Vinod Sivagnanam is a Senior Product Manager at Adobe.
For companies seeking to extend their geographic footprint, setting up a payment system that works—for the company itself and its customers—is a crucial aspect of international expansion.
Let’s say you’re a seller based in Germany that sells to customers in the U.S. If Germany is where you’re headquartered and where you recognize revenue, eventually you’ll need to convert the USD your customers pay into euros.
There are two main options for handling this:
1. You can ask customers to pay you in euros, even though they’re based in the U.S. The backend systems—payment processors, card networks, banks—handle the currency conversion and deposit euros into your account.
2. You let customers pay in USD, giving them a localized shopping experience. Then you, as the seller, take care of the conversion into euros on your end.
Between these two options, the first one is admittedly easier to implement. Existing card networks already support international payments. Card-issuing banks handle the compliance checks and conversion, and most credit cards now support international transactions by default. So with option one, a merchant can go to market quickly—set up the storefront and be selling in a day or two.
However, this approach does not offer a great customer experience. Imagine you’re in the U.S., buying shoes from Italy, and the price is listed in euros. You’re not sure what the final charge will be on your card. There could be transaction fees and unclear exchange rates—it’s all a black box. Plus, in some countries, international transactions can trigger additional regulatory steps, like requiring an invoice or customer ID.
This friction creates uncertainty for the customer and slows down the purchasing process—the exact opposite of what an e-commerce platform wants. Your goal is to reduce the time from landing on the site to completing the purchase; option one slows that down.
Option two, on the other hand, offers a much better experience. It mimics local shopping. If I’m in San Jose and buying something from a retailer in Austin, I just swipe my card and go. That same seamless experience, but at a global scale, is what option two enables. Pricing is in the customer’s local currency, there are no foreign transaction fees and no surprise exchange rates. You’re removing the friction and uncertainty from the customer’s side.
Enabling Truly Global Payments
Of course, option two comes with challenges on the seller’s side. First, you have to support the right payment methods for each country. In the MENA region, for instance, cash and wallets are common. In Europe and the U.S., cards dominate. Some countries prefer bank transfers.
As a seller, you often rely on payment service providers (PSPs) to handle this. For this, you’ve got two paths: One is to become your own PSP, which some retail platforms have started to offer. This gives you more control and potential revenue from fees. The other option is to partner with a third-party company that facilitates electronic payments between merchants and customers, like Stripe, PayPal or DLocal (which specializes in emerging markets).
PSPs aren’t like traditional financial institutions; they solve unique customer pain points such as seamless checkout experience or cross-border payments, but still rely on banks and credit card networks in the back-end to move the money. So now you have to think about the following: Does your PSP support the payment methods and customer use cases you need in each market? Can they scale with your volume? And what are the fees? (PSPs often charge based on transaction volume, with tiered pricing. If you’re a high-volume seller, you want to hit the right tier to reduce costs.)
Navigating The Regulatory Ecosystem
Then there’s the big concern: regulation. Payments are heavily regulated, especially cross-border. Some countries require documentation for every payment—an invoice tied to each dollar coming in, for example. Others require customer identity verification, like tax IDs or even social security numbers. (Brazil and China are good examples of countries with complex requirements.)
Some governments also try to protect their foreign exchange reserves: They’ll only allow incoming payments that are tied to verifiable exports. It’s not just about having the documents; you also need a way to transmit them to the government. And public sector systems often lack the technical infrastructure to handle this at scale.
Think about big e-commerce platforms processing hundreds of thousands of transactions daily. Now, imagine needing to generate, process and submit that many invoices to a government system that isn’t built for it. In some cases, platforms have had to build that infrastructure themselves just to comply. Ultimately, it’s not just about payments—it’s also about infrastructure and compliance and, in some cases, collaborating with regulators when government systems are insufficient.
All About Connections
One of the main goals of globalization is, arguably, to connect buyers to sellers around the world. But it’s not just about connecting them—you also have to make sure the buyer can pay and the seller gets paid. Today, there are a lot of creative ways to improve that connection.
One area we’re seeing more investment in is real-time payments—essentially, the global equivalent of a peer-to-peer payment app. Let’s say you’re in the U.K. and I’m in the U.S. I buy something from you, and you get the money in your account almost instantly. To make that possible, some e-commerce platforms are starting to hold liquidity in their biggest geographic markets. For instance, they might maintain a pool of U.S. dollars in the U.K., so when a U.S. customer makes a payment, they can credit that customer’s account instantly using local liquidity.
Banks are also starting to innovate here. Historically, they didn’t have to—they were a necessary part of the system, were charging a spread and didn’t face much pressure to improve. But now, with fintech companies coming in and disrupting the space, banks are realizing they need to compete—especially since e-commerce is high-transaction-volume and fast-growing.
Some innovations rely on digital currency to speed up cross-border settlements. If you send $5 by converting it into a digital currency, transfer that amount and then convert it back on the other end, it can happen almost instantly.
All of this—the global platforms, real-time payments, innovations in banking and digital currency—is interconnected. One drives the other.
Managing A World Of Expectations
The reality is, retailers really have one “good” choice: to enable global payments. For customers, the expectation is already there—they want to see local currency, familiar payment methods and no foreign transaction fees.
But for sellers, being able to select your currency is of equal importance. Some sellers are in emerging markets with volatile currencies, so they may prefer to get paid in U.S. dollars or euros rather than their local currency. Consequently, platforms such as PSPs have to offer options beyond just providing a payment method—they may offer options for holding funds, for choosing when to convert based on favorable forex rates and for sellers to pay suppliers directly from those funds.
Sellers don’t want to manage 15 different tools to handle their business finances. Global shopping platforms are starting to consolidate financial tools into one streamlined system.
The truth is, many of these platforms still haven’t solved the basic use case yet: how to get every seller in every country paid in their own currency. Once that’s solved, the next layer is improving the experience—getting sellers paid instantly, with low or no fees, giving them financial control. Even in emerging markets, expectations are rising. The bar keeps going up everywhere.
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