Managing risk in cross-border commerce

Aug 04 2020 | PayPal editorial staff

Cross-border trade can open up a world of opportunity for your business—if you can overcome the risks.
If you’ve ever shopped online, you probably felt skeptical about using a website at some point. This means you’re already familiar with one of the biggest challenges that cross-border commerce poses for your business: Customers can be wary of sharing their financial data on unfamiliar websites.

Selling in unfamiliar markets presents increased security risks. In 2018, digital fraud shaved $4.2 trillion USD off the world’s economy.1 The loss of consumer trust has a significant impact on businesses, with 46% of consumers citing that they only buy from brands that they believe will protect their privacy.2

Concern about the authenticity of products and whether items will arrive as described, or arrive at all, also cause many customers to opt out of purchases. You’ve done all the hard work only to lose them at the last hurdle, what a shame.

Customer trust and perceived security are crucial elements of cross-border commerce. Shoppers may not be as at risk of fraud as they believe, but it is still a key cause of cart abandonment. One in five shoppers will abandon their purchase due to concern over website security.3 And many believe that returns are more difficult, if not impossible, without buyer protection.

Overcoming the fear of fraud

The fear of digital fraud could be costing you money without you realizing it, but there is good news. Online businesses can mitigate consumer fear of cross-border payments by ensuring consumer protection, working in local currencies, and providing trusted payment options.

PayPal has the experience, global reach, and fraud protection technology to instill trust in cross-border shoppers and help businesses manage payment risk and fraud around the globe. In an online survey of 31 markets, 50% of respondents listed PayPal as the most trusted cross-border payment method.3

Where does this credibility come from? Aside from allowing businesses to accept more than a dozen payment types in 100 currencies, PayPal offers buyer and seller protection on eligible purchases. PayPal also gathers unique insights from trillions of transactions to help monitor and respond to fraud, manage chargeback risk, and understand buying and engagement signals.

Protect your business, and its reputation

If you’re interested in entering new markets but you’re worried about the security risks, or perhaps you are active in foreign countries but concerned that you’re not doing enough to attract cautious customers, consider creating a cross-border strategy with one of the world’s trusted payment platforms.

Get started  
1June 2019 Digital Fraud Tracker,

2Statista, Brand-related data privacy concerns of smartphone users in the United States as of May 2019. Published by J. Clement, October 1, 2019. Based on Vibes 2019 US Mobile Consumer Report, page 39.

3PayPal commissioned Ipsos MORI PayPal Insights 2018. n=34,000, 31 markets. Online survey of adults (aged 18+) between March – May 2018

Frequently asked questions.

PayPal Seller Protection helps protect sellers in the event a buyer lodges a claim that the payment was unauthorized, or a buyer lodges a chargeback with their card issuer claiming they did not receive the item. Unless already available in your market, for all transactions made on or after 13 April 2020, Seller Protection will be extended to intangible items such as travel, ticketing services and digital goods. With PayPal Seller Protection, you may be protected for the full amount of all eligible transactions.
Below are some of the main requirements you need to meet to benefit from Seller Protection:

  • The transaction must be marked as eligible or partially eligible for Seller Protection on your Account Transaction Details page.
  • Your account must be in good standing.
  • You must respond to our requests for documentation and other information within the required timeframe. 
For physical goods:
  • You must ship the item to the address on the Transaction Details page.
  • You must provide proof of shipment, proof of delivery, or signed delivery confirmation where applicable. 
For intangible or digital goods: 
  • You must provide provide compelling evidence that the intangible item or digital good was delivered or provided as described, or that the service was completed as described. Compelling evidence can include any evidence available to prove that your buyer received the goods or services or benefited from the transaction.
  • You must comply with any terms and conditions that apply to the purchase.
  • You must comply with all technical integration requirements that were specifically notified to you by PayPa
Seller Protection will not apply to:
  • Claims or Chargebacks submitted on the basis the item was ‘Significantly Not as Described’
  • Items that you deliver in person, including at a retail point of sale
  • Items equivalent to cash, including but not limited to gift cards
  • Donations
  • Financial products or investments of any kind
  • A payment sent using PayPal’s friends and family functionality
  • A payment made using PayPal’s Account Optional (or Guest) Checkout, PayPal Payouts, Mass Pay, PayPal Direct Payments, Website Payments Pro or Virtual Terminal Payments, PayPal Business Payments and PayPal Here
  • For shipped items, any item that is not shipped to the recipient's shipping address on the Transaction Details Page. We recommend that you do not use a shipping service arranged by the buyer, so that you will be able to provide valid proof of shipping and delivery.

There are no limits or caps associated with Seller Protection. However, PayPal reserves the right to withdraw Seller Protection if the Seller abuses the privileges offered. In the event of withdrawing Seller Protection, PayPal will communicate the same before taking any action.
For full eligibility requirements, see the full Seller Protection Policy terms in the PayPal User Agreement, but please note that we will not update the User Agreement immediately when making this change. 
Depending on when you view the User Agreement it may still indicate that intangible items services and digital goods are ineligible, which will no longer be correct, however all other exclusions will remain in effect.

Here's how you can change your business contact information displayed on the Transaction Details page:
  1. Go to Account Settings.
  2. Click Business information under "Business Profile" on the left of the page.
  3. Click Update beside "Business information."
  4. Click Edit and edit your business details, and click Save.

If your business is changing ownership, you can change the contact name on your PayPal business account. The contact name must be the owner's name, not the name of the business.

To update your company name on your PayPal Hong Kong account, please follow the steps below:

  1. Go to Account Settings.
  2. Click Business information under "Business Profile" on the left of the page.
  3. Click Update next to "Business information."
  4. Click Edit beside your business name.
  5. Enter your new business name, and then click Save.
Please provide clear, valid documents so we can quickly make the changes for you. We'll review them and get back to you within 3-5 business days.

To make sure that you can continue to withdraw from your PayPal balance, your new business name should match to the name registered on your bank account. If you linked a bank account before you changed your business name, you should remove the bank account and add another account with your new business name.
If a buyer opens a dispute or claim regarding an item they didn’t receive, you may be required to provide the proof that you’ve already sent the item to the buyer. One way to show that proof is to use a carrier with online tracking. The recipient's name and address in the online tracking information must match those displayed in your Transaction Details page. For transactions involving items worth $750USD (or its equivalent in other currencies) or more, please also keep an online receipt with the recipient’s signature as proof of delivery.

It's important to meet the postage requirement for you to be eligible for Seller Protection. If the buyer demands that you deliver to an address different from the one in the Transaction Details page, we suggest that you contact the buyer to arrange a refund and make a new payment with the correct delivery address. You can view the detailed postage requirements related to Seller Protection in our User Agreement.

Learn more about how to handle a PayPal dispute or claim.
The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.