Tackling Cross-Border Payment Challenges with International Sales
by Richard Gilbert, on March 7, 2017
Selling globally is often great for your business, but it can lead to some serious currency exchange fees. In this guest post, Richard Gilbert of Payoneer shares tips for managing these and other payment challenges.
With the emergence of global internet connectivity, smart phones and mobile data networks, a new world has materialized. Merchants from around the world can now reach customers anywhere, as if they were running a brick-and-mortar shop in their very neighborhood. The obstacles to cross-border shopping are diminishing; shipping systems are getting better and faster, and 24/7 multi-language customer support is the new standard for marketplaces. However, there is still a significant obstacle that sellers face in the global eCommerce era, and that is getting paid from marketplaces for stock sold.
Whether you’re in the U.S. selling to China and Europe or vice versa, you’ve likely encountered issues such as high currency exchange rates, slow bank transfers, and a plethora of fees on all funds received.
How can you maintain a healthy global business while dealing with international payments?
1. Master Currency Exchange Rates
This might be the biggest challenge for sellers. When a buyer’s currency is different from your own, you’re going to have to deal with the ever-changing international exchange rates. These rates shift daily (and even hourly) depending on multiple factors: global events, natural disasters, the strength or weakness of the economies involved, interest rates, etc. The final sum received on your end can be completely different from one day to the next for the same item sold. What’s more – depending on the service you’re using – you may incur high currency exchange fees, as well.
While you can’t control the global economy, you can control your payment provider. Seek out a payment solution with competitive conversion rate fees, and compare a few for reference. In the short and long run, this can save you a pretty penny.
2. Minimize Cross-Border Transfer Fees
Have you ever been paid via international wire transfer? If you have, you know how slow and expensive it can be. MyBankTracker recently conducted a comparison of the incoming international wire transfer fees at 10 of America’s biggest banks, and found the average fee to be $18 per transfer (and in some cases, up to $30). Financial Web reports that wire transfers can take up to 15 business days in some cases, depending on the currencies and countries involved. This method is slow and expensive, and can leave a long trail of paperwork to follow if any issues should occur. Maintaining a steady cash flow is paramount to the health of any business, and if you’re sitting around waiting for money to arrive – only to be paying high fees once it does – this can seriously hinder the operation of your business. To reduce your costs, consider an international payments solution other than banks for receiving and sending funds abroad.
3. Choose a Solution That is Safe and Compliant
Moving money around online can seem scary, but it doesn’t need to be. Any self-respecting financial institution that offers online money transfer services has serious security measures in place to ensure that your money and personal information are secure. Regardless, we recommend reading up on any payment solution you might choose, especially if it is one you haven’t heard of before. While it may be new to you, it might not be new on the market. Review the company’s security measures, as well as reviews from users on their experiences using the services.
When transferring funds across nations and currencies, it is crucial to choose a provider that is compliant with international laws and anti-money laundering regulations. Payment solutions that are compliant will mention this on their website in a clear, easy-to-find location.
4. It's Not All About Receiving Funds (But Sending Them, Too)
The international payments aspect of selling online is not just about receiving funds. You're likely working with professionals locally and abroad, including suppliers, storage/shipping companies, and maybe even the odd freelancer to help maintain your website or brand. If you're working with professionals located abroad, you're going to incur many of the same issues as you do on the receiving side, namely high fees for cross-border money transfers (yes, there are fees involved with sending funds, as well).
Find a solution that reduces these fees to nil, with minimal wait-time for money to be received on the other end. Your service providers will thank you. For example, our Payoneer platform enables its users to pay one another for free. No hefty bank fees, no 15-day wait-time.
Navigating the waters of international payments doesn’t have to be complicated or expensive. Payoneer offers a multi-faceted solution for sellers, allowing them to get paid by the Amazon marketplaces and pay others at a very low cost. To learn more or sign up for a Payoneer account (it’s free), click here. You'll receive a $50 bonus with your first $100 load with Payoneer.