Going Global
- Cross-border transactions cost 1.5-2.5% more in interchange and authorize at 75-85% vs. 90%+ domestic; local acquiring in high-volume markets fixes both problems but requires a local entity
- FX markup (50-150 bps over mid-market) is often the biggest silent fee in international processing - ask your processor for the spread, not just "competitive rates"
- Add local payment methods only when a country exceeds 10% of your volume; before that threshold, the integration cost doesn't justify the conversion gain
- SCA compliance is required for European transactions regardless of where your business is headquartered - you need 3DS for EU cardholders
Before international expansion, understand:
- Buying payments and processor selection
- Auth optimization and decline reasons
- Payment methods by region
- Compliance overview basics
Your processor already handles it. International cards are processed automatically - you pay slightly higher fees (cross-border surcharge of 0.5-1.5%) and the customer's bank handles currency conversion. No action required on your end.
When to start optimizing:
- Under $50K/month international revenue - Just accept cross-border payments. Don't optimize.
- $50K-$200K/month - Consider showing prices in local currency (see international payments)
- Over $200K/month - Consider local acquiring to reduce cross-border fees. Read the rest of this page.
The entity formation, local acquiring, and fund repatriation sections below are for businesses with significant international volume. If you're under $200K/month international, they don't apply yet.
Going global means accepting payments in foreign markets, where cross-border transactions typically cost 1.5-2.5% more in interchange and decline at 75-85% auth rates compared to 90%+ domestic. Local acquiring fixes both problems but requires a local entity, bank account, and processor onboarding. This page covers cross-border vs. local acquiring, FX strategy, regional payment methods, and compliance variations by market.
Most merchants assume their US processor "supports international." It does, at 3%+ effective rates and 75% auth rates. That's cross-border, not local.
On this page
What Matters
- Cross-border vs. local acquiring. Cross-border = your US processor charges foreign cards. Local = you have a local entity and processor in that market.
- FX is a hidden cost. The exchange rate markup can exceed the processing fee.
- Payment methods vary by region. Cards aren't king everywhere. iDEAL in Netherlands, Boleto in Brazil, UPI in India.
- Compliance varies. PSD2/SCA in Europe, data localization in some markets, different consumer protection rules.
- Start with one market, prove it, then expand. Going global all at once is a recipe for operational chaos.
Cross-Border vs. Local Acquiring
Cross-Border (Your US Processor)
You use your existing US merchant account to accept international cards.
| Aspect | Reality |
|---|---|
| Setup | None. Already works. |
| Cost | Higher interchange (1.5-2.5% more) + FX markup + cross-border fees |
| Auth rates | Lower (75-85% typical vs. 90%+ domestic) |
| Chargebacks | Harder to fight across borders |
| Best for | Testing a market, low international volume |
Local Acquiring
You establish a local entity and merchant account in the target market.
| Aspect | Reality |
|---|---|
| Setup | Entity formation, local bank account, separate processor onboarding |
| Cost | Lower interchange (domestic rates), better FX control |
| Auth rates | Higher (local issuer trust, no cross-border friction) |
| Chargebacks | Easier to manage with local representation |
| Best for | Significant volume in a market (usually 20%+ of revenue) |
When to Switch from Cross-Border to Local
Consider local acquiring when:
- Market represents more than 20% of total volume
- Auth rate gap exceeds 10 percentage points vs. domestic
- FX and cross-border fees exceed 1% of market revenue
- Local payment method support is required
FX Strategy
Foreign exchange is where money disappears quietly.
Where FX Costs Hide
| Cost Type | What It Is | Typical Range |
|---|---|---|
| Card network FX rate | Visa/MC base rate | Usually fair |
| Processor markup | Added to network rate | 0.5-2% |
| DCC margin | If you offer cardholder's currency | 2-4% |
| Settlement timing | Rate at auth vs. settlement | Varies |
DCC (Dynamic Currency Conversion)
DCC lets cardholders pay in their home currency. Sounds nice. Usually isn't.
| Aspect | Reality |
|---|---|
| Who profits | You and processor (DCC revenue share) |
| Who loses | Cardholder (2-4% worse rate) |
| Customer experience | Savvy travelers decline it |
| Recommendation | Skip it. The margin isn't worth the reputation hit. |
Multi-Currency Pricing
Show prices in local currency. Charge in local currency if you can.
| Approach | Complexity | Best For |
|---|---|---|
| USD only | Low | Testing, B2B, US-centric |
| Display local, charge USD | Medium | Marketing localization |
| Charge in local currency | High | Serious international presence |
Cross-link: FX and Settlement for operational details.
Regional Payment Method Requirements
Cards aren't universal. Know what matters in your target markets.
Europe
| Method | Coverage | Notes |
|---|---|---|
| Cards | Primary | Visa/MC dominant, some local schemes |
| iDEAL | Netherlands | Bank transfer, 60%+ of Dutch e-commerce |
| Bancontact | Belgium | Local card scheme |
| SEPA Direct Debit | EU-wide | For recurring, requires mandate |
| Klarna/BNPL | Nordics, Germany | Popular for fashion/retail |
Latin America
| Method | Coverage | Notes |
|---|---|---|
| Cards | Primary but different | High installment usage |
| Boleto | Brazil | Cash voucher, declining share (~8%) as PIX grows |
| OXXO | Mexico | Cash payment at convenience stores |
| PIX | Brazil | Instant bank transfer, now dominant in Brazilian payments |
Asia-Pacific
| Method | Coverage | Notes |
|---|---|---|
| Cards | Varies | Strong in Australia, weak in SE Asia |
| Alipay/WeChat Pay | China | Required for Chinese consumers |
| UPI | India | Dominant, low cost |
| GrabPay | Southeast Asia | Super-app payments |
Decision Framework
Before entering a market:
- Research top 3 payment methods by volume
- Verify your processor supports them (or find a local partner)
- Calculate total cost including method-specific fees
- Test checkout flow with local testers
Canada PAD Agreements
If you're expanding to Canada and want to debit bank accounts, understand that Canadian Pre-Authorized Debit (PAD) is not US ACH.
Key Differences
| Aspect | US ACH | Canadian PAD |
|---|---|---|
| Authorization | Can be verbal, flexible | Requires written agreement |
| Agreement content | Varies | Specific required elements |
| Cancellation | Varies | Specific customer rights |
| Dispute window | 60 days typical | 90 days for personal, 10 days for business |
PAD Agreement Requirements
Your PAD agreement must include:
- Amount (fixed or variable with limits)
- Frequency (one-time, recurring, sporadic)
- Start date
- Payor's bank account information
- Cancellation rights and process
- Recourse statement
Keep PAD agreements on file. You'll need them for disputes.
Compliance Variations
Europe (PSD2/SCA)
Strong Customer Authentication (SCA) requires 3DS for most transactions.
| Exemption | Criteria |
|---|---|
| Low value | Under €30 (cumulative limits apply) |
| Trusted beneficiary | Customer whitelisted merchant |
| TRA | Low-risk based on fraud rate |
| Recurring | Subsequent charges on same subscription |
Data Localization
Some markets require data to stay local:
- Russia: Payment data must be stored in Russia
- China: Various data localization requirements
- India: Payment data storage rules (evolving)
Consumer Protection
| Market | Key Difference |
|---|---|
| EU | 14-day cooling-off period for online purchases |
| UK | Similar to EU post-Brexit (for now) |
| Australia | Strong consumer guarantees beyond contract terms |
Test to Run
8-week market entry pilot:
Weeks 1-2: Research
- Identify top payment methods in target market
- Calculate cross-border cost vs. local acquiring estimate
- Research compliance requirements
Weeks 3-4: Setup
- Enable cross-border for target market
- Add top 1-2 local payment methods if supported
- Localize checkout (currency display, language)
Weeks 5-8: Measure
- Track auth rate by market vs. US baseline
- Monitor chargeback rate
- Calculate effective cost per market
Success criteria: Auth rate within 10% of domestic. Path to local acquiring if volume justifies.
Scale Callout
| Volume | Focus |
|---|---|
| Under $100k/mo international | Cross-border is fine. Focus on checkout localization and top 1-2 local methods. |
| $100k-$1M/mo international | Evaluate local acquiring for top market. Add regional payment methods. |
| Over $1M/mo international | Local acquiring in major markets. Multi-currency treasury. Regional payment method coverage. |
Where This Breaks
-
Underestimating operational complexity. Each market means different support hours, language, dispute processes, and compliance requirements.
-
FX exposure without hedging. If you price in local currency but have USD costs, currency swings eat margin. Talk to your CFO.
-
Assuming card dominance. In many markets, not offering the local method means losing 30-50% of potential customers.
Analyst Layer: Metrics to Track
| Metric | What It Tells You | Target |
|---|---|---|
| Auth rate by market | Local friction level | Within 10% of domestic |
| Effective rate by market | True cost | Track trend |
| Payment method mix | Local method adoption | Matches market norms |
| Chargeback rate by market | Regional fraud/dispute patterns | Below threshold |
| FX impact | Currency cost | Track monthly |
Next Steps
Planning international expansion?
- Research payment methods - Know what matters in target market
- Calculate cross-border costs - Understand true cost
- Run the market pilot - Test before committing
Already accepting cross-border?
- Evaluate local acquiring - When volume justifies
- Add local payment methods - Improve conversion
- Optimize auth rates - Reduce cross-border declines
Entering Europe specifically?
- Understand SCA/PSD2 - 3DS requirements
- Review exemptions - Request where you qualify
- Check compliance - Regional requirements
Related Pages
- FX and Settlement - Currency operations
- Payment Methods: International - Regional methods guide
- Buying Payments - Processor selection
- Checkout Conversion - Optimizing checkout
- Auth Optimization - Improving cross-border approvals
- 3D Secure - SCA and European requirements
- Compliance Overview - Regional compliance requirements
- Fraud Prevention - Cross-border fraud considerations
- Chargeback Prevention - International dispute handling
- Network Programs - Global thresholds
- AVS & CVV - International AVS limitations
- Launch New Country - Market entry playbook