In the United States we celebrate our Independence on July 4th and as a company you can celebrate your independence by working and establishing your business around the world. Doing this requires some preparation and investigation into figuring out what regulations must be followed. Just like our merchants, Segpay is required to comply with both the card brands and the regulatory requirements in all our merchants’ locations. For example, for anyone to process EU and UK business transactions you’re required to have a local presence in both areas and a local P.O. Box isn’t enough.
Remember back in 2016 when the UK voted to leave the EU, all Payment Facilitators doing business in these areas had to prepare for Brexit? This meant to apply for a second payment institution license (PI) in an EU country. When it became clear that Brexit was really going to move forward, Segpay had to choose its EU headquarters and we chose Ireland. With that decision we began the detailed process of applying with the Central Bank of Ireland (CBOI), to become a licensed payment intuition. The process took time resulting in us receiving our final PI approval more than two years later in 2019, just months away from the January 1, 2020, Brexit deadline.
If you’re thinking of expanding your business outside of the US or even to another state, we want to offer a glimpse into what it takes. This month we share the challenges and how to conquer them when setting up shop across the pond.
Opening abroad? Get ready! Making the big move comes with a long list of requirements, and some are unexpected. For example, once you select where your EU headquarters will be you need to complete all the regulatory approvals required including the extensive reporting to your EU bank while also hiring an EU team that would be able to properly run the EU business. That team also needs to be based in the EU. The team on the ground is expected to include a CEO of the Iocal office and staff members in accounting, compliance, and business development. The compliance and accounting team members are also required to have specific payments experience and must be approved by your local bank. Not only do you need an office staff, but you also need to build a local board of directors for your EU entity. The challenges are many here like; how do you find these team members? How do you create the corporate culture of your company in the EU office? What are the local laws and regulations regarding employment? How do you handle the local holidays? What are the benefits you need to offer? And where should you locate the office?
Step by Step
Answering these questions can get overwhelming, so that’s when knowing the right person or having someone who’s knowledgeable on staff helps. At Segpay we were lucky to have a human resources director with global experience. As a first step, she recommends hiring an HR attorney. They can help develop things like an employee handbook, handle employee contracts and help your company get familiar with the local employment laws. While the U.S. tends to follow right to work laws, the EU is very different. For example, if we make a bad hiring decision there are laws in place that add protections to workers if they have been employed for over a year and even more protections to workers who have a tenure greater than a year. In Ireland, there is also a policy where employers can stipulate an employee’s notice period. In a tight job market, some firms have a 60-to-90-day notice period delaying the ability to hire new staff. When it comes to holidays, you will likely have to adopt a new holiday schedule and be able to offer competitive vacation time. Providing competitive benefits for insurance and retirement are also important for building long-term success.
Putting People in Place
Once you’ve developed your plan you can move to searching for the best people for the specific roles you need in your new market. Recruiting off LinkedIn and other traditional sources is good, but we found the best resource was from local recruiters. Speaking of local, where your local office is located is very important. Factors to consider are things like local commutes, where is your workforce is based, does the office need to be in a central location inside the city or in a suburb? Easy access for the team is very important for success.
How do you foster your U.S. corporate culture with your new team abroad? It’s an ongoing challenge for us here at Segpay. Last month we opened a larger office space where the team can decorate and make it their own. To stay in touch and on task, we have a morning stand-up call which has been a great way for the U.S. team and the Irish teams to connect daily. Sharing company swag with the new team allows them to proudly spread the word of where they work in another country.
Heading West: California Culture
You don’t have to be setting up shop across the pond! These same steps are important even if you’re ramping up across the country or in a new state. Recently our HR Directors opened an office in California. While I’m familiar with Florida laws, I was a bit murky when it came to California law. Our HR director offers this advice when opening an office on the West Coast. First make sure to register with the state of California for unemployment insurance and understand the state specific employment laws including all payroll laws. Make sure to get compensation coverage and create an employee handbook along with understanding the benefits related to operating in California. Most importantly, make sure to understand the rules related to recruiting. For example, when interviewing candidates, you can only ask questions that will let you know about their knowledge, skills, and ability to perform the job.
Expanding your company globally can be both exciting and rewarding. The challenges give way to the triumph of reaching a larger audience. Have questions or need help, reach out. We’re happy to share our successes and failures as we’re here for you All the Way to Paid.