Global Blue is one of the world’s largest tax free shopping networks.
Innovations in tax-free shopping cuts down on costly currency conversions and aims to eliminate physical VAT refund forms.
Global Blue is one of the world’s largest tax free shopping networks, providing travellers with savings of up to 19% on their purchases abroad at any of their 300,000 merchant partners, processing more than 30 million transactions per annum.
Having pioneered the concept of tax free shopping over 35 years ago, Global Blue is also one of the most innovative tax free shopping solutions providers in the world, with plans to make purchasing for goods and services considerably more convenient for millions of travellers worldwide.
“We are the global leader in Dynamic Currency Conversion (DCC), which allows merchants in 75,000 outlets around the world to offer foreign customers a convenient and cost effective way to pay in their domestic currency instead of having their home bank charge them a transaction fee for the conversion,” says Mr Geir Svendsen, Managing Director of Norway at Global Blue.
While welcomed by travellers, this innovation puts pressure on banks as it squeezes their margins.
“In Norway, as I suppose in most countries, the banks control every aspect of peoples’ financials, and they are not happy we’re cutting them out of the equation. The traditional way is that you go to your bank that will issue you a credit card, then you travel abroad, let’s say to London and make a purchase there, paying in pounds. The merchant now sends the transaction request back to your home bank in pounds and then does the currency conversion, which you have to pay in your local currency. This is a huge income source for the banks, and they are constantly issuing warnings to their customers not to use DCC services, although it’s undoubtedly in their best interest to do so while travelling.”
Global Blue operates DCC services with banking and retail partners in 18 countries, and last year provided 12 million DCC transactions, in spite of the protest of the banks.
“We’re constantly working on
these innovations for the benefit of our customers, as the first trip to a foreign country can oftentimes be quite jarring and disorienting, so we can at least make their shopping experience as smooth as possible.”
Before it used to be that when the travellers did their tax free shopping, they would receive a paper slip for a VAT refund from each merchant they visit. By the time the trip was concluded, they would end up with 15-20 forms that they had to fill in individually with their personal information, then get it stamped by customs, before taking it to the Global Blue refund office to receive the refunds.
Since developing the Global Blue SHOP TAX FREE card, which can be downloaded as a token on a mobile device, it can be scanned by the merchant to generate a filled form. At the moment, the forms have to be brought to the refund office, but soon the process will be fully digitised, so the token can be scanned at the refund office, eliminating the need for physical forms altogether.
What makes Norway unique, is that Global Blue also acts as the customs, too, thereby removing the need to get the forms stamped before going to their refund office.
“The challenge for us is to promote this token to the travellers in order for them to have it prior to coming to Europe. There are people working hard on this in China, because China is number one in terms of Asians travelling to Europe. Norway is a small country in the global context and as we don’t have massive budgets to spend on advertising, our strategy is to partner with the hotels and travel agencies that Asian travellers prefer, to have them act as ambassadors on behalf of Global Blue in issuing Global Blue SHOP TAX FREE cards or tokens.
According to Global Blue’s 2016 Global Shopper Report: China Edition, which combined data from over 27 million tax free shopping transactions and the opinions of 5,000 regular Chinese travellers about their travel and spending plans, revealed that Chinese tax free shipping spend dropped into negative growth, falling -24% year-on-year. This decline was attributable to a number of factors, including the difficulties in obtaining a Schengen biometric visa, the increase in terrorist attacks in Europe, and the Chinese New Year holiday falling later in 2016 than the year before.
The report also states, “despite recent negative growth, Chinese shoppers remain the largest tax free shopping market, accounting for a third of global sales. Shopping remains a hugely important part of the holiday experience for regular Chinese travellers, as 81% of those planning international travel in 2016 will shop during their trip, with an average budget of EUR 3,544 per trip to Europe and EUR 2,517 per trip to Asia.”
The respondents also revealed the top five services that should be offered by retailers looking to attract Chinese shoppers: 1. tax free shopping ( 65%) 2. ability to pay with China Union Pay (55%) 3. ability to pay in my home currency (46%) 4. staff who speak my language (39%) 5. Wi-Fi in-store (26%).
To further cater to the tech savvy Chinese tourists, in 2014, Global Blue entered into a partnership with Alipay, Chinese ecommerce giant Alibaba’s digital payment systems provider. This collaboration was designed to enable Chinese tourists to be reimbursed the VAT paid on goods and services purchased from Global Blue’s retail partners in Europe, directly into their Alipay accounts.
“Alipay is thrilled to work with Global Blue in this milestone collaboration to make it easier for merchants to better meet the growing spending needs of Chinese consumers,” said Sabrina Peng, president of Alipay International, on the launch of the cooperation. “We are confident that this cooperation will create a more enjoyable and convenient overseas shopping experience for Alipay customers.”
In January of 2017, this became reality as the partners successfully launched real-time VAT refunds for Alipay customers, providing direct refunds to their Alipay accounts as soon as they received approval at Global Blue refund offices in the airports.
So far, the technology has been successfully implemented in Milan, Munich and Helsinki, with a European rollout expected by this summer.
“In order to provide an even better service to Chinese travellers, the refund to an Alipay account is integrated with our Global Blue SHOP TAX FREE card, which, as I mentioned earlier eliminates the need to fill out the tax free form by hand, and offers a lot of merchant promotions and discounts. For all our global travellers in mind, we aim to eliminate paper forms entirely, offering a fully digital token once we have approval from the tax authorities,” says Mr Svendsen.