Until recently, the merchant cash advance loan alternative was available exclusively in the United States of America. Important factors such as credit reporting and credit card processing kept large providers of merchant cash advances from spending too many resources expanding to other parts of the world when international markets are much likely to be much smaller and not worth the time, effort, and money to expand.
However, with the US market becoming more and more saturated everyday, large providers of cash advances that wish to scale have no choice but to expand to new markets and do so quickly so as to beat the competition and tap into a new market. Canada and Australia are the easiest markets to break into but the number of small businesses to market to in those countries barely a small fraction of what’s available in the US these markets are likely to saturate quickly too.
Major industry players such as AdvanceMe and Merchant Cash and Capital are looking to grow into more commercial markets such as Japan and the European nations. As cash advance providers move away from using credit card processing as a method of retrieving payment for these loan alternatives, expanding into international markets is becoming easier because it eliminates a major hurdle: working with international card providers and processors.
Conversion rates and credit assessments are now the largest concerns for cash advance providers as well as a notable time difference between headquarters (somewhere in the US) and the target market (some 6 – 12 hours difference between them). But that is easily dealt with by expanding offices to the target market and beginning to branch out.
It is now a race to see who will establish a foothold in which international markets and who will have the appropriate backing to meet the demand that is anticipated when these programs become available to small business owners in other countries. The other challenges that await are marketing opportunities. While the same methods may work for marketing in the US as other countries, the expertise to reach the small business owner in an international market may prove more challenging than is being anticipated with internet and phone marketing leading the way in the US.
Still, we expect to see cash advances available in 5 – 10 new countries before the end of the year and economists are now beginning to speculate what kind of impact these costly programs may have on local economies around the world and what kind of domino effect that may have on a global economy that is already suffering.