Cross-border commerce in the US is booming steadily with new customers aspiring to jump on the bandwagon to boost sales and orders. With this opportunity, a network of companies and providers have come to ease up the implementation process, in terms of facilitation; logistics, payment processing, fraud identification and much more. Every process for cross-border commerce is daunting enough for retailers especially when they are mostly unaware of regulatory considerations.
Multiple parties have to work in unison to make the process of cross-border ecommerce seamless and streamlined. Every party has different understanding, reasons, motivation, and even priorities before they are completely on board. One of the biggest hurdles of cross border commerce are regulatory issues that crop up owing to the following factors:
- Inconsistency in regulations:
At the basic level, every online business requires regulation consistency. But the challenges with the growth of ecommerce have continuously baffled regulators causing volatile changes in policies. Even in developed countries like the U.S., it is being debated whether state taxes are applicable on ecommerce transactions. The inconsistency of legal regulations is widespread in its application too.
- Domestic incorporation:
It is a common tendency in several countries to treat domestic companies differently if they are incorporated abroad. One should incorporate locally if they are keen on selling to customers. Local customers would find such companies reliable too since they are registered locally.
- Legal limitations to sale:
Every country prescribes the do’s and don’ts of selling and the services to be sold through cross-border commerce. Most countries consider that any transaction with minors cannot be enforceable, and legal adulthood age varies by country too. Product categories have different requirements based on the type of food, alcohol, and antiques. As part of a business, one could be held responsible for not meeting those requirements. If a country enforces a regulation of packaged food to have certain ingredients, date of manufacturing, and expiration date on its label, then it should be made mandatory. If goods are shipped from another country without meeting these regulations, your license of doing business could be suspended in violation of the laws.
- Clarity of legal frameworks:
One is required to meet local laws but one does find it difficult to find recourse to courts when required. Several countries have a weak legal framework and even if the framework is robust, one can expect endless delays in the overall judicial process. So, even if a company wants to conduct cross-border commerce in a country like the U.S and even fulfill regulations, it might still fail to defend its legal rights succinctly.
- Compliance Costs:
The compliance costs involved in regulation are borne by businesses for ensuring good practices. There are high costs associated with meeting consumer concerns and privacy risks. Some compliance costs ill-serves responsible businesses, which put in extra efforts and money to address privacy concerns but ultimately get provoked by unwarranted legal requirements.
The above regulatory concerns need to be addressed before implementing full-scale cross-border commerce operations in any country including the US. The regulations, as well as the tax structure, need to be adhered to, for smooth performance of such operations.