COMMENTARY: Use Smarter Merchant Intelligence for Safer Cross-Border Commerce

Even amid tariffs, geopolitical tensions, and international fraud schemes, cross-border commerce continues to grow. While consumers enjoy unprecedented access to a global marketplace, the payments industry behind that experience must navigate a complex, fragmented, and fast-changing regulatory environment.

Country-specific regulatory differences are especially challenging for high-risk categories such as drugs, nutraceuticals, tobacco, and weapons. The risk becomes clear in practice. Here are just two examples:

•         Knives: Butterfly knives, swords, and push daggers are commonly sold in the United States, but these weapons are restricted or prohibited under UK law. As a result, U.S. sellers who ship these items into the UK risk violating local law;

•         Nutraceuticals: Many nutraceutical ingredients are permitted in the U.S. but highly restricted in other countries. Take DHEA, for example. While allowed in the U.S., it is classified as a controlled substance in several countries, including Brazil, Canada, and the United Kingdom.

For payments providers, these jurisdictional mismatches create heightened risk exposure, particularly when merchants sell globally but compliance controls are applied locally. As a result, payments providers must act as real-time gatekeepers, ensuring aligns with rules and restrictions across all relevant jurisdictions.

Monitoring risk across billions of merchant touchpoints each day is a gargantuan task. Fortunately, a new wave of AI-driven technology is helping shoulder that burden. 

To be sure, human expertise remains essential to managing cross-border risk. But artificial intelligence is bringing new speed and precision to the process. Its impact is especially clear in merchant onboarding, the critical first step through which sellers gain access to payment services and begin accepting credit cards.

But traditional underwriting is ill-suited to today’s global environment. Payments providers need a way to evaluate risk at scale, before merchants enter their portfolios. Doing this effectively requires the ability to:

•         Analyze high volumes of data efficiently;

•         Generate accurate, real-time insights into a merchant’s current business model and historical risk profile;

•         Incorporate a diverse set of trusted data sources;

•         Flag products and services subject to regional restrictions;

•         Detect risk signals and patterns.

Also, merchant onboarding must be rigorous without causing unnecessary friction for compliant sellers. Striking that balance requires an intelligence-driven approach.

Yet, robust onboarding is only the beginning. Continuous monitoring is essential to identify merchants that drift, often unknowingly, into non-compliant cross-border activity. It also allows payments providers to respond quickly to evolving regulatory requirements.

AI handles monitoring at scale by scanning billions of pages of e-commerce content. Human analysts then investigate flagged signals and assess them against regional regulatory risk. Their findings feed back into the models, improving how the system detects prohibited activity over time.

To build an effective, efficient compliance infrastructure, payments providers must focus on four key priorities that reflect the ever-evolving nature of merchant intelligence. These are:

1. Transform data into actionable intelligence for risk-based decisioning

Effective merchant risk-management frameworks must be able to translate large volumes of intelligence into actionable insights. The goal isn’t more data. It’s a clear, global picture of the merchant, so risk doesn’t slip through the cracks.

2. Treat merchant intelligence as a continuous, end-to-end discipline.

One-time checks do not provide adequate protection. Providers must adopt a model where risk insights flow continuously throughout the merchant lifecycle. This reduces blind spots and reveals connections that would otherwise go undetected.

3. Elevate product and content visibility beyond merchant-submitted information.

Payments providers cannot rely solely on declared business activities. They must gain visibility into what merchants sell, how they present online, and the potential for behavior that violates country-specific rules.

4. Strengthen global jurisdictional awareness in real time.

Because laws, enforcement trends, and card network rules change frequently, providers need real-time jurisdictional intelligence to determine what is permitted and what is high-risk in every market where merchants sell or ship.

Even with geopolitical turbulence and evolving regulatory landscapes, the momentum behind cross-border e-commerce remains undeniable. Global sales are projected to surpass $5 trillion this year, and consumers increasingly expect payment experiences that offer broad choice while remaining fast, seamless, and secure.

Payments providers that blend AI’s speed and precision with the nuance and instincts of human judgment will keep the world’s digital storefronts open and thriving. By building merchant intelligence into every stage of the lifecycle, they can anticipate risk instead of just reacting to it, which will result in faster mitigation and more holistic compliance.

In this way, effective cross-border compliance becomes a business advantage. Providers that treat compliance as a core capability, rather than as a constraint, reinforce the stability of the cross-border ecosystem and create the conditions for long-term growth.

—Niamh Lewis is vice president of compliance operations at G2 Risk Solutions.