One big hurdle

I’ve been quiet, but things are moving.

I’ve got almost fully-functional e-commerce functionality built into the new site. I’ve got secure SSL pages working, I’ve fully debugged every scenario I can think of (WRT credit card transactions). I’ve got real-time stats going for the premium users. I dont have tips going yet … but that isn’t far from the infrastructure that’s in place.

Now I’ve hit a hurdle. Its a big one. hurdles Its simply not possible to do small-sum credit card transactions to international customers from Australia. I cant charge international customers 5USD for a service/product, the payment infrastructure just wont cope with that. Here’s the run down:

I’m in Australia. I dont want to charge in Australian dollars, its not ‘international’ … and people will get weird sums on their credit card statements.

If I charge in USD, the banks will use the Swift interbank system for translating the USD amount into Australian dollars. It costs anything from $10 to $16 *per transaction* to convert from USD to AUD! So a transaction of $5 will cost me $10-$16!

Solution 1: charge large sums … doesn’t work for my business model.

Solution 2: get a multi-currency account based in Australia. The only Australian bank that offers this service is the NAB. By having a USD account in Australia, I can avoid that Swift interbank charge. But now there’s a new problem … multi-currency accounts cost $1200 to set up, have a substantial monthly fee and depending on the maturity of your business, they require a floating account balance of 5-20k USD! That’s out of my league.

Solution 3: use PayPal’s Payflow Pro gateway. But it costs $150/month … and you still need a merchant services account (usually around $50/month).

Solution 4: get a USD bank account in the US. I dont know if this is possible, let alone legitimate.

Solution 5: take my business out of Australia.

I keep thinking that surely this is wrong, there’s gotta be a solution for this scenario. Maybe I havn’t researched enough … and then I found this discussion on a Google group, which confirmed my fears… that there’s simply no easy solution for selling smallish sums to international customers.

I’m still researching. I’ve found that Amazon FPS is one of the only payment gateway solutions that caters for micro-payments. Unfortunately, they only sell their services to merchants with a USD credit card and a US address.

Most credit card gateways take a percentage (like 3%) plus a transaction fee (like 30c). So if you want to sell something for $1 .. you lose 33c (one third). But Amazon FPS has special pricing for transactions under $10 … the commission is 5%, and the transaction fee is 0.05. So if you sell something for $1 … you only lose 10c, which is reasonable and viable. But I dont live in the US 🙂

Its going to take some effort and thinking outside the box to jump this hurdle …

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9 Responses to One big hurdle

  1. ogden says:

    If you can’t find any other solution, wouldn’t it make sense to simply find a trusted person living in the US who would be willing to regularly transfer that amount back to you? Assuming that you’ve cleared it with tax authorities and that you have that agreement in writing, it would be cheap and low-risk, although not hassle-free… Could be a decent solution to get you started until you can afford more professional services.

    • Hi ogden,

      I’ve thought about that… but as you say its risky. Better would be to find a real business partner (someone who could bring something to ambisonia) and set up something properly. Either way, it would have to be something stronger than trust … would have to be totally documented and legitimate. Then I’d get into Amazon FPS.

  2. Ryan says:

    You can use WorldPay to accept US$. Let the amount add up to like $500 (in your WorldPay account) and then do the transfer to your bank account which will cost you about $10 from your bank.

    There is a yearly cost of about $400 AU.

  3. Ryan says:

    WorldPay is also a % only and no fee. So it would only be like 4% of $5 – that’s it.

    PS – I do agree that there aren’t any preferable solutions to accept US$ in Australia. WorldPay takes 4 weeks to pay you!

    • Ryan,

      That’s interesting … are you sure that there’s no minimum payment? I’d be surprised that they allow payments of, say, 5c … if they do then its a big plus. I bet the 4 week payment delay is about buffering incase of credit card fraud. I’m OK with that.

      Do you accept payments in US dollars?

  4. Ryan says:

    By the way, this was the same issue that I experienced in Australia like 8 years ago… no new solution has appeared on the market in this time.

  5. Martin says:

    Hi Etienne,

    You write:
    “Solution 4: get a USD bank account in the US. I dont know if this is possible, let alone legitimate.”

    I used to have a bank account with Wells Fargo Bank even though I live in Canada. They didn’t seem to mind. I opened the account when I lived in the US, and couldn’t close it when I left because they had my account intertwined with that of another customer with a similar name.

    So, it should be possible and appears to be legitimate. Only don’t use Wells Fargo. Use some other bank.

    • Hi Martin,

      From googling, I’ve read a couple of conversations that say its been much harder to do this since the Patriot Act. Doesn’t mean its not possible. There’s also the issue of taxes … I’m not sure of having an account in the US means that I am subject to US tax laws …

  6. Martin says:

    No, you would not be subject to US taxes. The US taxes people on citizenship. (Most other countries tax on residence.) I also have a bank account in the UK, and they also don’t mind.

    One problem you will encounter is, what in the UK is called, Know Your Client rules. To protect against money laundering, banks in the US will require proof of who you are and where you live. I recently hired a lawyer in the UK, and I had to produce my passport and also a utility bill with my Canadian address on it.

    So, I believe you will still be able to do it, but it will require a little work for you to prove who you are and that you are resident in Oz.

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