Ranging from news articles to recent CEO interviews.
A rapidly growing global middle class with a hunger for American goods offers major opportunities to U.S.-based companies. But with these opportunities come risks; Payscout Inc.‘s turnkey solution to global payment processing helps eMerchants manage the complexities of doing business in emerging markets.
(Los Angeles, CA) October 20, 2014—The last few years have seen tremendous growth in the global middle class; Ernst & Young expects India’s middle class, currently around 50 million people, to grow to 200 million by 2020, and China’s to 500 million, with similar rates of growth expected in other emerging markets. With this rapid growth in prosperity comes an equally rapid increase in Internet access and social media use. India, which as recently as 2010 had only eight million Facebook users, is now Facebook’s second-largest market, with over 115 million users, followed by Brazil (69 million), Indonesia (63 million), and Mexico (36 million). To help eMerchants reach this quickly growing pool of potential customers, Facebook is ramping up its ad sales efforts in emerging markets with new formats and more local sales offices. In response, Payscout, Inc. encourages companies looking to capitalize on these markets to first seek the help of a third party administrator with experience in navigating the complexities of doing business in emerging markets.
The goal of Facebook’s venture into emerging markets is to have ads better suited to meet the needs of people and advertisers in high-growth countries. While these developments represent a compelling opportunity for U.S.-based eMarketers, merchants wanting to sell to consumers in emerging markets need to be aware that there are risks as well. Brazil, for example, has what is considered the most complicated tax system in the world, and is a challenging place to do business without an experienced advisor.
Recently, in fact, a U.S.-based merchant expanded into Brazil only to find that its merchant service provider did not have a way of dealing with the country’s closed-loop banking network-resulting in 90% of the merchant’s Brazilian transactions being declined.
Faced with thousands of dollars in lost revenue, the merchant contacted Payscout, Inc. in search of a solution. Within a week, Payscout Brazil, which serves as an intermediary between merchants and the bureaucracy, enabled the merchant to receive direct payment from cardholders and begin selling into the Brazilian market.
Despite these challenges, the upside of emerging markets continues to draw the attention of the world business community - says Business Insider, “EM currencies have firmed over the past week, confirming our view that the global backdrop remains supportive for risk appetite.”
“To make the most of their investment in emerging markets,” says Payscout CEO Cleveland Brown, “merchants need to work with a merchant service provider that understands the complexities of doing business in these markets. The opportunity is great, but risk management is essential.”
Many merchants, says Brown, take it for granted that the credit card payments they receive will be processed quickly and accurately in emerging markets-which is not always the case. In truth, he says, most merchants could improve their understanding of their businesses by learning more about how payment processing works in three stages:
1. Authorization: A customer wishing to make a purchase presents credit card information to a merchant, often via a credit-card information form on the merchant’s website. This information is forwarded to the merchant service provider (MSP), who then forwards it to the payment brand (Visa, MasterCard, etc.), who in turn forwards it to the bank that issued that particular card. The bank decides whether to authorize the transaction and sends its decision back through the credit brand and the MSP to the merchant.
2. Settlement: Once approval for the transaction has been issued, the merchant presents the approved transaction to the merchant service provider; the MSP then presents a “deposit transaction” to the appropriate payment brand for clearance. The brand awards a credit to the MSP, who pays the merchant and debits the cardholder’s account.
3. Funding: This is the final step in the settlement process; it occurs when the MSP successfully deposits payment into the merchant’s bank.
But it is not necessary for a U.S.-based eMerchant who wants to do business in emerging markets, says Brown, to become expert in the complexities of multi-currency processing.
“They don’t have time, especially if they’re a small or medium-sized business (SMB),” he says. “They have a business to run. What they need is a global merchant service processor (global MSP) that understands the issues involved and can help them manage risk while capitalizing on the growing foreign demand for American goods.”
Payscout, Inc. allows small to medium-sized enterprises across a multitude of industries to build relationships with clients and simultaneously focus on global growth.