New World of Global Trade Set to Affect Cross-Border Commerce

global trade

Smaller merchants may need more help navigating the new rules than ever before.

As reported by The Wall Street Journal in May, international trade deals are fading in favor of less formal pacts in an effort to navigate a changing economic and political landscape. On a global level, this shift seems beneficial for all parties involved as these new agreements take into account factors such as indirect costs stemming from regulation. However, it could lead to confusion for small merchants and retailers, as they may not have the resources to maneuver any pertinent changes to their cross-border sales strategies. Indeed, previous PYMNTS research notes that navigating cross-border payment complexity alone is a leading growth limitation for 27% of small and medium-sized businesses (SMBs).

With inflation continuing to strain consumer budgets, more businesses are setting their growth sights past their own borders. This is hinted at in the PYMNTS collaboration with Citcon, “The Emerging APAC Opportunity Playbook: Mapping International Expansion Edition.”

APAC region

Here we see businesses of all types and selected countries have relatively even interest in selling across their own borders, in this case to the APAC region. Although the area is technically just one region manufacturers and retailers consider vital to their international strategies, this interest — held by more than one-third of a variety of retailers — may be representative of a broader interest in cross-border trade.

In a PYMNTS editorial, Kristian Gjerding, co-founder and CEO at CellPoint Digital, describes current and future potential complications associated with selling in other countries. “Cross-border transactions typically take two business days to process and settle, complicated by the many external remittances at play. Every step in the process, from purchase to routing, verification, fulfilment and settlement, presents another opportunity for friction, delay and frustration for the customer. Dealing in different jurisdictions has legal implications. Similarly, taxation rules differ from country to country presenting merchants with yet another compliance burden to handle, alongside the inefficiencies created by operational payments systems. There is also the emerging problem of data protection … Our prediction is that the businesses that fail to tackle these challenges head-on will fall behind, burdened by issues such as cost, processing times, security and legal concerns. On the flip side, businesses that take advantage of new payment platforms, such as payment orchestration, will begin to understand payments as a strategic advantage.”

Fortunately for smaller merchants navigating cross-border expansion, third-party solutions may assist in this navigation, some of which specifically cater to organizations of their size. After all, in this day and age, doing business internationally should be as easy as transacting within one’s own borders.