1. Stay competitive: The online market has far larger shoppers. Having an online store helps you tap into the large online population.

2. Go global: The brick-and-mortar setups are restricted by location. Ecommerce gives you the opportunity to go global and boost your revenue stream.

3. Lower costs: Digital marketing for your ecommerce is comparatively cheaper than the amount you would otherwise spend on a full-fledged sales and marketing team.

4. Save on rent: An online store can cater to a larger consumer base without you investing in a larger physical space/office.

Although ecommerce is low-risk and low-cost, it still requires funds to get it off the ground, like salaries, development, web hosting, design, and accounting services.

Having said that, you’ll need to know what funding options you have to start your online business. Let’s explore some of the most popular funding options available for online businesses.

1. Line of Credit

An unsecured personal line of credit for business has an interest rate lower than that of a credit card.

You can borrow funds as a personal loan for your business, repay in monthly installments and use it again whenever the need arises without going through the hassles of reapplying.

The best part is that you’ll pay interest only on the amount you borrow and not on your whole approved credit limit.

2. Credit Card

A credit card gives you instant access to money. But, it has its own share of downsides. The interest rates are high. So, if your business is not making enough money, paying the minimum amount could be painful. That means you could stay in debt for a longer time.

3. Crowdfunding

If you’re selling something you have created, you may be able to get financial help through crowdfunding, especially if your product is unique, creative and one-of-its-kind.

Successful crowdfunding campaigns often offer something back. It could be giving out a free product or selling it at a discounted price.

4. Traditional Business Loan

A traditional business loan is the first option people think of if they need help financing their business. However, unlike an unsecured line of credit, the business loan disappears once you pay it off. If in future you need finance, you need to reapply. So, if you need a one-time dose of cash, a business loan could work.

5. Angel Investing

An angel investor provides seed money for starting a business. The investment could also provide ongoing support to help the company sail through times of financial crisis.

Angel investors are easy to find. They could be your family, friend, neighbor, parents, or anybody you know, who has the money to carry your company through initial financial setbacks. You can also find angel investors through online funding sites.

Most of the angel investors prefer to have partial ownership of the business. However, it’s up to you to weigh the pros and cons and decide whether the investment is good enough to lose some equity of your business. Angel investing is a good choice for a small startup or ecommerce businesse.

6. Venture Capitalist

If your aim is to start big, you’ll need a larger amount of investment. VCs are the perfect people for you.

Venture capitals (VCs) are wealthy investors. They invest more than angel investors, but they are picky investors. They’ll only invest in startups that have the potential to show profits.

Since their investments are huge, they expect higher returns on their investments and larger claim to your business than angel investors.

But, they are business savvy people with the mind of an entrepreneur. They’ll offer their expertise and guide you to make a successful and profitable business venture.

The bottom line…

If you have an offline store and are trying to have an online store, or if you are hoping to make your start as an entrepreneur, ecommerce is a lucrative and rewarding way to become your own boss. If financing is holding you back, there are many funding options for every business owner to get the funding they need to succeed.

Shiv Nanda is a financial analyst who currently lives in Bangalore and works with MoneyTap. You can email him at shiv@moneytap.com.

The post 6 Popular Funding Options for an Ecommerce Business appeared first on cleverbridge.

Managing the complexity and cost of this process is a daunting endeavor, and one that many growing companies may not have the manpower and financial bandwidth to manage on their own.

In this downloadable cleverbridge ebook series, we explore the decisions you should consider if you feel you’ve outgrown your current payment provider, and the step-by-step process you should take as you position your company for success.

Calculating the Total Cost of Going Global

Nearly all successful digital businesses go through a similar lifecycle.

First, you need to start selling your product or service online. You look at payment service providers (PSPs) such as PayPal, Stripe or Braintree to begin accepting payments, and you’re off and running. If you’re a subscription business, you are also taking advantage of your payment provider’s simple recurring billing features. However, just like every digital business that grows above the $50,000 monthly recurring revenue (MRR) threshold, you’re starting to experience the limitations and pains of your start-up phase payment provider. Here are some of the common signs that indicate you could be outgrowing your PSP:

• Don’t support the payment methods and currencies of all your target markets
• Payment decline rate continues to be high or even increases with greater customer volume
• Specific countries have higher failed transactions rates than most
• Cart/check-out abandonment rate continues to be high
• Experience billing errors such as duplicate and/or missed customer billing events
• Lack of visibility into subscriber activity and optimization opportunities

Download the ebook to learn more:

10 Questions to Ask a New Payment Service Provider

When it’s time to explore new options, you not only want to resolve today’s challenges, but also drive growth for tomorrow. Knowing the cost of ownership of each option is another important factor.

A full-stack ecommerce provider that offers all-in-one global ecommerce, billing and payments solutions can wow your customers with features that extend beyond simple transaction processing – and increase revenue. More comprehensive solutions can also save precious time and resources. To the unfamiliar, how to maximize profits and make life easier with a full-featured ecommerce solution may not be obvious. But don’t worry; just ask these questions when evaluating potential solutions to uncover opportunities – and costs – that are often overlooked.

Download the ebook to learn more:

Convincing Internal Stakeholders You’ve Outgrown Your Payment Service Provider

Your online business for your digital good/service is losing steam. Your reporting shows that steady churn and stagnant trial-to-paid conversion rates are impeding your ability to grow recurring revenues. Across the board, your finance, technology and marketing teams are looking to innovate.

You know that upgrading your payment service provider is a critical strategy for accelerating your slow growth, and you are equipped with the most important questions for evaluating new providers.

But you need executive and cross-department buy-in for this project — and your colleagues are resistant to change. So what do you do?

Download the ebook to learn more.

Learn how cleverbridge can help manage, monetize and optimize your digital business as you continue to grow. We take responsiblity for recurring billing, global payment processing, compliance, customer service, and more. Contact our sales team today.

Kyle Shamorian is the content marketer for cleverbridge. Connect with him on LinkedIn here.

The post Ebook Series: Have you Outgrown Your Payment Service Provider? appeared first on cleverbridge.

Many companies choose to focus their full efforts on one model or the other, while others attempt to hedge their bets by supporting a hybrid of both.

Here, we’ll dive into some of the main differences between the B2B and B2C ecommerce spaces, and the key concepts necessary to support a thriving digital business, regardless of your end user profile.

Customer Profile and Market Size

At its most basic level, a B2C company sells its wares directly to the customer, where a B2B company’s products are sold to another business, which often sells to customers of its own.

In the B2C space, the target audience is far broader, so although customer retention is vitally important, the greater focus is placed on customer acquisition, where attracting sheer numbers of interested prospects remains the main stepping stone in the buying cycle. And with a smaller average customer value ($147 per order, according to Shopify), casting as wide a net as possible maximizes awareness and demand for the company’s product – and ultimately revenue.

The B2B prospect is not only a business, but a specific kind of business, and booking new customers requires hitting a much narrower target. But when you do, it pays dividends.

A key B2B target may be a company with a certain volume of revenue ($1-5 million per year, for example), or a business that operates in a certain vertical (real estate, hospitality, medical, etc.). And though a potential lead is likely more difficult to identify and close – with a much longer sales cycle to boot – the average customer value is nearly triple that of B2C ($491 per order), and represents significantly higher value.

Where customer acquisition tends to be the greater focus for B2C, B2B’s bread and butter is customer retention. Because each B2B buyer represents a much greater revenue stream, and the business/customer relationship lasts months or even years, there’s far greater value in consistently reminding your B2B customer of your worth, through personalization, flexibility and various pricing options, which we’ll address.

B2B ecommerce is certainly on the rise, with Forbes valuing it at $6.7 trillion by as early as 2020.

The B2C Versus B2B Buying Decision and Supporting Content

B2C and B2B customers approach online buying differently, and each model should support its customers’ needs and preferences accordingly.

When a B2C customer takes to the web for product search, they’re the single decision maker in a fairly simple transaction. They need to know product functionality, price point and to get an overall sense that the product meets their personal – and yes, even emotional – needs. And because a B2C purchase requires a smaller upfront cost and the refund policy is likely simple, there’s much less risk involved and therefore a much shorter buying cycle.

The supporting web content that educates the B2C customer on the product – like landing pages, demos, FAQ’s and even the checkout page – should be exhaustive but not overwhelming. The consumer should feel educated enough to make a purchase decision in as few steps as possible to prevent them from leaving your site at any point during the buying cycle.

This, however, is where B2B gets significantly more complicated.

The B2B research and buying process is much more rigorous, the implementation process operates on a larger scale, and the initial purchase decision likely requires buy-in from more than one person.

For example, if an IT specialist is looking to subscribe to new software for their company, they’re going to have to convince any number of other people, like their supervisor, top executives, and even the finance department, among others.

Because this is a business decision instead of a personal one, the supporting material should be more detailed and exhaustive. In addition to the traditional FAQ’s and product demos, consider displaying a use case that guides each decision maker based on their particular concern. Educate the CEO on why it’s a great investment, the accounting department on why it makes financial sense, and the IT department about the ease of implementation.

Providing the necessary information to a prospect’s full slate of stakeholders can help make sure your company becomes its desired service provider. From there, you’ve on-boarded a profitable client that represents a potential long-term partnership.

Read more: Bring Consumerization to the B2B Buying Experience

Customization and Payment Flexibility

For a single B2C customer, signing up for enterprise software or a SaaS subscription remains fairly plug-and-play. After conducting research and making the purchase, they’ve decided the product meets their needs and presumably supports their device. Customization should be minimal.

On the B2B front, whether usage-based, seat-based or any other user model, dozens and maybe hundreds of employees in the end user’s business may be using the software on a day-to-day basis. It’s crucial to allow the end user to customize their experience based on functionality, usage, department, and other metrics that maximize usability.

And just as the product itself should be flexible, so should the payment options.

For B2C, there’s often a uniform price for all customers, and the standard credit card and PayPal-type payment options should suffice. But the B2B model should host a bevy of additional options, like purchase orders, payment on credit, budgeting workflows, etc. And for large clients buying a significant order, consider the Configure Price Quote (CPQ) model or volume-based discounts as incentives, both of which we’ll explore further in future blogs.

B2B Web Performance

Some 98 percent of B2B buyers say they do at least some research online, according to Forrester, and 62 percent said enhanced search functionality is essential to their research and purchase decisions.

As a digital business, your website remains one of the most important tools to appeal to your customers. And for obvious reasons, it should function in a way that suits the user.

A digital platform in the B2C place can populate adequate search results with a basic search function that delivers on common keywords and product SKUs. Amazon is a great example of this.

In B2B, because the slate of product offerings are more complex and niche, the search should be far more tailored to the B2B user profile and company need. A search function based on structured data and more complex algorithms can populate results based on what your customer has bought before, what they’ll likely buy next, and provide a forecast for purchases far in the future.

In fact, some B2B companies even build out separate microsites tailored specifically to the needs of their top clients, which may bring in the lion’s share of yearly revenue.

And for B2B buyers who are used to the company’s sales representative as their primary contact point, according to Shopify, streamlining the online search process doesn’t replace the sales role, but rather “empowers your sales reps to work in a more consultative, rather than transactional role,” supporting an even more optimized and personalized experience.

Keystone

Although B2B customers are fewer, they maintain a much higher value than their B2C counterparts, and can potentially deliver more revenue if your company implements the right structure and the platform to support it.

Whether your end user is a single customer or another company, cleverbridge can help manage, monetize and optimize your digital business as you continue to grow. We take responsiblity for recurring billing, global payment processing, compliance, customer service, and more.

Ready to discuss further? Contact our sales team today.

Kyle Shamorian is the content marketer for cleverbridge.

The post 7 Key Differences Between B2C and B2B Ecommerce Models appeared first on cleverbridge.

In a 5-4 ruling, the high court overturned its 1992 decision in Quill v. North Dakota, which decided that out-of-state companies – at the time, mostly catalog companies – did not have to collect sales tax if they lacked a physical presence in the state.

Physical brick-and-mortar retailers have long decried the Quill decision, citing a difficulty to compete against their online counterparts because of the extra charge to their customers.

U.S. states have also voiced their criticism of Quill, arguing that they’re sacrificing millions of dollars in tax revenue for state- and locally-funded initiatives. Most notable of those states is South Dakota, which passed a state law in 2016 requiring digital businesses to collect sales tax if they bring in sales of more than $100,000 or more than 200 transactions per year.

When several large online retailers failed to register under the new law, including home goods company Wayfair, South Dakota brought legal action against those companies in the South Dakota v. Wayfair case in April of this year. But Quill stood in South Dakota’s way.

As of today, the Court has ruled in favor of South Dakota, explicitly overruling Quill as “unsound and incorrect.”

The Court’s opinion went on to state that Quill “creates rather than resolves market distortions. In effect, it is a judicially created tax shelter for businesses that limit their physical presence in a State but sell their goods and services to the State’s consumers,” which is “something that has become easier and more prevalent as technology has advanced.”

Justices Anthony Kennedy authored the Court’s opinion, which was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch. Chief Justice John Roberts filed a dissenting opinion joined by Justices Stephen Breyer, Sonja Sotomayor, and Elena Kagan.

Read more on this story in a previous cleverbridge blog.

Kyle Shamorian is the content marketer for cleverbridge. 

The post Supreme Court Rules States Can Collect Sales Tax from Online Sellers appeared first on cleverbridge.

Last Tuesday, the Court heard arguments in South Dakota v. Wayfair, a case in which several online companies including Wayfair are challenging a 2016 South Dakota state law requiring them to charge sales tax on goods and services sold to South Dakota customers even though the companies do not maintain a physical presence in the state.

South Dakota’s law has been struck down as unconstitutional by state court in South Dakota based on an older U.S. Supreme Court case, Quill Corp. v. North Dakota. In 1992, the Court ruled in Quill that out-of-state companies – at that time, usually a catalog company – did not have to collect sales tax from their customers in those states.

The Court in Quill also encouraged Congress to resolve the issue through legislation, but Congress has yet to tackle the issue. After waiting 25 years for congressional action, some states decided to take matters into their own hands. South Dakota not only passed its Internet Sales Tax law in 2016, but quickly went to court to enforce it against online retailers who failed to register with the state to collect taxes. The companies’ primary defense is the Court’s ruling in Quill, which the Court can now decide to affirm or overturn. Meanwhile, dozens of other states have lined up in support of South Dakota, claiming that Quill diverts billions of dollars every year from state and local tax-funded programs.

At oral argument, the Justices did not give a clear indication of which way they will rule. Justice Sonia Sotomayor noted that overturning Quill begs “many unanswered questions” and what may amount to a “massive amount of lawsuits.”

The Court can only answer the question before it. And the South Dakota law does not reach every online retailer with South Dakota customers, only those with sales of more than $100,000 in the state or more than 200 transactions with in-state customers. The South Dakota law also doesn’t allow retroactive tax collection. So even if the Court rules that South Dakota’s law passes constitutional muster, other state laws requiring much less economic interaction with a state or retroactive tax collection might not.

The Justices grappled with those concerns during oral argument, as well as what is fair to brick-and-mortar businesses who may be losing sales to online competitors and to small online retailers without the ability to navigate thousands of local tax laws.

What Does This Mean for Ecommerce Businesses?

If the Court reverses Quill, at least far enough to allow South Dakota’s law to stand, several other states already have laws in place to require state sales tax collection and online retailers should expect many more to follow suit. And even if companies challenge some of these new laws as unconstitutional for reasons left unaddressed in South Dakota’s case, the immediate new burden on online retailers could be substantial. There are more than 10,000 separate tax jurisdictions within the 45 U.S. states that currently collect sales tax, creating a complex issue that many small- and medium-sized companies may not have the bandwidth or financial resources to manage.

Free ebook: Managing the Complexities of Payment Processing

“The challenge that I see is cost. There are companies who stay current with sales tax rates, provide sales tax calculations, offer sales and uses return preparation and tax advice,” says cleverbridge Tax Manager Krystle Pelayo. “The bigger companies will be able to afford the cost or manage it themselves in-house, however smaller ones companies may have to opt out and only sell locally or in a much more limited number of locations.”

In terms of competition, says Pelayo, a passing win for South Dakota’s tax law may level the playing field among digital businesses themselves, but increase the ongoing fight for the consumer dollar between digital and brick-and-mortar.

Consider price points and customers jumping to a competitor for a better value.

“Ecommerce companies would no longer have to worry about their digital competitor not collecting sales tax in a state that they’re in,” Pelayo continues. “Consumers will be less likely to abandon their cart to go to another website who doesn’t charge tax. Though even as ecommerce competition may lessen, the likelihood of a consumer performing in-store research and then purchasing online at a lower price may lessen as well.”

Keystone

The Supreme Court is expected to rule on the South Dakota law by late June. But even if the Court decides that the law doesn’t pass constitutional muster, there’s no doubt states will continue trying to find a way to work around Quill. It would be wise for online retailers to begin planning for a more complicated future of collecting sales tax.

Kyle Shamorian is the content marketer for cleverbridge.

Katherine Minarik, Group General Counsel, contributed to this article.

The post Many Ecommerce Companies Don’t Have to Collect Out-of-state Sales Tax. But Will They Soon? appeared first on cleverbridge.

Kyle Shamorian: What challenges do you foresee for ecommerce companies in the coming year?

Craig Vodnik: I think there are three. There’s compliance and GDPR, financial management, and maintaining renewals.

So in terms of compliance, each country has its own set of rules and regulations around privacy and personal data protection, with the right to be forgotten and the forthcoming GDPR being the most vital of those regulations. As a company grows globally, managing the complexities of each country’s rules becomes increasingly difficult if you decide to be your own merchant of record through that process.

And there’s a similar issue from the financial side of things, specifically around payment contracts, where selling into other countries becomes more difficult. Brazil is a good example of this, because it’s effectively put up tariffs that require a customer to pay an additional tax if a non-Brazilian company wants to sell into the country. So as it becomes harder to do business outside borders, it’s vital for companies to be aware of these changes and make sound decisions.

And the third challenge is around renewing subscriptions, especially for SaaS businesses. Optimizing monthly or yearly renewals can affect profit curves substantially, even if the renewal rate is increased by even a little. The challenge is to retain  those customers, which is far less expensive than acquiring new ones.

KS: What opportunities do you see for digital businesses to overcome those challenges?

CV: When ecommerce companies reach a certain size, they have the ability to invest internal resources in developing a platform that supports global growth – Apple or Adobe, for example.

But companies that bring in less than a couple hundred million per year may not have the resources, or want to invest the resources, in developing these tools in-house. So for smaller companies who want to focus primarily on the quality of their product, there’s a real opportunity in partnering with a solutions company like cleverbridge.

Download Your Copy: Six Guides on Ecommerce Essentials

Also, education is a critical part of this process, in terms of whether it makes sense to build internally or outsource. My advice is to identify your core competency, whether it’s service, customer success, technology, etc., and build your business model around it. Think in terms of “less is more.” Do fewer things, better, and the “more” part will take care of itself.

KS: What would you say are the main issues that keep ecommerce companies up at night as they go global?

CV: In addition to GDPR and other compliance topics, going global requires a keen sense of local laws, specifically as they apply to consumer protections, taxes, etc.

If you’re a digital product or services company and under 50 or 100 people, there’s almost zero chance you can grow globally without outsourcing these tasks. If you get to 5,000 people, you can probably do it yourself, but it’s up to you if that’s something you want to do. Even if you build the initial solution, there are constantly upgrades that need to happen, so the commitment needs to be for the long haul.

Consider the metaphor of swimming from one island to another. If you only go a little ways, you can go back. But if you’re going to do it, you have to go all the way, and it’s a long, dangerous swim.

KS: As companies grow into new markets, and billing, renewals, tax remittance, etc., become a greater issue, can you talk about the key differences between an ongoing partnership – versus a simple service provider – regarding ecommerce solutions for digital businesses?

CV: The key factor here is that companies need to decide what they want to be, whether it’s simply building a product, or taking on the full slate of responsibilities.

Every company has the ability to develop their own subscription model, but it really comes down to whether or not it makes sense to do that in terms of bandwidth and allocation of resources.

Partnering with cleverbridge allows us to essentially be the canary in the coal mine for growing businesses. If we see something like a lower conversion rate or an unusual revenue day, we can be looking at the data with a larger perspective and identify opportunities, challenges and other trends to support that company’s success.

KS: What are you most excited about as you move into 2018 and beyond.

CV: I’m excited about the renewal enhancements that we’re putting in place, including machine learning designed to achieve the highest renewal rates.

I’m also looking forward to the possibilities of predictive analytics, which use data to identify not just what’s happened, but what will happen. This allows companies to mitigate issues before they occur, as opposed to simply reacting to issues that have already occurred.

Also the opportunities we’re seeing in B2B. Companies that sell to businesses are experiencing the same awakening that B2C companies did about 10-15 years ago. We have the opportunity to allow businesses to self-serve which in turn allows them to achieve higher yield on every order. That’s going to be a big opportunity going forward.

Kyle Shamorian is the content marketer for cleverbridge. 

The post Ecommerce Opportunities and Challenges with cleverbridge Co-founder Craig Vodnik appeared first on cleverbridge.

I’m talking about the European Union’s General Data Protection Regulation (GDPR), which was passed on April 27, 2016. We’re currently in the middle of a two-year grace period between the GDPR‘s passage and its enforcement by authorities on May 25, 2018.

Despite the impending deadline, the GDPR has flown under the radar of many businesses. This is understandable, particularly for firms based outside of the EU. But before long, most online businesses will need to reckon with the law. Let’s explore the challenges – and opportunities – it presents.

The What

First things first. What the heck is GDPR? It is the set of rules governing personal data across all 28 EU member nations.

For the purposes of the GDPR, “personal data” refers to any piece of online or offline data that can identify a person, indirectly or directly. Such data can include a person‘s name, email address, IP address, contact details, geographic location, or even posts on social media accounts.

A definition so broad will force businesses to treat even the most innocuous personal data with almost the same gravity they currently reserve for highly sensitive details like payment info and medical history.

To ensure compliance, the GDPR’s regulations will be enforced by hefty fines. Under the GDPR, the maximum fine for non-compliance has ballooned to 20 million EUR or 4% of annual revenue, whichever sum is greater. All the more reason to pay attention…

The Who

Must your business comply with GDPR? EU-based firms are almost certainly subject to its regulations. But for businesses operating outside the EU, the answer might come as a surprise.

In contrast to earlier laws, the GDPR applies to all processing of personal data from subjects in the European Union, regardless of whether or not the processing actually takes place within the EU or whether payment is exchanged or required.

With the enforcement of GDPR, businesses with no physical presence in the EU are now technically subject to EU regulation if they serve EU citizens. In addition to firms offering goods and services, this also applies to all companies engaging in behavioral monitoring of EU citizens, i.e., profiling site visitors for marketing purposes. This broader territorial scope, coupled with the GDPR’s aggressive penalties for non-compliance, should incite more businesses to pay attention to it.

The Why

The GDPR and the readjustments it brings did not arise out of thin air.

Technology moves fast. And the last EU-wide data protection law was written 22 years ago, in 1995. At the blink-and-you’ll-miss-it pace of the Internet, this is eons ago. It follows that the EU would want to update its policies to reflect the realities of technology today.

Beyond staying up to date, the EU also desires to create the digital equivalent of its borderless single market. By drafting one set of laws to dictate data use and collection across the entire EU, it hopes to eliminate online barriers and help businesses build data processes that are universally compliant.

Lastly, to protect citizens, the European Commission seeks to standardize and codify European norms governing data use. By extending the law’s territorial scope beyond the EU’s borders, the European Commission is probably also hoping to influence the way other nations treat customer data.

What It Means for You

So what does all this actually mean for your business? The overarching mandate of GDPR is putting ownership of personal data firmly in the hands of the consumers to whom it belongs. To remain in compliance with GDPR, businesses may need to alter their collection, storage and portability of this data.

Here are some of the most important highlights:

1. Privacy by Design and by Default: Instead of consent by default, the preferred mode of many digital businesses, any data collection activity (web forms, marketing profiling, etc.) must be designed according to the principle of data minimization and should ask the user to explicitly opt-in. Any such data gathering activity must include clear, intelligible language explaining its exact purpose and legal basis.
2. Stricter Documentation and Accountability: In addition to gathering explicit consent for data collection, businesses must also keep dated records that this permission was requested and granted, as well as documentation of the activity’s legal basis. The same applies when processing data for other legitimate purposes. If a data subject claims that your business gathered their data without consent, the onus is on you to prove that consent was granted or that another legitimate purpose exists.
3. Right to Data Portability: Consumers must be able to easily gather their data from a provider and transfer this information to another vendor. This means you’ll need processes in place to accommodate such requests.
4. Notification: Firms must have a plan in place to notify data subjects and the relevant authorities of a data breach in a timely fashion, which typically means no later than 72 hours after the breach was discovered.

These are just the tip of the iceberg: GDPR is comprised of a whole slew of specific rules and regulations – 99 articles over 88 pages, to be exact. Feeling adventurous? You can read the whole thing here.

The Upside

Taken together, GDPR will augur a drastic rethinking of how affected businesses use and process customer data. To maintain compliance, businesses will need to undergo a period of reflection on and auditing of their current data practices. This means answering many key questions, including:

• What types of data am I collecting from current and prospective customers and employees?
• Do I need all of the data I’m collecting? Could I prove my justification if compelled to?
• Which persons or departments in my organization own responsible and compliant stewardship of data?
• How long do I need to store the data I collect?

This is no trivial exercise.

Consumers are more aware than ever of how their data is being collected and used. It’s likely that the firms that prioritize transparency and responsiveness will be more trusted than their peers. And in today’s brutally competitive marketplace for digital goods and services, a little bit of trust can become a competitive advantage.

Keynote

As we approach the advent of the GDPR, savvy businesses should view it as a chance to reevaluate their attitudes and practices around customer data. And since there’s a high likelihood that the GDPR will affect most firms, why not play it safe and shoot from the outset?

For more on compliance around the world, check out our ebook 3 Compliance Risks for Global Subscriptions.

Vincent Schwarz is the Compliance Manager and Data Protection Officer at cleverbridge.

The post Are You Ready for the GDPR? appeared first on cleverbridge.

Taking your business global is filled with complexity. With each new market you enter, you multiply the challenges of complying with tax and privacy laws, or even just being able to process customer data. cleverbridge Co-Founder Craig Vodnik sat down with Technori’s Scott Kitun to discuss when and how companies should address their global tax and privacy compliance.

Listen to the podcast

Podcast Excerpt: The Alarm Bells of Global Compliance

Craig talks about when a company needs to think about compliance. He identifies two alarm bells that will alert your business to this need. First, are you selling online in the United States? If so, then you need to worry about state sales tax wherever you have a tax nexus. Second, are you attracting customers from global markets? If so, then you need to worry about data privacy and data sovereignty.

As Craig puts it:

When a company starts seeing that they’re getting interest from other countries, that’s when the second alarm bell should be going off. The first one is actually taxation in the U.S. Sales tax — where is your nexus? Where do you have a physical presence? And it’s no longer just physical presence, it could be you’re using an affiliate that creates a tax nexus in another state that you’re unaware of … 

… So that’s the first thing: If you’ve got affiliates, you need to be worried about tax nexus around the U.S.

As you start going global, when you see interest from other countries – whether it’s Canada, whether it’s the UK, Australia – that’s going to start to create additional  problems that you should be aware of. Particularly around taxes — that’s the first thing, as we just discussed — but the second thing is global privacy policies and data sovereignty issues.

Countries around the world are starting to pass laws that say, I want my citizens to be protected. I want their data to stay within the confines of my country or my region. The EU would be a good example of that. And that’s why Brexit is such an important thing.

Edward Snowden kind of elevated data privacy and data sovereignty to be much bigger issues in peoples’ minds. Data sovereignty means keeping the customer data within the walls of that country. Data privacy asks what are the rules by which you can operate with that customer data when they’ve signed up for your service? It starts to get very complex.

And then throw on top the same issue you have in the U.S., which is taxation. How are the VAT rules in the EU changing? They just changed, by the way, six months ago. What’s happening in South Korea? They passed a law that says if you’re selling an online service or digital product into South Korea — even if you have no presence — you have to charge 10 percent VAT and remit it to the South Korean government. We don’t have a nexus in South Korea, yet we still comply with that law. Japan? 8 percent as of last October 1.

Keystone

Their conversation was wide ranging. Listen to the whole thing to find out what softball and double byte characters have to do with global subscription billing.

The post Summer Rerun: Technori Sits Down With cleverbridge’s Craig Vodnik [Podcast] appeared first on cleverbridge.

Disclaimer: This blog post does not contain legal advice. The rights, obligations and liabilities of a business vary according to geography, industry, method of delivery, type of product, and all sorts of other variables that preclude us from using this blog post to tell anyone how they must act from a legal perspective.

Selling software online was more or less a tax free activity when ecommerce began in the mid-90s. The technology was new, there was no legislation specific to selling software online, and consumers flocked to the internet to purchase perpetual licenses for their favorite software programs which were delivered to them electronically.

It didn’t take too long before governments around the world realized they were missing out on revenue. Laws were gradually written or reinterpreted so that governments could obligate business to collect taxes for digital products or services from out of state and out of country customers.

If you are the merchant of record for your online sales, managing tax calculation, collection and remittance is a difficult and resource intensive activity.

Neglecting these tax issues can be extremely detrimental to your bottom line and vigilance is required.

How Much Tax Must Your Business Collect?

Figuring out whether the product or service you sell is taxable is one thing. Determining rates is another, and your obligations change according to the location of both your business and your buyers. To complicate things even more, the rules change frequently and repercussions for violating the rules can be swift and severe.

Taxes in the U.S.

The Marketplace Fairness Act has been languishing in Congress for years. That means that there is no federal law in the U.S. requiring online businesses in one state to collect taxes from consumers in another state. In the meantime, local governments are reinterpreting existing laws and instituting new ones to drive more revenue for their jurisdictions.

Traditionally, if a business lacked a physical presence (offices, warehouses, employees, etc.) in a state, it did not have to collect and remit a sales tax to that state. Over the last five years, many states established so-called Amazon tax laws that created tax nexuses for businesses in situations where they could traditionally argue that they had no physical presence in the state. For example, many states passed laws creating tax nexuses if a business had affiliates in that state.

Similarly, so-called cloud taxes were established in the state of Tennessee and the city of Chicago in 2015. These governments can now collect revenue from business that do not have traditional physical presences in those jurisdictions.

Taxes in the EU

Unlike the U.S., the EU has been collecting value added tax (VAT) on digital products for years. But much like the U.S., the laws have changed over time. Originally, customers paid tax based on the origin of the product, not its destination. This was turned on its head in 2015. Now EU customers pay VAT rates based on the residence of the customer, not the origin of the digital service.

Additionally, when it comes to the shopping experience for EU consumers, you have to indicate the entire full price customers will pay at checkout. You can’t display a price and then later add the tax amount to it. Also, you have to indicate which portion goes toward taxes. That isn’t a consumer preference. That is the law.

There are more countries in Europe than the EU member states to be considered: In Switzerland and Norway, electronic services have been subject to VAT since January 1, 2010 and July 1, 2011 respectively.

Taxes in the Asia-Pacific Market

Mature ecommerce markets in APAC are also starting to collect taxes on online sales. Japan assesses an 8 percent consumption tax on online sales while South Korea’s VAT rate is 10 percent. Last August, Australia’s Commonwealth Government announced that they are pursuing legislation to apply a goods and services tax on cross-border sales of digital products and services. They hope this new law will be adopted sometime in 2017.

There are more countries coming up in the near future with new VAT laws re digital services: New Zealand (starts October 1, 2016), Taiwan and Russia (starts January 1, 2017).

More and more, just like the EU member states, departments of revenues across the US, and governments in the Asia Pacific markets are looking to drive revenue by obligating online businesses to calculate, collect and remit taxes for online sales to local customers.

Regulations for taxing internet purchases of digital goods are relatively new and being reworked constantly, so what was true five years ago isn’t necessarily true today. And what is true today won’t necessarily remain so five years from now.

Keystone

All of this is just a small taste of what it means to comply with global online tax.  Expanding your subscription business globally has great appeal, but it’s clearly more complicated than it appears on the surface. Assess your risk and make sure you are prepared.

For further insight in what it takes to expand your subscription business beyond its current borders, download our complimentary ebook, 3 Compliance Risks for Global Subscriptions

The post The Complexity of Regional Tax Compliance for Your Digital Goods and Services appeared first on cleverbridge.

PCI DSS

The ability to accept payments online is the backbone of your subscription business. The first rule of online business is to be compliant with the Payment Card Industry Data Security Standards (PCI DSS). What does this mean?

PCI DSS provides a comprehensive road-map to help organizations ensure the safe handling of cardholder information. This road-map comprises technical and operational requirements set by the PCI Security Standards Council (PCI SSC) that rule over the entire payment process and data storage organization.

PCI DSS is organized by six overarching goals/domains:

• Build and maintain a secure network
• Protect cardholder data
• Maintain a vulnerability management program
• Implement strong access control measures
• Regularly monitor and test networks
• Maintain an information security policy

Customers are increasingly aware of the need to guard their personal information and demand a high level of data security around any electronic transaction they make. PCI DSS compliance allows organizations to stay ahead of security vulnerabilities, prevent fines, and increase overall security levels. This not only allows them to be compliant but also makes them more trustworthy and competitive.

PCI DSS compliance helps protect your business, but your data security vulnerabilities are not limited to the credit card payment information stored on your servers. To fully protect your business, you must widen your scope and make sure that you comply with the body of standards for information technology which falls under the rubric of the ISO27k family.

ISO

The body of standards for information technology security falls under the rubric of the ISO27k family. In the ISO27k scope, each company defines its own assets and assigns each asset a value which results in a hierarchy of importance for all of your company’s assets. Assets include not only credit card information, but all your other payment data.

Additionally, according to the ISO, your assets include data related to “intellectual property, employee details or information entrusted to you by third parties.” Each asset is then assessed for risks that determine what kind of loss would ensue if these assets became threatened by hackers. Implementing security requirements to counter those risks is then determined through the lens of the ISO27k standards.

GDPR

With the recent and continuing data privacy scandals, European governments are revisiting their data governance laws. The General Data Protection Regulation (GDPR), which will be binding on all EU member states, goes into effect in 2018, leaving little time for companies to get compliant.

What GDPR Means for US Companies

US companies don’t fully understand how seriously Europeans value their privacy or even what Europeans consider to be personal information. It’s not just social security numbers and credit card information. Europeans consider their names, addresses and email addresses to be personal information that companies do not have automatic rights to collect and use.

When the GDPR goes into effect in 2018, it will be applicable to every organization in the EU. Not only that, it is applicable whenever you are collecting data from a natural person in the EU, related to offering them goods or services or monitoring their behavior.

Other Key Changes Data Privacy Changes:

DPO

U.S. companies must have a data protection office (DPO). This is already required under German law.

Privacy by design

Privacy must be considered during product development. How do you implement this? How do you train developers? You might need privacy engineers, and that means hiring more employees. US companies don’t have this mindset of even paying attention to these issues. And, of course, these issues slow down the time to market. In other words: costs, costs, and more costs.

Privacy risk assessment

Whenever you implement a new process or product, you need to document how it affects the risk to personal data. This is another resource intensive rule in terms of time and cost to your business, especially when it comes to time to market.

One stop shop — Data Protection Agency (DPA)

In the past, depending on your business, you had to comply with separate regulations in different countries (UK, Germany, France, etc.). With GDPR, you have to choose one country standard (they will all be the same anyway) and establish a relationship with a local data protection authority. Every member state will have a DPA to field complaints from consumers, audit your business, answer your questions, and whom you would have to notify in the event of a security breach.

Data transfers

The GDPR limits data transfers from outside EU/EEA (European economic area). An agreement between the EU and the US called Safe Harbor used to govern data transfers between the US and the EU, but that provision was struck down in 2015. As of August 2016, companies can apply for the Privacy Shield. Based in part on the rules of GDPR, the requirements for achieving the Privacy Shield are more robust than what was required under Safe Harbor.

Data portability

Whenever a consumer wants to change to a different provider, she can ask the provider to supply the data to the new provider or ask them to delete her data.

Fines and penalties

If you’re not persuaded to revisit your data governance practices yet, consider the steep penalties. Fines for collecting or using data in a forbidden way under the new GDPR can reach €20 million or 4 percent of annual revenue. That’s not to mention the damage a violation can do to your reputation. As we said before, it’s not just an issue of breaking the law; it’s also about eroding customer confidence.

Keystone

If the growth of your primary customer base is stagnating, it’s solid business advice to say that you should look for other markets in which to trade. Knowing how to protect your business will ensure that your efforts at improving your market share in key target markets will lead to more subscribers, more recurring revenue and greater customer lifetime value. Your alternative is plunging into uncharted territory without guidance, a good way to inflict your business with rising customer complaints, lawsuits and regulatory fines.

Daniela Hagen and Vincent Schwarz contributed to this blog post.

The post Three Frameworks for Data Privacy and Information Security appeared first on cleverbridge.