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.

Norway-Asia Business Review - - Contents - HENRI VIIRALT

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.

PHOTO: GLOBAL BLUE

PHOTO: GLOBAL BLUE

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