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Companies who use the Internet to reach overseas customers frequently use their website to process orders and accept payments. To ease international customers' use, companies should consider installing currency converters on the payment page. Additionally, as payment practices usually vary from country to country, it is important that the prevalent payment mechanisms be identified and incorporated into the order-processing component of the web site. U.S. Commercial Service Trade Specialists in your target market can help you identify a country's most common payment mechanisms, which you should consider before commencing cross-border e-commerce in a particular market. See also, research on the Top Internet Markets FAQ .

Covered In This Section:

Credit Card Payments

For B2C transactions, many overseas customers use credit cards for online purchases, but credit cards are not a universally common method of online payment. For example, regulations in some countries hold cardholders liable for fraudulent charges, other countries are culturally cash-based, and others simply do not like credit. Nonetheless, to offer credit card payment services, a company must establish a credit card merchant account with a bank. The bank will process the transactions in exchange for a fee. Companies should compare the fee structures of banks to see which works best for the size and number of transactions expected.

While fast, credit cards carry their risks. Chargebacks can be very costly for online exporters. Common chargeback reasons are: fraud, dispute over the quality of merchandise, non-receipt of merchandise, or amount charged to card was incorrect. Companies accepting online credit card transactions should be knowledgeable about their credit card and bank's policies toward chargebacks and how to avoid them.

Account-to-Account (A2A) Transfers

A2A transfers, in which money is transferred electronically between the customer’s and merchant’s bank, are popular in many countries. A2A transactions offer the advantages of occurring in real time and reducing the potential for fraud and chargebacks. Unfortunately, because A2A transactions are rare in the U.S., few U.S. banks currently offer this service.

Person-to-Person (P2P) Transfers

There are many companies offering P2P services, in which funds are sent electronically to a third party, which in turn deposits the funds in the merchant's account. An example of a P2P service provider that conducts cross-border transactions is PayPal. PayPal lets anyone with an email address securely send and receive online payments using their credit card or bank account. PayPal will also conduct currency exchange, allowing the customer and merchant to operate in their preferred currency. Internationally, P2P transfers have come under some degree of scrutiny (see a United Nations Discussion Paper about Informal Money Transfer Systems), so it is advisable to consult with a Commercial Service officer in the country you are targeting before deciding on a particular payment mechanism.


An online merchant selling to international customers must pay careful attention to the tax implications of those sales. In general, once a company crosses a certain threshold of activity in a foreign country, the company becomes subject to income tax in that foreign country. In many cases, a company must have a "permanent establishment" in the foreign country before that country will subject the company to income tax on the company's business profits from that country. Thus, for example, an American online vendor of digitally- or physically- delivered products that does not have equipment or personnel in Japan generally would not be subject to Japanese income tax on its sales. However, there are important exceptions to this general rule. Some payments from customers in a foreign country may be subject to withholding tax by the foreign country (e.g., if the foreign country determines that the payments are "royalties" or other payments subject to withholding).

Electronically delivered goods should be treated like any other sale to a foreign customer. It generally is the responsibility of the customer/importer to declare their purchase and pay any taxes. Tax and tariff information on a country-by-country basis is available, or contact a Commercial Specialist in the targeted country for more information.

In addition, a foreign country may impose other types of taxes, such as value-added tax (VAT), on sales into its jurisdiction. For example, as of July 1, 2003, the EU member states began taxing sales of electronically supplied products and services by non-EU firms to non-business customers located in the EU. Non-EU providers of electronically supplied products and services are now required to register with a tax authority in a member state and collect and remit VAT based on the VAT rate of the member state where their customer is located. Additional information regarding taxation of hardware and software around the world can be found at the Department of Commerce, Office of Information Technology and Electronic website.