Companies are grabbing the opportunity: according to Juniper Research, the total value of global B2B cross-border payments hit $35 trillion in 2022, up from just $27 trillion in 2020 and representing a 30% increase.
Canadian companies are well positioned to take advantage of new global selling channels, and many of these organizations are seizing the opportunities. Led by an increase in the number of small and medium-sized enterprises (SMEs) that export, the number of Canadian goods exporters grew by 9.3% to reach 47,701 in 2021, according to Statistics Canada. A total of 177,799 Canadian enterprises traded goods internationally in 2021, of which 17% were two-way traders (i.e., handling both imports and exports).
5 Steps to Take First
One of the first considerations that small businesses should think about before going global is exactly how they’re going to get paid for their products and/or work. Here are five things you need to do before you close your first cross-border e-commerce transaction:
- Outline your terms in advance. Since cross-border transactions are more complex than in-country sales, you’ll want to outline your payment terms and any other key points in advance. Make sure your customer has the opportunity to review and agree to the terms before you ship any goods or perform any cross-border services.
- Get set up to take payments in different currencies. International payments will cross borders and typically involve at least two different national currencies. If your company is based in Canada and opening its doors to customers in the UK, for example, then your payment gateway will have to be able to convert Pounds into Canadian Dollars (and vice versa).
- Pick a payment platform. Look for one that’s versatile, affordable and that offers a high level of merchant support just in case you need it. Read reviews online before making your choice and, if possible, call one or two of the provider’s customers to learn more about their experiences. Finally, make sure the platform supports the various ways that you want your customers to be able to pay (e.g., credit card, wire transfer, cash in advance, etc.).
- Sign up with a credit card processor. There are several processors that serve the Canadian market and that can manage both local and international transactions. Find a provider that offers the highest level of service in exchange for transaction fees that your company can afford. The company will be able to process payments immediately and securely and should charge you a small percentage on every purchase.
- Familiarize yourself with Canada’s trade agreements. Once you’ve put your terms and payment gateways in place, it’s time to check out the various agreements that Canada has put in place to facilitate international trade. For example, the country has 15 free trade agreements in place with more than 40 countries worldwide. Two of the most prominent agreements are the Canada-United States-Mexico Agreement (CUSMA) and the Canada-European Union: Comprehensive Economic And Trade Agreement (CETA). These treaties are negotiated between two or more countries and encourage international trade by reducing or removing tariffs and other barriers to trade.
It’s Time to Grab the Opportunity
In 2021, more than 2.14 billion people worldwide bought goods and services online, up from 1.66 billion global digital buyers in 2016. This presents an exciting opportunity for small enterprises that take the time to understand the nuances of global selling and that expand their horizons outside of their own countries’ borders.
“In a world where consumers are increasingly choosing to shop online, Canadian small businesses [that] want to excel should, and need to, expand internationally to reach new markets and consumers,” University Canada West points out. “Small businesses that strictly remain in their local community, or even province or country, are only limiting their potential market.”
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.