Payments company BlueSnap is adding tax tools in an attempt to make it easier for e-commerce merchants to expand to more countries.
"Merchants don't want to have to figure out local or international tax rates for each state and country they're in, and we thought it would be a good idea to make it easy to figure these things out," says Ralph Dangelmaier, CEO of BlueSnap.
BlueSnap is providing the tax services via a partnership with Avalara, which offers a cloud-based compliance system that calculates sales tax, value-added tax (VAT) and other taxes for more than 100 countries. These are calculated based on local laws, aggregated and integrated into the payment. BlueSnap merchants can add Avalara's capabilities into their existing workflow via an application programming interface (API).
BlueSnap charges 2.9% for each payment and will add a fee for the tax service of a "few pennies per transaction," Dangelmaier says. This fee will be less than purchasing the same service directly from Avalara, he says.
The different compliance rules make it hard to compute different tax obligations, says Jeff Coppolo, head of global business development at BlueSnap. Avalara's technology includes a proprietary database with algorithms that determine address validation, geolocation, applicability of tax rules, tax calculation, tax return prep and filing, tax remittance, tax forms and records management.
"As states and countries change their tax codes there are multiple scenarios that merchants would be liable for," Coppolo says. "And we're not tax experts, so it made sense to partner with someone who is."
BlueSnap's payments technology also includes geographic location and analytic tools that help merchants accept payments in different currencies, languages and payment types.
The company has made other recent moves designed to target cross-border sales.
BlueSnap developed "buy now" templates to help merchants integrate with local payment methods instead of requiring merchants to build separate applications for each country. The product is particularly designed for Brazil, Russia, India and China, which have local payment methods that are difficult for European and North American merchants to accommodate.
It also developed BuyNow2, which is designed to help e-commerce merchants reduce abandonment by allowing them to host numerous checkout pages for different markets.
Other companies, including Magento, also offer tax and international payment services for e-commerce merchants, says Gareth Lodge, a senior analyst at Celent. "The software can do all sorts of things," Lodge says.