In our previous post, we provided an introduction to key terms in the banking industry. This time, we will focus on basic types of payments that you may encounter in your business.
PAYMENT TERMS:
B2B
B2B, which stands for Business-to-Business, refers to commerce between two enterprises as opposed to transactions between a business and an individual customer. The size of most B2B transactions is larger than B2C (Business to Consumer) transactions because generally an enterprise will be seeking to buy a large inventory of items to sell to end users. B2B purchasing may also involve raw materials used to manufacture finished products or services. B2B deals may be subject to bidding processes and negotiations, so payments are rarely immediate.
B2C
The term Business-to-Consumer (B2C) refers to the process when a company sells products and services directly to consumers who are their end-users. Most enterprises that sell to consumers can be referred to as B2C companies. B2C payments can take various forms: many B2C transactions take place on websites, where consumers buy products directly from online retailers. Today, many B2C purchases are conducted on mobile apps. When dealing with cross-border payments, businesses should offer familiar payment methods at each location and generate personal relationships with customers.
C2B
C2B, which stands for Consumer-to-Business, is a system in which an end user or consumer provides a product or service to an enterprise, which then uses it to complete a business process. Another C2B model is when a consumer allows a business to market a service or product on their website or blog in exchange for a fee. A different form of C2B is when an end user announces a need and businesses compete to meet it.
C2C
The C2C (Consumer-to-Consumer) business model involves transactions between two consumers. This type of commerce is typical of intermediary auction websites such as eBay, Etsy and Craigslist, but the site does not take responsibility for the quality of the products. In C2C transactions, prices are negotiable and the purchasing process is simple. These websites usually provide convenient payment methods such as PayPal, credit cards, debit cards and mobile apps.
As a rule, it is worthwhile to keep your eye on developing payment trends and new models. The ability to facilitate payments for both enterprises and individual buyers is key to your commercial success.
In this post we will introduce you to some of the terminology used regularly in the banking sector.
BANKING TERMS:
Bank Wire/Wire Transfer
A bank wire is an electronic message system, which enables banks to communicate regarding various actions or developments connected to client accounts. A wire transfer, on the other hand, constitutes the electronic transfer of funds across a network, which may contain a large global group of bank administrators. Wire transfers enable individuals or businesses in different geographic locations to safely transfer money to various entities.
SWIFT Code
The SWIFT code of the Society for Worldwide Interbank Financial Telecommunication is an internationally-recognized identification code for various banks around the world. SWIFT codes are generally used for international wire transfers, and are comprised of 8 or 11 alphanumeric characters. If you plan to send money to an entity overseas, you will need to have the recipient’s SWIFT in order to perform the transfer.
Virtual IBANs
An IBAN (International Bank Account Number), is a virtual account issued by a bank, which enables the account holder to receive incoming payments and reroute them to a real bank account. Virtual IBANs provide all the functionalities of traditional bank accounts such as sending and receiving payments, bank statements, and more. IBANs enable international companies processing transactions in different currencies to easily reconcile all incoming payments. Using IBANs, these merchants can allocate a unique virtual account to receive payments from each client and for each currency, thereby increasing efficiency and cutting costs.
SEPA
The European Union (EU) created SEPA (Single Euro Payment Area) as a payments ecosystem which regulates how cashless payments are transacted between Euro countries. European consumers, businesses, and government agencies that make payments via direct debit, credit card or through credit transfers use the SEPA system. In the designated zone, businesses can carry out various transactions in Euros, regardless of their location.
Correspondent Bank
Correspondent banks are financial entities that serve as agents on behalf of other financial institutions, often foreign banks. Correspondent banks may handle foreign exchange, manage international investments, facilitate international trade and provide other services to the foreign bank in exchange for a fee. Foreign banks avail themselves of the services of correspondent banks when they are unable to establish a branch in a given country.
EMI
The Electronic Money Institution (EMI) supplies licenses for issuing electronic money. It allows certain entities to issue their own currency, which can be used outside the location of the payment system. It can also be converted to other currencies and service third-party payments. In addition, the EMI license allows the created currency to bind already existing payment bank cards to client sub-accounts. EMI licenses enable the issuing of cards of major vendors (VISA, MC, etc) and even the creation of an independent card payment system.
STAY TUNED FOR OUR NEXT BLOG POST ABOUT PAYMENT TERMINOLOGY
Singles Day (November 11), which was first started by Chinese college students in the 1990s, is the antithesis of Valentine’s Day. It is a day dedicated to the celebration of singledom.
Some singles have developed various rituals to mark the day including gifting friends with 1 figure-shaped items, from toothpicks to half of a deep fried double dough stick. Other singles, who aren’t into celebrating their status, will go on a blind date on the day so that they don’t have to be alone.
One of the most outstanding customs is self-gifting: This is a day for self indulgence and rewards for hard work all year round.
The world’s greatest shopping extravaganza
Singles Day is hands down the world’s biggest online shopping event. On Singles Day last year marketplace giant Alibaba recorded $30.3 billion in sales in a 24-hour period, more than Black Friday and Cyber Monday combined.
China is the world’s largest e-commerce market, with annual sales approaching $1.53 trillion. So there’s room for everyone – Alibaba is not the only corporation that can profit from the holiday, global retailers can capitalize on this day as well.
The Chinese favor foreign labels so this shopping day represents a unique opportunity for global brands. According to Alibaba, over 40% of Singles Day shoppers purchased international brands, including Apple, Dyson, Gap, Estée Lauder, L’Oréal, Kindle, Nestle, Nike, and Adidas.Over 240 international brands recorded at least $14.4 million in sales.
4 Tips for global online retailers
Last year buyers favored health supplements, followed by milk powder and diapers. Makeup products, including emulsions, facial masks, face wash and toner, were also high on the national shopping list. However, as a large number of shoppers are savvy millennials, many sought out electronics, smartphones and gadgets. Due to the fact that a significant percentage of the shoppers are women, apparel and home goods also sold very well.
Singles Day has spread beyond China to Southeast Asia and other locations. In countries like Singapore, Indonesia, Thailand and Vietnam, local residents eagerly await the day’s special sales.Last year, prior to Singles Day, China’s largest retailer, JD.com, rolled out a two-week campaign called “11.11 Crazy Hot Sale,” in which it targeted Thai shoppers. Even US retailers are starting to adopt Singles Day, as a time when Americans can express well-deserved self-love.
Chinese online consumers use WeChat for every aspect of their lives, from scheduling doctors’ appointments and shopping to messaging friends and payments. Shopping by smartphone in China is quick and easy, thanks to convenient payment methods, particularly Alipay, Union Pay and WeChat Pay. If you want to make a hit on Singles Day, integrate these familiar payment platforms on your Chinese website.
The Chinese are very connected to social media. While WeChat is the most effective way to reach potential customers, Weibo (similar to Twitter) and Youku Tudou (similar to YouTube) are also widespread. Post videos, interactive content, and special coupons to attract followers.
Singles Day offers online retailers huge potential both in China and abroad, but it is very important to study your target audience’s culture, shopping preferences and spending habits before taking the plunge.
The post How to Hit the Online Sales Motherlode on Singles Day first appeared on Bm2Pay.]]>
As opposed to fiat currency, cryptocurrency is not connected to governments or central banks. Using a ledger system, cryptocurrency transactions are anonymous and decentralized. Bitcoin’s value, for example, is determined by demand and market supply at any given time, much like precious metals. Due to the fact that no government regulations apply to cryptocurrency and transactions are untraceable, there is a risk of abuse of the system for illegal activities including terror funding and drug trafficking.
Some advantages of using cryptocurrency for payments
Despite the risks, cryptocurrencies have several significant advantages as well:
When utilizing credit and debit cards, and handling transfers, foreign transactions, false declines and many other types of financial activities, there are fees involved. These fees tend to mount up and become quite costly. Cryptocurrency payment gateways charge only 0.5 to 1% per transaction. Most cryptocurrency accounts that take the form of a digital wallet are free.
One of the major banes of credit card use for payments is chargebacks.The cancellation of credit card transactions by purchasers can be extremely costly for merchants. But when it comes to cryptocurrency transactions, the basic rule is that they cannot be reversed.
Consumers are concerned about how retailers, service providers and financial institutions retain extensive amounts of sensitive personal data from an individual’s name, address and email to credit scores and net worth. When performing cryptocurrency transactions, data is converted into numbers, or cryptocurrency wallet addresses, so private information is not revealed.
Cryptocurrency payments are not classified according to countries. There are no cross-border fees, and no limitations on accessing funds. As banks and credit card companies are not involved, users can make payments, pay bills and shop independently.
More service providers and retailers are accepting cryptocurrency
Cryptocurrency acceptance is becoming more widespread among large service providers and retailers. AT&T recently became the first mobile carrier to accept bill payments in cryptocurrency. The Shopify ecommerce platform allows its merchants to accept Bitcoin payments through BitPay.
Microsoft permits users to deposit Bitcoin in their Microsoft accounts for the purchase of movies, games and apps in the Windows and Xbox stores. The large retailer Overstock has been accepting Bitcoins and other major cryptocurrencies since 2014. Paypal also allows merchants to accept Bitcoin through Braintree. There are many small businesses that are accepting cryptocurrency payments today.
What lies in the future for cryptocurrencies?
Cryptocurrencies like Bitcoin lack basic stability because they are not a pegged currency. By nature, they are more like a commodity asset for trading like precious metals. Some enterprises (like Facebook) are introducing stablecoins which are pegged to certain currencies, thereby securely anchoring cryptocurrency. But this would stand in contradiction to the decentralized (and uncontrolled) nature of cryptocurrency.
COTI recently developed the world’s first DAG (directed acryclic graph) protocol for creating decentralized payment networks and stable coins. Other technologies are expected to emerge and innovate cryptocurrency norms. Time will tell what form cryptocurrency payments will ultimately take.
Our new e-book provides a guide to holidays worldwide, the gift recipients, and the most popular types of presents given on each occasion.
Read A Guide to Global Holidays and Gift-giving to gain a better understanding of your cutomers’ cultures and buying preferences worldwide. Learn how to boost sales at high seasons and generate brand loyalty and return shoppers.
Read A Guide to Global Holidays and Gift-giving
The post A Guide To Global Holidays And Gift-giving first appeared on Bm2Pay.]]>Our payment glossary is a great source for definitions, in-depth information and resources. Take a moment to understand the reasons for shopping cart abandonment and high fraud rates. Find out what open banking is and how it will affect your payment options in the near future. Read about ways you can overcome cross-border payment obstacles. Learn how Artificial Intelligence can jumpstart your business. And much more.
Feel free to contact us with any questions you have at [email protected].
Go to bm2Pay Payments Glossary
Our new eBook A Merchant’s Guide to International Payments offers an overview of preferred payment methods in various geographies worldwide.
Read A Merchant’s Guide to International Payments.
The post Your Global Guide to Payment Preferences first appeared on Bm2Pay.]]>What kind of solution should you be seeking when you need to accept online payments in different markets, multiple currencies and a wide range of payment methods?
The best online payment solutions enable the following activities:
If your online business operates in various foreign markets, you need to be able to offer familiar payment methods at each location. Some countries use international credit cards, but in others the population prefers local credit cards. In certain areas, debit cards or payment on delivery are the first preferences. Your payment solution should be able to offer the most suitable payment methods at each site.
You need to ensure that all of the credit card and personal data you store in your system is secure. In order to maintain the highest level of security, your online payment system should feature data encryption and tokenization, 3D Secure, PCI compliance, hosted payments and other protective measures. An advanced payment solution should include all of these options and more.
The growing sophistication of hackers means that attacks are becoming more rampant and harmful. But a single fraud detection level does not suit all your markets. It is best to have an adjustable fraud monitor that uses machine learning to adapt fraud screening to the specific risk level in each market. That way you minimize false positives and effectively mitigate real fraud attempts.
When processing payments, you need to work with various parties including a payment gateway, payment processor, issuing banks, credit card companies and other third parties. Each of these entities collects a fee for its services. Rather than attempting to deal with each of these parties separately, it is easier to integrate with an end-to-end payment solution that handles all of these processes at a reasonable fee. Check out various platforms to see which offers the best rates for all of these services.
Many online merchants offer monthly services such as gyms, child care services, gaming, cell phone companies and other sectors. By offering automated recurring payments, you ensure that your customers needn’t worry about forgotten payments, and you will always be paid on time. If you offer subscription type services, this payment model is a must for your enterprise.
With the growing popularity of smartphone use, you must be able to offer secure and easy payments via mobile phones. Look for an online payment solution that enables you to build mobile friendly pages and process secure payments via mobile apps. Ensure that the system can process mobile wallets, money transfers, credit cards and other payment options.
As a global online merchant, your aim is to provide your customers with the easiest and most comfortable payment experiences, while cutting costs and increasing processing efficiency at every market. A sophisticated one-stop-shop payment platform enables you to meet all of these needs and many more.
Learn about the bm2Pay online payments platform.
What is causing these changes in your payment ecosystem? How can you improve results?
Our new eBook A Merchant’s Guide to Payment Optimization offers practical tips on how to resolve payment hurdles in new markets.
Read A Merchant’s Guide to Payment Optimization.
The post Are Your Payments Out of Control? first appeared on Bm2Pay.]]>
According to the EU plan, by the end of 2019, charges for cross border payments in Euros will have to correspond to fees for payments made within a country using the local currency. In a nutshell, the resolution empowers EU member states to demand that banks apply the same charges for cross-border and domestic non-euro payments. Banks will also be required to make currency conversion costs transparent, in order to protect consumers from arbitrary fees charged for currency conversions.
This new regulation is likely to impact on cross-border payments worldwide and set new precedents in the financial sector.
New technologies for lower financial fees
Today, sending money from one country to another can be quite costly. Banks in one country often have no direct relationship with banks in other countries, making it necessary to involve an intermediary bank and invoke additional fees. Visakha Thongphetsavong, CMO of the Everex fintech company, notes that fees associated with international money transfer generally range between 5% to 20% of the cross-border transaction.
Among other emerging technologies, blockchain can be used to lower cross-border fees. Blockchain enables the encryption and storage of transactions in highly secure, decentralized ledgers. By eliminating the need for intermediaries or central authorities for financial transactions, blockchain enables enterprises to save on third-party fees. According to Thongphetsavong, the technology can significantly reduce the total cost of fees to about 2% to 3% of the transaction.
If you can’t beat ‘em join ‘em
Both banks and credit card companies stand to lose funds if third parties are cut out of cross-border processes. Some credit card companies are examining ways to use blockchain to their advantage. For example, MasterCard is currently studying how blockchain technology can cut costs, facilitate settlements, and improve customer experiences.
Microsoft and MasterCard launched Mastercard Track, a global trade platform that encompasses account-to-account and card payment solutions, fraud management and payment gateway services. This tool is expected to help reduce friction in the global trading system and promote exports, especially by small and medium-sized businesses.
Blockchain and banking
Banks initially viewed blockchain as competition, but some are now adopting the technology in various blockchain-based platforms. As a real-time, open-source platform capable of transmitting data and value securely, blockchain can become the basis for new banking products and a significant source of new revenue.
According to CEBNet, 12 banks have already adopted this technology for various use cases in China alone. Additional global banks that use the technology include ALFA Bank from Russia, Yes Bank from India, and LatiPay from New Zealand.
Creating a united front
The success of blockchain-based banking depends on collaboration among worldwide banks. This kind of cooperation will enable the establishment of a network capable of supporting global payments. Blockchain’s key attraction lies in its unique network features, but it is this quality which necessitates widespread cooperation among old-school financial institutions. Time will tell if they are up to the challenge.