Going Global Exposes Payments’ Weak Spots

Expanding into new markets can reveal weaknesses in a merchant's payment infrastructure. As companies sell abroad, they must contend with local payment preferences, new providers, and different transaction economics. Each additional connection adds to the integration, reconciliation, and maintenance workload. "It's rarely the initial connection that becomes the problem for merchants," said Nick Daley, Spreedly's product management director.

"It's generally the operational and data layers." Issues can arise from fractional values sent by providers or different treatment of pending transactions. Payment preferences also require consideration. Consumers in new markets may expect methods not common in the merchant's home country, leading to added costs for supporting local payment options.

However, not all methods are equally relevant in every market. Daley noted that two to four payment methods often cover most of the transaction volume in some regions. Merchants must determine which payment methods are most likely to be used by their customers. Payment economics also vary across borders. Cross-border interchange fees and card network economics differ from domestic processing.

Local acquiring is typically cheaper for merchants. Alternative payment methods can introduce additional costs, settlement timing variations, and different risk profiles. Real-time bank transfers, for instance, have a distinct economic structure compared to card transactions. Routing decisions for a merchant's domestic operation may not be suitable for another country.

Building and maintaining connections with new providers incurs ongoing costs. Each integration project has its own quirks and requires continuous upkeep. As the number of providers increases—from two to five or six—managing status codes, settlement formats, and retry behaviors becomes more complex. This workload can be reduced through payment orchestration.

An orchestration layer can normalize provider-specific differences behind a common connection, simplifying the merchant's maintenance responsibilities. However, orchestration can't solve all problems. Regulations and compliance requirements, such as data residency, licensing, and tax treatment, remain market-specific. Merchants are still responsible for their commercial relationships with local acquirers, and connectivity to an acquirer doesn't guarantee approval.

Localizing the checkout process entails adapting currency display, language, and the overall payment experience to the target market. Fraud models developed for one market may need to be recalibrated when merchants enter a new region. Ultimately, the decision on which country to enter involves evaluating the need for ongoing support of specific payment methods, the capacity of the merchant's infrastructure to handle multiple provider relationships, and the engineering capacity dedicated to maintaining them.