|Are US Citizens willing to pay in other currencies ?|
Something I've noticed is that people in the US seem to have an aversion to making online payments in any currency other than US$.
Or to be more precise, a client has a website and has been accepting credit card payments for over 2 years. He has had customers from many countries in Europe, plus Australia, New Zealand, Canada, South Africa, Sri Lanka, and many others. Yet he has only had one customer from the USA.
Could this be something to do with him only accepting payments in UK Sterling ? (This is actually a restriction imposed by his banks due to the nature of the goods he sells). Do US citizens have an aversion to paying in any currency other than US$ ? Are US Visa and Mastercards valid outside the USA ?
Could there be some other reason ? We estimate that about 40% of his site visitors are from the USA so it would be nice if we could increase sales to US customers.
As long as I can pay by credit card, I've got no problem at all.
Well... OK, a currency converter function on the site would be nice (or a link to another site providing a curency converter... it could open in a new window), just so I knew exactly how much $USD I was paying.
I think if any site (even those with USD pricing) wants to do business internationally, they should provide some kind of currency conversion calculator in their shopping area.
I used to have a site that sold its goods in strictly Canadian funds, and had a real time currency converter. I founf this to be a real stumbling block in getting US based customers, even though the canuck buck is pretty weak against the mighty greenback. Once I switched to selling in strictly USD, sales most definately increased. I think you have to bill in the currency of what your major market is.
Well, we have a real time currency converter, and we also have approximate prices displayed in many currencies. We also state very clearly that they will see the converted amount on their credit card statements.
Do US issued credit cards charge a fee for transactions made in other currencies ? Could there be some other problem ?
i sell tangible goods and changed the currency on my site from pounds to us$
it made no difference to uk customers
but INCREASED sales to the usa,
i have a disclaimer on the site saying that the $ price is for guidance
and that we are a uk based company charging the cc company in pounds
therefore there could be a +/- few cents difference between the quoted price and the billed price,
and that we will make the difference good if there is a problem
this is stated clearly on the site and also on the confirmation email, giving them a chance to cancel the order,
in 12 months no-one has either cancelled or asked for a refund of the difference.
incidently, i process credit card sales manually and if you have high turnover Barclays in UK will process us$ credit card transactions directly on accounts with foreign currency transactions of 20k+ pounds annual. (so in this case the customer would pay the exact dollar amount)
Denominations other than the dollar will probably flake out an American, I would probably just look for the same product with a dollar tag. Other currencies raise too many flags...shipping, support..etc.
>Other currencies raise too many flags...shipping, support..etc.
and VAT is a killer
>Something I've noticed is that people in the US seem to have an aversion to...
Agreed – quoting anything else other than US$ prices to the US market is an unnecessary barrier on a site.
If you’re targeting international markets, I’d also say that the US$ is the most universally accepted currency for quotes so it makes sense to stick to US$. When it comes to actual credit card transactions from a foreign merchant account however, we’ve found that there’s often a slight variation from interbank (or interbank plus x%) rates on the client’s bank statement simply because of transaction routings and the slight timing variations when dealing with different currencies. (Typically client quoted $100, actual statement amount $98-$102) We warn clients in advance about a 2% variation and generally get away with it.
One of the real problems we’ve had is quoting US$ rates for British clients – it's the only nationality with whom we've had a problem. Once again the barrier needs to be avoided if possible – definitely a point of consideration for companies who’ve traditionally dealt with US/international markets and are planning a foray into the UK market. On-site currency converters are one option. We’ve opted for a more personalised e-mailed explanation during the selling process.
I think the main reason that there is an aversion is that here in the US we don't deal with any other currency. Europeans for the most part have dealt with currencies and credit cards in different countries. Most americans don't know enough about foriegn transactions and don't know they can purchase something in Pound Sterling with a US credit card.
The first time I traveled over seas, I did some research and found out that plastic (credit cards) is plastic all over the world. I didn't know this before I plans this trip.
If you post on your site that you accept "American" credit cards, you will probably see an increase in sales.
Thanks for your input guys. Keep it going.
I've made a slight change to the wording as suggested by Hope, and I'll let you all know if this makes any difference.
Does anyone know how many of each type of credit card has been issued in each country etc ? Is there a list somewhere ?
|I've made a slight change to the wording as suggested by Hope, and I'll let you all know if this makes any difference. |
It's only been a few days, and things are looking up. 10% of sales on the site in question in the last week have been from the USA. The only change made to the site was the mention that we accept US issued credit cards. Thanks for the suggestion Hope :)
I manage a large website (by Canadian standards) and we had had to switch to pricing in US currency. It was a real mistake to have the currency default on Canadian dollars when we first launched the site. Most Americans have no idea what their dollar is worth in other currencies.
We have made some changes to our site and are now forcing Canadians to change the currency to Canadian dollars. Canadians do not seem to have any trouble with this concept but Americans do.
When we deal with other countries we always talk in US dollars. Lets face it, you can go to the most remote part of the planet and ask the locals what the currency is worth in US bucks and they will know right away.
The almighty US dollar rules! Why fight it.
In many countries in SE Asia, the U.S. dollar is the only thing you can use for purchases larger than $20.
Take Vietnam for example. The local currency is the Dong. There are ~14000 Dong to the U.S. Dollar (at least a while ago). The largest bill available in Dong is something like 5000 Dong. So you need a stack a foot high to buy anything tangible. Also the ink runs if you get it wet. I'm not kidding. So they use the U.S. dollar as the hard currency. Every shop and bank will take dollars.
Many US folks can be very provincial. They travel to other countries, and expect the local people to talk English and accept USD. Other currencies seem like Monopoly money to these people. (Considering the denominations on currencies like the lira, this perception is partially understandable.)
If a site is going to sell to US customers, particularly unsophisticated ones, I'd highly recommend pricing in US Dollars or at least offering a very easy and obvious currency conversion feature.
I price in USD for two reasons:
a) It is the biggest market for my products
b) Most people can broadly convert USD to their own local currency without using a tool to do it. However, as an example, most Americans wouldn't have a clue how many Euros there are to the $. They might have a better idea with £ to $, but not much better.
There is therefore no contest for me... $ it is.
(edited by: Napoleon at 9:52 pm (gmt) on Nov. 11, 2001)
The barrier to non-USD-denominated purchases is not limited to unsophisticated (potential) customers. I have a drawer full of litas, zloty, you name it and have spent several years of my life abroad. Purchases made in foreign (from my perspective) currencies were, until relatively recently, converted at a decent rate of exchange without surcharge at the exchange rate as of the date of posting, not purchase. For stable currencies, there was neither incentive nor disincentive to purchase in local currencies. Weak currencies gave the US purchaser the benefit of the float: by the time the paper slips were collected and eventually presented in the US, the real price would have slipped, giving the US purchaser a semi-unanticipated discount--and an incentive to purchase in non-dollars.
Over time, Visa, MasterCard, and Amex have become more sophisticated and, arguably, rapacious. Conversions are made at less favorable rates (at least by some issuers), are made as of the date of purchase, and--deadly from the vendor's point of view--with a non-trivial additional service charge. Those who purchase with the assurance that "US credit cards" are accepted are due for a shock--great or large, depending upon their price sensitivity--when their credit card bill arrives. Don't count on folow-up purchases.
For myself, I never purchase from Stateside in other than USD. Whether I'm typical or generalizable-from is not for me to say.
>>Do US issued credit cards charge a fee for transactions made in other currencies ?<<
In some cases, yest. Some of the big issuers charge a hidden currency-conversion fee of 2 to 5 percent on top of the 1 percent that Visa/MasterCard charge for currency conversion. Some don't charge anything, however--it all depends on the card.
I don't think that's the reason why U.S. buyers are reluctant to order from overseas vendors, however. (Most U.S. credit-card users aren't even aware of such conversion fees.) A more likely reason is lack of experience in using foreign currency, combined with a fear of the unfamiliar. The United States is a big country, and I'd guess that the majority of Americans have never used any kind of money except the U.S. dollar.
|(This is actually a restriction imposed by his banks due to the nature of the goods he sells). |
Okay, but I don't understand why he doesn't advertise in $. This makes no difference to the bank so long as the money arrives in pounds. But the website can state dollars, surely.
If you really want to be sneaky, open up a PO Box in the US, and don't mention Britain at all.
>>Most U.S. credit-card users aren't even aware of such conversion fees.<<
This is true only to the extent that U.S. credit card users may be presumed not to read their monthly statements--which may or may not be the case. There is, however, nothing hidden about these conversion fees: in contrast to the more abstruse matters of purchase vs. posting dates and rates of exchange, which are indeed "hidden," the service fee for conversion is broken out explicitly, right next to the vendor's name and purchase price. (This is true at least for Chase-issued Visa and MasterCards, and for American Express.) Heck, the less sophisticated purchaser might even assume that the vendor, and not the credit card issuer, imposed the service charge.
This is not just a matter of perception. Unless the item offered for sale is unavailable in the States, or is so very much cheaper when purchased from a foreign vendor, or if price is for some other reason irrelevant, it makes little sense for the U.S. purchaser to look beyond our borders.
I use to take US$ for my UK site via cheques int the post now it is all in GBP on a secure server via credit card the orders from the US are the same.
Those who purchase with the assurance that "US credit cards" are accepted are due for a shock--great or large, depending upon their price sensitivity--when their credit card bill arrives.
While driving through Canada (having forgotten to exchange some $$ for CDN at the border), I found that my credit cards gave me a much better conversion rate than most of the local gas stations I did business with. And that's *after* I read my statement. ;)
That said, if I were planning a vacation in another country (rather than just driving through on my way to the rest of the U.S. ... why Alaska isn't part of Canada, I really can't say.), I'd make darned sure to convert some money to foreign cash when I arrived.
Online though, all I ask is that you accept US cards, and give me a currency converter on the site.
The issue may not be an unfamliarity with foriegn currency, but a fear of being a victim of fraud. The fear may be unfounded, but the thought of dealing with a non-US company by an American consumer is one of the warning 'flags' many stories from the US media talk about. The countries in question may be far removed from England and some of the others we have mentioned, but the information that sticks with the american consumer is that the perp had set them selves up as a legitimate foriegn (non-US) company and the victim was powerless to act after the fact.
As unfair as it is, these two points stay with the American consumer and are reinforced by an occasional story from the US media.
As a business owner I deal with foriegn companies almost every day. However, I deal with American customers almost exclusevly, and over the internet our biggest hurdle is to remove their fear.
American customers love to spend their $$$, but they want to be assured they will receive what they paid for and at the price advertised.
Sorry for being long-winded. The short version; remove their fear.
Mushi mushi . . .
British company, London based.
For what it's worth, some 80% (pre Sept 11 - now 50% but rising again) of our online business was with the States, nearly all consummated with cards. Very little resistance, but I will consider putting up a converter, for we don't know how many people are frightened off.
And also, in my experience, surcharge or not, the credit card conversion rates are significantly better than you get in, say, a bureau de change.
I think something should be said here for target audiences... If your target audience tends to be comprised of well-read, educated, worldly sorts of people, you would probably see few objections to foreign currency pricing.
If your target audience is young and tech savvy, you'd probably see a bit more resistance, but still find a fairly open-minded market.... these folks would probably be effectively soothed with a currency converter.
However, if you are targeting the K-Mart-shopper-AOL-mom-n-pop-middle-american sort of consumer, who leave all their computer settings at their defaults, and consider a "Made in the USA" sticker an important product feature, go straight to USD pricing. Don't waste your time with something as complicated as a currency converter, and don't leave all those funny "foreign" symbols near your prices. People will run away.
thanks for all the information people, your thoughts and comments are much appreciated.