Online Retailer Calls for End to Plastic Monopoly

Online Retailer Calls for End to Plastic Monopoly

A successful online business owner says the Commerce Commission’s decision to allow a surcharge on credit card users will slow growth in New Zealand's export earnings.

Igor Petchorine who runs successful Auckland based business Globalmediapro.com, says governments worldwide need to negotiate with banks to lower the cost of standard wire transfers between countries.

Petchorine says New Zealand should follow the European Union’s lead with the Single Euro Payments Area (SEPA) and inexpensive cross-border wire transfer known as basic EU-payment.

“The SEPA project created a defined financial zone where regulations allow for the seamless local and cross-border transfer of currency between parties. SEPA brought an end to high processing costs and time delays and provided a model for the secure transfer of funds between consenting parties,” he says.

Petchorine says the possibility for buyers and sellers within such a single payments area to pay and to be paid inexpensively and unconditionally significantly reduces prices and increases sales. New Zealand would benefit from being a part of the SEPA or a similar global payments area.

He says the current high fees charged by banks to send and receive cross-border payments are costing New Zealand millions in lost export earnings.

“I think we have a number of local businesses who have significant potential to add to New Zealand’s export earnings through the online sale of added value items with low retail prices. But with high cross-border bank payment fees in place and difficulties opening and operating bank accounts in foreign countries, they are forced to expose themselves to the increased risk and costs associated with credit card payments.

Petchorine says his business illustrates the validity of wire transfers over credit card payments and the fraud often associated with them.

Globalmediapro.com is one of New Zealand’s most successful niche international e-tailers. The business ships commercial quality audiovisual equipment to thousands of customers in dozens of countries throughout the world. With over 1.8 million unique visitors per year, the e-store is one of the most popular of its kind.

Traditional international banking costs made one off transactions between countries very expensive for low ticket items sold through New Zealand shop sites particularly when coupled with high shipping costs. So Petchorine created his own innovative solution to global expansion without credit cards.

The site acts much like a vending machine; customers select the products they wish to purchase, make the payment via online banking to accounts in 16 countries and receive the product without delay.
Utilising a sophisticated back-end to the site, the process is completely transparent with real time tracking of delivery status for all orders.

Petchorine says his low cost business model was not a good fit with the 2-4% per transaction charge from credit card suppliers. In addition businesses using this payment method must also contend with costs of chargeback risk, risk management, and currency exchange fees.

Globalmediapro.com’s primary method of payment is wire transfer and Petchorine says lower costs associated with direct money transfers make this a much easier, more secure and cost effective means of payment.

“I didn’t want to pass the cost of credit card provision onto customers through increased prices and I was concerned about the security of online payment methods and widespread internet based credit card fraud so I chose to only take electronic transfers.

“The bottom line for me is cost. I wanted to be able to sell top quality equipment at the lowest prices and by reducing overheads I can pass those savings onto consumers.”

Petchorine says he knew if he could beat his online competitors on price, customers would keep coming back and they have.

Petchorine says until New Zealand looks at solutions other than credit card payments the debt and fraud hangovers they are associated with are here to stay and will continue to hit both online businesses and their customers in the pocket.

ENDS

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