businesses in the vibrant e-commerce space. The journey continues, and Tazapay remains dedicated to its mission of making global payments as smooth and frictionless as possible.

About Tazapay

Tazapay is a Singapore-based fintech company, designed to redefine the cross-border payment experience. Since its inception in 2021 by industry veterans, Tazapay has raised a successful $16.9 million Series A funding round, with significant investment from prestigious institutions such as Sequoia and the PayPal Alumni Fund. The platform allows businesses to transact with ease in 173+ countries, offering an array of card and local payment options. Its unified interface simplifies the onboarding process, allowing businesses to partner with just one entity, thereby streamlining their payment process. Tazapay continues to drive global business growth by offering a trusted and accessible platform for cross-border e-commerce transactions.

News
Singapore-based Tazapay partners with Volt to add open banking payments in UK and Europe

London, 28th February 2023: Tazapay, a Singapore-based cross-border payments provider, has partnered with leading global real-time payments gateway Volt to add open banking to its growing stack of payment offerings, as it accelerates its international growth plans across the UK and Europe.

The partnership will enable Tazapay’s customers to roll out and increase their cross-border sales, especially for APAC and MENA-based merchants looking to expand and increase sales in the UK and Europe.

Volt’s real-time reconciliation capabilities enable businesses to track payments from initiation to receipt, unlocking full visibility of the payment value chain via its data-driven insights and analytics. Over 70% of all payments processed via Volt’s gateway receive instant confirmation of settlement, a significant feature for cross-border merchants and businesses. Tazapay will also leverage Volt’s fraud prevention solution to identify and block any suspicious payments by monitoring transactions via a flexible scoring system.

Tazapay currently supports over 2,000 merchants across 30+ markets. It provides a full-stack payment solution that includes local payment methods as well as cards globally, with buyer and seller protection. The company has a global network of more than 170 markets for its card coverage, and 85 markets for its local payments collection coverage.

This strategic partnership with Volt, a leading player in open banking and real-time payments, unlocks growth for Tazapay in the UK and Europe and will be further continued by enabling open banking payments in Brazil later this year. Volt processes transactions securely between accounts held at over 5,000 banks in the UK, Europe and Brazil, covering over 680 million accounts.

The partnership marks another significant milestone for Tazapay, which has recently completed a $16.9m Series A fundraising round led by Sequoia Capital Southeast Asia, and has received in-principle approval for a major payment institution (MPI) licence from the Monetary Authority of Singapore (MAS).

Open banking continues to gain tremendous momentum in payments worldwide. The value of open banking-powered payments reached almost $4bn in 2021 and, by 2027, is expected to exceed $330bn. Over 60 countries currently have or are considering launching open banking frameworks, and Volt is building the global infrastructure to connect all the domestic systems worldwide via one single point of integration (API).

“With the advent of open banking and maturing of real-time payment networks like the PayNow service in Singapore and UPI in India, there is an increase in expectations from businesses and end consumers for payments to be done in real time. Tazapay is building the payments and compliance infrastructure for cross-border commerce and services, and we continue to focus our attention on growth plans. We are thrilled to be partnering with a like-minded company like Volt, who will support us in enabling seamless, real-time cross-border payments for our customers,” says Rahul Shinghal, CEO and Co-founder at Tazapay.

“This partnership demonstrates the global acceleration of real-time payments across many sectors – a complement to the acceleration of online business processes and an obvious fit for businesses now operating in a digital-first economy. We are excited to join forces with Tazapay and support them in their ambitions to offer cross-border instant payments, as well as data-driven analytics for better decision-making, supported by our proprietary solution Connect,” says Matt Komorowski, Chief Revenue Officer at Volt.