PayPal is a global payments platform that is available to people in more than 200 markets, allowing customers to get paid in more than 100 currencies, withdraw funds to their bank accounts in 56 currencies and hold balances in their PayPal accounts in 25 currencies. About 25% of our total payment volume is cross border trade.
Traditionally, international trade was solely the domain of the largest businesses that could take on the capital costs, establish regional contacts, and comply with regulatory requirements associated with international trade. A small business can now use the Internet in combination with a host of inline service providers to engage in trade at a geographic scale similar to large businesses. This democratization of trade has tremendously positive development, inclusion and growth implications.
PayPal surveyed 1200 online small businesses from six different markets and found that shipping, regulatory compliance and customs/duties are the top three barriers to cross border trade for small businesses. Another major concern for companies like PayPal is a trend towards data localization, a modern manifestation of a classic trade barrier known as a localization requirement. A regulatory requirement to locate systems in country would force PayPal to withdraw its services from that particular market. Finally, De Minimis thresholds should be addressed to alleviate burdensome paperwork and expenses when dealing with low-value products.
PayPal asks legislators to modernize and simplify trade policy to be inclusive of Internet-enabled small businesses. By improving customs and duties systems, consistently educating businesses on updated best practices, and promoting safe and secure services, governments can help to combat some of the major barriers reported by small businesses. Trade agreements should also work to prohibit data localization requirements affecting cross border financial services companies.
Over 65% of U.S. based PayPal "top merchants" engage in international trade, compared with US Commerce Department data, which finds that less than 1% of small businesses engage in trade.
Internet-enabled U.S. small business owners engaged in international trade report double in sales revenue compared to those who only sell domestically.i
The PayPal Passport tool is a free online resource designed to educate and empower small businesses to expand their global sales by uncovering new peak sales opportunities outside their own borders. We have partnered with governments to do webinars and in-person seminars to make small businesses aware of this tool.
Forrester Research reports that cross border business to consumer e-commerce is expected to be a $424 billion market by 2021.
ECIPE examined the impact of data localization requirements in seven countries and found negative impacts on foreign investments and national GDP. Regulations cost EU citizens an estimated $193 billion per year, and strict regulations in Vietnam had reduced GDP by 1.7%. [link]
On Behalf of PayPal, Ipsos interviewed a sample of 202 adults who are decision makers/influencers in implementing payment systems at the company they work for, and whose business offers customers the option to make purchases online. Interviews were conducted online between Nov – Dec 2015. No quotas were applied to the sample, and no weighting has been applied to the data.