Updated April 1, 2022
Global eCommerce revenue will approach $5 trillion in 2021, soaring past expectations that 2020 and 2021 would be hampered by pandemic challenges. For eCommerce retailers looking to expand, international markets are a logical next step. The potential for growth is undeniable, but that growth can come with significant barriers — like international taxation, regulations and compliance requirements. With the right eCommerce partner, scaling digital storefronts and meeting regulatory requirements is possible. These are a few of the most common eCommerce compliance challenges and how you can prepare your business for them.
Staying Ahead of Tax Registration and Filing
International taxation and remittance is a tangled web of international laws in a constant state of flux. As eCommerce retailers expand into new territories, the administrative burden of managing these laws and requirements quickly becomes unruly, and the cost of error is high. Missteps along the way can hurt your bottom line and put your business in legal trouble.
For nearly all small to mid-sized retailers, eCommerce partners are essential for interpreting and implementing tax codes. This means that the most common compliance challenge eCommerce retailers face is finding the right partner with the expertise and framework to take on liability and keep up with changes. When looking for an eCommerce platform, be confident that they can do the following:
- Take on the role of seller and merchant of record. This allows the liability to pass to your outsourced partner instead of bearing it all on your own.
- Keep current with local laws and regulations. Instead of having international tax law experts on your payroll, let your platform take on the ins and outs of these changes and keep you up to date.
- Register and file taxes promptly. Each jurisdiction has different timelines for filing and registering taxes. Your eCommerce partner should know what these are and ensure that the proper paperwork is filed.
- Make eCommerce taxes simple for customers. Taxes are not an enjoyable part of buying and selling online. Make sure tax amounts, duty and other charges are transparent and straightforward for customers and minimizes their burden.
- Navigate payments, consumer laws and banking agreements. Local banking laws can throw a wrench in your payment processing, and setting up new connections with individual banks is not a wise use of time. Tap into your eCommerce partner’s network of already established contacts and quickly expand into new markets.
Prioritizing the customer is the most critical component of international taxation and remittance. Make the process as seamless and easy as possible and cut out complex or frustrating aspects of your checkout.
Navigating GDPR and Data Privacy
The EU’s General Data Protection Regulation (GDPR) is the most comprehensive and toughest privacy law in the world. Since its passage, other international and local regulatory bodies have added similar provisions to their books. For instance, the California Consumer Privacy Act (CCPA) has recently taken effect. The pace of regulation is increasing, and consumers and lawmakers are demanding better, more transparent privacy protections.
As a result, eCommerce merchants have had to quickly adapt their marketing and compliance strategies to keep up. While the nuts and bolts of these regulations can be overwhelming, the core of these privacy laws is to drive more accountability and transparency. With that in mind, here are a few questions to ask as you build GDPR compliance into your business:
- How is data collected, and who is accountable for personal data in your organization?
- Who has access to customer’s data, and where is it stored?
- How is data shared or transferred to other systems?
At its simplest, GDPR should be about protecting customer data. This is another vital role for your eCommerce partner to play. Ensure they understand the laws already on the books and have an eye toward what is coming next. Collecting customer data is an integral part of doing business online, but complying with regulations is key to maintaining trust, avoiding fines and staying competitive internationally.
Protecting Customer Credit Card Information
The standard for credit and debit card processing is the Payment Card Industry Data Security Standard (PCI DSS). It is a collection of standards created by the five biggest credit card companies — Visa, MasterCard, American Express, Discover and JCB — that eCommerce merchants are accountable to. It calls for the standardization of credit card processing and storage to keep data transfer secure.
PCI standards apply to all businesses that process, store or transmit credit card data. And for companies that operate online, handling credit card data is a given. Smaller companies are not only required to maintain compliance, but they can also be targets for cybercriminals looking to target vulnerable systems. for many small businesses, a data breach is extremely costly in terms of its bottom line and customer trust.
Using an eCommerce platform partner as a merchant of record allows businesses to sidestep much of the heavy lifting for compliance. Since your partner is in charge of processing payments, they need to stay compliant with PCI DSS regulations as they change. This allows DTC retailers to focus on expanding their businesses while their vendors manage the regulatory environment.
Stay Informed and Strategic
International eCommerce can be a potential goldmine. With that excitement of new opportunities comes a complex and challenging regulatory environment. Staying informed and strategic is the only way to succeed in a marketplace that is rapidly changing. International shoppers will realize very quickly if a merchant is not up to the task of localization and prioritizing needs.
Since the regulatory and compliance environment is a constantly changing target, eCommerce merchants rely on expert partners and vendors to stay competitive. Instead of managing international tax and privacy laws themselves, agile businesses can focus on expansion and leave the rest to the experts.
To learn more about how Scalefast can help scale your business, read our international eCommerce white paper, “Crossing Borders: A Guide to International eCommerce Expansion.” Discover how Scalefast can be the complete solution for launching and scaling in global markets.