The US Tariff on Malaysia: How Payment Gateways Can Help

The recent introduction of a 24% tariff by the United States on various goods arriving from Malaysia has understandably caused some concern to the business community, and while it is currently set at a 10% reprieve, it is still a significant development and blow challenge to international trade. 

Effective from April 9, 2025, this US tariff affects a range of sectors, including the electrical and electronics (E&E) industry, machinery, rubber products, and furniture. While certain items, like semiconductors, currently enjoy an exemption (at the time of writing).

In this ever-changing trade environment where policies come and go, payment gateways in Malaysia present some interesting possibilities for SMEs businesses.

What is Tariff?

It is important to grasp the extent of this US tariff on Malaysia. The current 10% duty applies to a significant portion of goods exported from Malaysia to the United States. This increase in cost can make Malaysian products less attractive to American buyers, potentially impacting sales volumes and overall revenue. 

Businesses involved in the affected sectors will need to carefully assess how this new cost burden influences their pricing strategies and their ability to compete in the US market. This hike in cost would eat away profit margins and of course competitiveness.

How Payment Gateways Can Assist

While a payment terminal might not directly reduce the tariff itself, its features and functionalities can provide valuable support in managing these added costs.

1. Smooth International Transactions

A key function of payment gateways is to manage transactions that cross borders without unnecessary complications.   

• Handling Multiple Currencies: Payment gateways allow businesses to accept payments in a variety of currencies, including the coveted greenback. This provides a straightforward payment experience for American customers and simplifies currency management for Malaysian exporters. 
• Access to Local Payment Methods: Certain gateways provide access to payment methods preferred by consumers in the United States. Offering these familiar options can improve conversion rates and reduce the likelihood of failed transactions.
• Global Infrastructure: Many payment gateway providers possess a worldwide network and robust infrastructure, enabling Malaysian businesses to manage their international transactions efficiently.  

2. Managing Costs and Margins

The tariff naturally puts pressure on profit margins. Payment gateways can offer tools and pricing structures that help mitigate some of these financial strains. 

• Competitive Pricing Structures: Payment gateways have different fee models and transaction charges. By comparing these options, Malaysian businesses can select a provider that offers the most economical solution for their specific needs. 
  
• Clear Fee Structures: Choosing a gateway with transparent fees allows for accurate prediction and management of transaction expenses, a factor of increased importance given the tariff’s impact on overall costs.

3. Adapting to Market Changes

Given the complexity of international trade, it is important to stay flexible and adaptable to the trade environment. Payment gateways can provide the flexibility needed to adapt.

• E-commerce Platform Integration: Seamless integration with popular e-commerce platforms allows Malaysian businesses to quickly adjust their online pricing and sales tactics in response to the tariff. Gateways like Stripe and Shopify Payments offer strong integration capabilities. 
  
• Flexible Payment Choices: Providing a range of payment options through a gateway can cater to a broader customer base in the US, potentially offsetting some reduction in demand caused by higher prices.  

4. Security and Compliance

Maintaining trust and adhering to international standards are paramount in international trade.

• Data Protection Standards: Reputable payment gateways comply with global security standards like PCI DSS, guaranteeing the protection of transaction data. This is vital for maintaining the confidence of international customers. 
  
• Fraud Prevention Tools: Many gateways incorporate tools for detecting and preventing fraudulent activities, an essential aspect of managing risks associated with cross-border commerce.  

5. Streamlined Refund and Dispute Management 

Dealing with returns and resolving payment disputes from customers located in the US requires efficient processes, and payment gateways often offer integrated solutions.

• Refund management: Many gateways provide streamlined systems and workflows for managing refunds for international transactions, ensuring a smoother experience for US buyers. They typically include tools and procedures for addressing and resolving payment disputes, protecting your revenue and reputation.
  
• Trust and Reliability: A smooth and reliable system for handling refunds and disputes is essential for maintaining customer satisfaction and building long-term trust with your American clientele, especially in a potentially sensitive pricing environment due to tariffs.

Examples of Helpful Payment Gateways

Here are a few payment gateways that are well-suited for international transactions and can be beneficial for Malaysian businesses navigating the US tariff.

Broader Context of US Tariffs

The US tariff on Malaysia is part of a wider trend in international trade policy. The reasons cited for such tariffs often include national security concerns, addressing perceived unfair trade practices, or aiming to reduce trade deficits. 

At the time of writing, the Malaysian government has sent delegations to engage in discussions with the US to seek a reduction in these tariffs and has affirmed its commitment to fair trade principles. Businesses should keep up with the latest developments and be wary of any market change.

Conclusion on US Tariff and Payment Gateways

While these tariffs introduce added costs and complexities, payment gateways can offer a range of features that provide real assistance. From facilitating smooth multi-currency exchanges, to offering transparent fee structures, the right payment gateway can be a valuable ally. 

Here at Paydibs, we understand the nuances of international commerce, particularly for businesses operating within Southeast Asia and engaging with global markets like the US. Our platform is designed to facilitate seamless transactions and provide the tools you need to manage your international payments effectively.

From Alipay, Dragonpay, PayNow, VTC Pay, and Line Pay, various platforms exist to streamline cross-border payments. With our focus on the Southeast Asian market and our ability to handle transactions with the US, offers a tailored solution for Malaysian businesses navigating these tariffs.

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