Revenue Sharing
Situation
A merchant services provider wants to grow revenue by helping its customers grow sales. While domestic sales are brisk, international sales have not performed well for merchants. To date, the merchant services provider has offered no local currency pricing to enhance international sales efforts.
Objectives
In providing the ability for the merchants it serves to offer local currency pricing to their international shoppers, the merchant services provider has established clear goals:
- To increase international sales volumes substantially
- To augment revenue per transaction
- To gain a competitive advantage and thus attract new merchants
- To minimize technological and operational issues around local currency pricing
Strategy
E4X technology is used to provide local currency pricing in a range of foreign currencies that allow merchants to rapidly grow sales in international markets. The merchant services provider benefits in a number of ways:
- They earn a portion of the foreign exchange margin, thus augmenting revenue per international transaction at the same time as such sales are growing
- They are able to guarantee the value of transactions to their merchants in each merchant’s operating currency
- They receive custom reporting that allows them to control all payments to all merchants in all currencies
Results
Overall results from the implementation of a strategy of this nature vary, but are typically:
- 2% or more additional revenue per transaction, depending on price sensitivity
- Satisfied merchants as a result of increase in sales, and a valuable advantage over competing providers
- Simple to operate and manage, with comprehensive and relevant reporting
- Implementation within just 30 days demonstrates ability to respond quickly to merchant needs
