7 Payment Strategies for International Direct Mail

Success

Brian Weekes

VP International Development PacNet Services Ltd

The Global Economy Today

The UK is a small part of the global economy

Emerging economies will add 100 million new middle class consumers per year over the next 5 years.

1 / Accept Payment in Local Currency

• Increase response by 25% to 200% depending on market and demographic.

• International buyers simply don’t have access to Pound Sterling payment devices.

• A Pound Sterling Bank Draft will cost an international customer £5.00 or more to purchase plus the bank’s exchange fees.

2 / Set Your Price

• What do local businesses charge for similar products and services?

• Even exchange, higher or lower margin?

• Consult indexing tools (IKEA Billy Bookcase or)

The Big Mac Index

• The Economist’s Big Mac Index can serve as a rough guide to local pricing.

• Or look at the local price of Ikea’s ubiquitous Billy bookcase.

Price of a Burger

• The price of a burger or a bookcase won’t directly relate to the price of your product but it serves as an indicator of what the market will bear.

• Americans pay US$3.58 • The Swiss pay US$6.30• South Africans pay US$2.46

3 / Build in a Buffer

• In mildly volatile climates, consider padding your price by 2% to give yourself a little insurance.

• Currency strengthens, you win.

• Currency weakens, you’re protected (for a little bit)

4/ Understand Payment Preferences in each Country

Cash or Credit?Credit card is the favourite online payment method for most countries, but mail order payment preferences vary from country to country – and generation to generation.

Local Currency Payment optionsMail Order:1. Cheques2. Postal Orders3. Credit / Debit Cards 4. Direct Debit5. Bank Transfer6. Cash7. COD

Telephone: 1. Credit / Debit Card 2. Direct Debit 3. COD

Country Cheques Cards BankTransfers

Direct Debit

Germany 0.6% 14.5% 36.2% 48.3%

Netherlands 0% 37.8% 31.8% 26.5%

Italy 12.5% 39% 32.1% 14.9%

France 23.8% 40% 17% 19%

Belgium 0.5% 41% 42.8 11.4

U.K. 10.7% 48.4% 21% 19.9%

U.S.A 28.6% 54.5% 5.7% 10.4%

Canada 14.8% 65.3% 11.9% 8.1%

Switzerland 0.1% 38.2% 56.4% 3.8%

Non-cash Retail Payment Preferences

Relative importance of payment instruments in % of total transactions

Source Bank for International Settlements

5/ Convey pricing as simply as possibleSimple order form

can be used for multiple

countries:

Easy to laser subscription form

for CANADA

Cheques accepted in Canadian

dollars

Mailed to Canadian mailbox

Localized design appropriate for key markets.

Priced in Indian Rupees.

Range of payment options requires space.

Cheque, direct debit and credit cards accepted.

Mailed to an Indian mailbox.

Multi-national Order Form offers prices in three currencies simultaneously.

USD is the default for miscellaneous countries. If you must price in USD for a multi-national campaign, be sure to request USD drawn on a US bank.

Offer more payment options where appropriate

• For mail order, balance simplicity of the order form with choice for your customer.

• Accept cheques where cheques are used. Additionally, offer credit/debit card plus DD options where popular.

6/ Efficient International Payment Implementation

• DIY – (as done by Amazon)– Opening your own international bank accounts and

negotiating local merchant service agreements may significantly lower cost of bank fees, but requires large upfront investment, infrastructure and accounting resources.

• Payment Service Provider– Contract with payment processor with international

capabilities for optimum convenience and speed of turnaround. Services offered vary from company to company. Lowest upfront costs.

7 / Be Aware• Cheque validity periods

differ from country to country – cash your cheques in a timely manner.

• Depending on your product, be aware of fraud. Some countries have a better reputation than others.

• Consult with local banks or a payments expert at your Payment Service Provider for guidance.

Questions

Thank You!

Brian Weekes, PacNet Services Ltd.Brian@PacNetServices.com

TFM&A Stand F42