International Payments and a Flattening World

Currency Map

In his bestselling book, The World is Flat: A Brief History of the Twenty-First Century, Thomas Friedman portrays a world where the playing field is being leveled by technology and where geography is becoming increasingly irrelevant. It is hard to argue against the theory in education, with more students coming to the US to study, more students studying abroad, US dominance in education being challenged, and new learning models challenging the traditional campus setting.

While the level of friction in the delivery of education on a global scale is rapidly decreasing due to technological and other factors, the friction in international payments remains quite high. For sure, regulatory impediments present some challenges to frictionless cross-border payments. That being said, there are more options than the tried-and-true international wire. Why does it matter? If your enrollment quotas are filled, you have a lengthy wait list, and you are successfully recruiting internationally then you needn't be concerned, at least for the time being. However, if you want to provide the best possible experience for international students, there are other options you should consider. International bank transfers offer a lower cost alternative to traditional international credit cards and wire transfers. While international bank transfers are a great solution for the cost conscious, they do require additional effort on the part of the payer. In many cases, they have to physically go to their bank to initiate a transfer.

Just like their domestic counterparts, international credit cards often provide the most customer convenience. They are also often more efficient to process than other international payments which can be cumbersome to account for. Partnerships such as those existing between Discover Card and UnionPay, BC Card, and JCB make international card acceptance much more straightforward.

  • China Union Pay – has now surpassed 3.5 Billion cardholders
  • BC Card – is the largest payments network in South Korea
  • JCB – with over 64 million card members is the largest card issuer in Japan

Regardless of the international payment methods accepted, make sure you understand who is bearing the foreign exchange rate risk. Often it is born by the payer, which can be a pain point for the customer and a profit center for service providers. Like any other cost to consumers, transparency is the best policy. In fact, the best practices that govern domestic payment acceptance apply to international payment acceptance as well, albeit with a few nuances. For a deeper look at payment acceptance best practices, download our free eBook on payment acceptance.

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Written by: Craig Lockwood, TMS, Managing Director Product & Strategy

Craig Lockwood, President, TMS

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