Regulatory challenges in cross-border payments … and how to overcome them

Accepting cross-border payments is a fact of life for any online business operating internationally. Payment systems have become adept at accepting payments in a wide variety of currencies and types from all over the world.

But there’s one aspect of cross-border payments that remains stubbornly difficult to deal with: the huge variety of payments-related regulations, which not only vary widely from one jurisdiction to another, but also change on a regular basis.

For global online businesses, it’s not only vital to be aware of where these challenges lie, but also to embed processes and systems that ensure their payments operations remain compliant wherever they do business.

What are the main regulatory challenges, and how should online businesses address them?

Top four regulatory challenges

Regulations have an impact on cross-border payments in four areas:

• Challenge 1.
  Data privacy and protection laws – compliance with local and regional data protection regulations, such as Europe’s General Data Protection Regulation (GDPR), is vital to avoid potentially hefty fines and reputational damage accepting cross-border payments. One of the latest jurisdictions to introduce such regulations is India. The country’s Digital Personal Data Protection Act, 2023 (DPDPA-2023) requires citizens’ digital personal data to be stored only on Indian servers, for example, with financial penalties for breach of rights, duties and obligations by those storing and processing the data.
• Challenge 2.
  Licensing and registration – different jurisdictions have widely varying business licensing and registration requirements. Businesses need to ensure they have the correct licences to legally conduct business and offer payment services in each target market. Also, legal systems vary widely across different jurisdictions, making navigating and resolving disputes a challenge.
• Challenge 3.
  Currency exchange risks – not all currencies can be freely exchanged with others; some are subject to capital restrictions and other requirements limiting their cross-border transfer. Global businesses need to be aware of such currency restrictions.
  A good example of this is South Korea, one of Asia’s most digitally advanced countries, where around three-quarters of consumers regularly shop online [source: Statista]. Despite the country’s advanced digital economy, it has strict currency restrictions, requiring businesses to convert Korean Won into a foreign currency before transferring the funds out of South Korea.
• Challenge 4.
  Tax compliance and reporting – many jurisdictions have strict tax compliance and reporting rules, with potentially severe penalties for failing to file and pay the appropriate taxes on time. In South Korea, foreign businesses that offer digital products or services are required to pay VAT.
  Given these challenges – especially the challenge of establishing a global network of local legal and compliance experts – Worldline has put special effort into ensuring our payments solutions are compliant with rules and regulations wherever we offer our services, as simply and efficiently as possible. Let’s take a look at how.

How Worldline simplifies things

Worldline is dedicated to supporting regulatory advancements, and works closely with regulators, banks and other business partners of the payments industry to promote a level playing field for all stakeholders in the global payments environment.

In addition, we are committed to collaborating with technology innovators to ensure that our products and services streamline processes for our customers – all the way from collection and remittance, through risk management and fraud prevention, to reporting – as well as enhance market connectivity, to foster a sustainable, robust, and healthy market.

Perhaps the biggest advantage for online businesses operating around the world is that our in-house teams have already done the regulatory groundwork in all key jurisdictions around the world. This means global businesses do not need to be onboarded separately in each jurisdiction. Instead, they are onboarded once, safe in the knowledge that payments are processed compliantly in new markets. For example, Worldline has expanded its ecommerce payment solution to meet the specific needs of South Korea, enabling online businesses process local payments without the need to set up a local business entity. Aside from South Korea, Worldline also helps merchants process local payments compliantly in many other key markets throughout the Americas, the Middle East, South Asia and Southeast Asia.

Working with an established global payments provider like Worldline – which has well-established relationships with local regulators and partners in place – can help you reduce the time to enter a new market, while reducing compliance risks significantly. Click here to find out more about our global payment solutions for geo-expansion.