Expanding into new markets sounds like the next logical step when a business gains momentum. But that move introduces a different kind of challenge—one that tests the business’s entire operating model. International growth presents issues such as unpredictable currency swings and compliance puzzles that change monthly. These demand a level of resilience, flexibility, and local understanding that few businesses master on their first try.

Below, we’ll discuss the challenges of international expansion and how to address them with more confidence.

What’s in this article?

• What risks come with global expansion?
  
• How do currency fluctuations affect international revenue?
  
• How do international taxes affect cross-border strategy?
  
• How do cultural differences and customer behavior affect product-market fit?
  
• How can businesses refine their payment processes when they go global?
  

What risks come with global expansion?

Launching in a new market means investing up front in local offices, new teams, supply chains, legal setup, and marketing for unfamiliar audiences. It often takes a long time for any meaningful revenue to appear, and sometimes that revenue never materializes at the scale you had forecast.

When a major US retailer expanded into Germany, for example, it sunk huge resources into local operations but pulled out 9 years later after losing about $1 billion. Misreading local market conditions (e.g., customer expectations, cost structures, regulatory norms) can quickly turn a promising growth plan into a costly mistake.

Each new country you enter adds layers of complexity:

• Supply chains stretch across longer distances, introducing higher logistics costs, greater shipping delays, and more exposure to port closures, strikes, and bottlenecks.
  
• Import tariffs, customs procedures, and local regulations slow inventory movement and increase costs.
  
• Local competition often has important advantages such as better distribution networks, stronger brand loyalty, and more intimate knowledge of customer behavior.
  

Global forces create other risks. Political instability can make operations in certain markets untenable overnight, and regulatory environments can shift dramatically after elections. Trade relations between countries can sour, resulting in tariffs that decrease profits. Global disruptions (e.g., pandemics, wars, economic recessions) can affect international supply chains and sales pipelines in ways that even the best contingency plans can’t fully anticipate.

A single region’s economic slowdown can affect a multinational’s overall growth, especially if the business’s revenue is concentrated geographically.

How do currency fluctuations affect international revenue?

When a business earns revenue in a foreign currency, it’s exposed to changes in value between that currency and its reporting currency. Currency volatility means that top-line growth in local markets doesn’t always appear like growth at headquarters. For instance, a strong quarter in Japan or Europe can appear weaker on financial statements for a US-based business if the yen or euro falls against the US dollar during that period.

Just a few percentage points of movement can translate into millions lost or gained, purely from timing. So chief financial officers need to prepare for the possibility that exchange rate movements will derail planned budgets and forecasts.

Currency fluctuations can also squeeze profits. If a business’s expenses (e.g., supplier payments) are in a strengthening currency but its sales are in a weakening one, it can get trapped between rising costs and stagnant or falling revenue. For example, after the Brexit referendum in 2016, UK businesses that sourced goods abroad saw their costs peak immediately when the British pound fell dramatically. Margin compression often happens quietly and accumulates over multiple quarters, which makes it harder to identify until it’s already embedded in financial results.

Businesses use a range of tactics to manage currency risk, including:

• Structuring local operations so revenue and expenses are in the same currency, which helps cushion currency swings
  
• Financial hedging, such as forward contracts and currency options, to lock in future exchange rates
  
• Dynamic pricing with frequent reviews to adjust local pricing if currency trends persist
  
• Smart cash management, such as holding multicurrency balances and timing conversions based on market conditions
  

Ignoring currency exposure can be just as damaging as managing it badly. Businesses sometimes treat foreign earnings as “safe” because they’re booked in local currencies. That can cause surprise if quarterly results are converted to the home currency at an unfavorable rate.

How do international taxes affect cross-border strategy?

Expanding internationally means entering a tax environment that’s more fragmented, more dynamic, and far less forgiving than what most businesses are used to. Each country has its own system, so crossing borders can change the rules entirely.

Businesses that expand into new markets need to consider tax obligations as part of their overall strategies. Taxes factor into where you incorporate regional hubs, how you structure your subsidiaries and affiliates, where and how you record revenue, and how you price products and services in each market.

Here’s why it’s important to properly manage taxes during global expansion:

Different tax obligations in different markets

When you start operating across countries, you have to work with multiple tax regimes at once, including:

• Corporate income taxes on local profits
  
• Value-added tax (VAT), goods and services tax (GST), or sales tax on transactions
  
• Customs duties on imports and exports
  
• Additional regional, city, or sector-specific taxes
  

The tax treatment for sales can change dramatically depending on the jurisdiction. Software might be exempt from tax in one country, taxed as a service in another, and treated as a digital product (with different VAT rules) elsewhere.

On top of that, filing requirements—what forms are needed, how often taxes must be paid, what records must be kept—aren’t standardized. A sales threshold that triggers mandatory VAT registration in one country could be irrelevant in another. Deadlines, penalties, and audit risk vary by market. Failing to register properly, charging the wrong amount of tax, or mishandling customs can lead to fines, back taxes, or bans from operating in a market.

Permanent establishment and transfer pricing

If your activities in a country exceed certain thresholds, they might qualify you for permanent establishment. This means local tax authorities treat you as having a taxable presence, even without a formal subsidiary. Sometimes, all it takes is a small sales team, a warehouse, or even regular customer meetings.

Transfer pricing is also a major consideration. Whenever a business’s entities sell goods or services to each other across borders (e.g., a US headquarters licenses technology to a European affiliate), the business should set those internal prices at “arm’s length,” as if between unrelated parties. Regulators around the world increasingly police these transactions to prevent profits from being artificially shifted to low-tax countries. Mistakes can lead to audits, penalties, and costly disputes that last years.

Global operations mean multiple tax authorities are evaluating your structure and transactions through different lenses—all at once.

Indirect taxes

Beyond corporate taxes, indirect taxes such as VAT and GST can create huge overhead. In many jurisdictions, once you exceed a certain revenue threshold with local customers, you’re required to:

• Register for local tax collection
  
• Calculate and apply the correct local tax rates on every transaction
  
• File periodic tax returns
  
• Remit the collected taxes to the local government
  

Tracking where you’re liable, charging customers the right amounts, and managing dozens of local filing obligations can overwhelm finance and operations teams quickly. Tools such as Stripe Tax can help identify where taxes need to be collected, apply the right rates at checkout, and simplify filings to help businesses stay compliant. But even with automation, the major choices—such as when to localize and how to structure revenue streams—still need human oversight.

How do cultural differences and customer behavior affect product-market fit?

Cultural norms, customer expectations, and customer behavior can reshape what success looks like. Customer behavior is shaped by local habits: how people shop, what they value, what they avoid, and how they make decisions. A marketing campaign that works in the UK might not in South Korea, where the sense of humor, status signals, and buying motivations are different.

Similarly, a user interface that feels intuitive to Australians might confuse customers in Brazil if it doesn’t match local design conventions. Even something as basic as customer service expectations (e.g., speed of response, formality of language) can vary enough to change how a brand is perceived.

Cultural differences to consider

Cultural differences can affect the whole business model:

• Purchasing patterns: In some countries, customers prefer small, frequent purchases to bulk buying. In others, mobile shopping via social apps is dominant compared with traditional ecommerce websites.
  
• Payment preferences: Preferred payment methods can vary dramatically. Credit cards might be common in one region, while digital wallets dominate in another.
  
• Product fit: Sometimes, even the product needs to adapt. Food businesses routinely adjust recipes to make snacks spicier, sweeter, or less salty, depending on local taste profiles. Tech businesses might need to redesign features, prioritize different device types, or rethink “standard” offerings based on local hardware usage, privacy expectations, or regulatory norms.
  

Ignoring these differences can lead to high cart abandonment rates, low retention, or failure to penetrate the market. Successful businesses understand the product-market fit is different for each market.

The importance of localization

Customers can usually tell when a product was adapted thoughtfully for them and when it wasn’t. Building local trust often involves:

• Localizing language, examples, references, and tone
  
• Adapting policies such as return windows, payment options, and delivery expectations to local norms
  
• Providing customer support in local languages and through preferred local channels
  

A website that doesn’t show prices in the local currency or has awkward address formatting at checkout signals that a brand is “foreign” and unfamiliar, which can reduce conversion rates and hurt long-term loyalty. However, businesses that embed themselves in the local cultural context can build loyalty much faster. They also create opportunities for new product ideas and improvements that can eventually flow back into their broader global operations.

How can businesses refine their payment processes when they go global?

Even if you have the right product for a new market, you won’t get far if it’s difficult for customers to pay you. Payment friction is one of the fastest ways to lose sales, and it’s easy to underestimate how much it varies by country.

Here’s what businesses need to understand about payments when they expand internationally:

Local payment preferences

Customers expect to see the payment methods they know, and those preferences vary widely. In much of Western Europe, direct bank transfers are common alongside credit and debit cards. In China, digital wallets such as Alipay and WeChat Pay dominate. In parts of Latin America and Southeast Asia, cash on delivery is still a major payment method for ecommerce.

If the checkout doesn’t offer local options, customers might leave. That’s revenue lost at the last stage. Successful international businesses localize their checkout processes to meet these expectations by accepting international and local payment methods.

Cross-border payments

You also need to consider how transactions are processed behind the scenes. When customers are forced into expensive cross-border payments (e.g., paying in a foreign currency, seeing unexpected foreign transaction fees), they could abandon the purchase or develop mistrust of the brand. Banks are more likely to decline cross-border transactions because they look riskier from a fraud perspective. This can lead to lower conversion rates, higher transaction failure rates, and more customer service problems.

One effective solution is to use local acquiring—processing payments through local banking networks so that, to the customer’s bank, the transaction looks domestic. It can raise acceptance rates and minimize surprises such as extra fees.

Managing global payments at scale

Scaling international payments requires you to manage:

• Local currency pricing and settlement
  
• Compliance with local payment regulations such as the revised Payment Services Directive (PSD2) in Europe
  
• Disputes, chargebacks, and fraud across multiple jurisdictions
  
• Potentially tax collection and remittance
  

Providers such as Stripe can help with these tasks. Using Stripe Payments, businesses can access more than 135 currencies, local payment methods, and localized checkout processes tuned to different markets through a single integration. They can give customers familiar ways to pay without requiring businesses to build custom integrations for every country. This kind of infrastructure simplifies growth for businesses and lets them expand faster without getting stuck rebuilding payment systems for every new market.

Localized checkouts

Businesses need to think holistically about how to customize the checkout process to new markets. Best practices include:

• Setting prices in the customer’s local currency
  
• Displaying total costs clearly, including taxes and any import duties
  
• Using familiar address formats and language localization
  
• Offering flexible payment options such as installment plans, where they’re culturally expected
  

The goal is to make each step from cart to confirmation feel natural for the customer, wherever they are.