Should Dealers Sell Internationally?

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Because of the Internet, more dealerships than ever are selling to customers in other countries. The strong euro makes European Union sales especially attractive. In this way, some stores actually benefit from the exchange rate.

Matt Tanzy is the managing director of the MIC's BankCard program, which offers dealers a discount on credit card processing. It also advises them on how to sell to other countries.

"I have no real way of estimating the total number of dealers currently doing international sales," Tanzy says. "I would guess that the top 100 or 200 franchised dealers are actively pursuing this lucrative sales strategy."

Dealernews columnist Todd Shafer manages the Web site for A&S BMW Motorcycles in Roseville, Calif. He says the high risk of fraud deters the dealership, and assumingly others, from selling overseas.

"We're now dealing with Canada and Mexico," Shafer says. "For those, we require that during the order process they provide the 800 number for customer service for the credit card's issuing bank. We then do a manual verification of the order details." A&S looked into doing the same for Europe, but soon realized that in other countries (and sometimes even in Canada) banks won't verify those facts because of customer confidentiality.According to Shafer, banks leave fraud issues to the credit card companies. The credit card companies don't care because they pass it on to merchants. The merchants care, but there's very little they can do other than not accepting hard-to-verify cards, or carrying a lot of insurance. "Until the industry develops a better method to verify and prevent fraud, I don't see anything changing," he says.

To help decrease the risks, Tanzy recommends dealers follow these procedures before shipping product overseas:

  • Obtain a photocopy of the front and back of a valid driver's license or passport.
  • Obtain a photocopy of the front and back (signed) of the credit card to be used.
  • Ensure the name on the ID exactly matches the name on the credit card.
  • Require the courier/shipping service to obtain a signed proof of delivery.

"On a typical chargeback dispute this will help to ensure that the dealer retrieves its money," Tanzy says. "But unfortunately, in the case of criminal fraud or stolen cards, VISA and MasterCard do not offer protection to the dealers. As we speak, there are debates and in-depth discussion within the payment processing industry on this very subject, as it is to everyone's benefit to resolve these challenges as the marketplace becomes more and more boundaryless."