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The International Marketplace |
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With the value of the dollar on the decline, foreign companies have stepped up their investing in the United States. Are American businesses having as much luck in grabbing a piece of the global pie? In the electronic payment processing industry, that pie appears to be out of reach for many acquirers and ISOs.
“Part of the problem is that acquirers and ISOs don’t know a lot about the international marketplace,” says O.B. Rawls, a former senior vice president of International Sales for Hypercom and now head of his own international consulting firm, Transmark Advisory Services. “It is mysterious, and therein lies its appeal.” Rawls cites the current economic downturn as a catalyst for domestic operations looking outside American borders for growth. However, he is quick to point out that most small to mid-sized businesses look at the international market with naiveté.
“Many companies don’t understand the complexity of doing business offshore,” says Rawls. “They’re confronted with unfamiliar tax bases and employment bases. Labor may be cheap but social costs are high. An acquirer can end up paying 50 percent to 60 percent of someone’s salary in social costs, travel and meal vouchers as well as retirement plans. The cost of doing business internationally is quite high. Even more challenging is the nearly monopolistic environment controlled by financial institutions.”
In many international markets, the sales process, card issuance, bank deposit and lending functions, as well as the acquiring process, are related through a limited number of financial institutions, leaving no room for outsiders like American acquirers to come in and reduce established margins.
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