With the increase in globalization, international trade companies have found it easier to expand into new markets. Innovations in communication and transportation have paved the way for globalisation, yet many companies struggle with a fundamental aspect of business: the exchange of money for goods and services. Below are six issues we commonly see importers and exporters face when dealing with international payments:
- Hidden Fees Trade companies are paying far more than they should to receive their own payments. Businesses can incur flat fees on incoming wire transfers, which can be a $20–50 fee assessed on receiving the wire. Moreover, intermediary banks are sometimes in the middle of a transaction and charge their own additional wiring fee.
- Exchange Rates Exchange rates affect both the importer trying to pay for goods, and the exporter trying to collect on the goods. Banks charge a premium on foreign exchange, which is often a large margin above the mid-market exchange rate.
- Payment Tracking International payments unfortunately don’t have the tracking abilities of carrier services. Importers have no insight into if or when their payments have been delivered into the exporter’s bank account, and the exporter has no view into the status of the payments.
- Payment Identification Exporters’ Accounts Receivable departments spend time and resources identifying and reconciling wire transfers, as it is often difficult to identify any payer information on a deposit.
- Importers Can’t Easily Pay Importers are often constrained to making payments via wire transfer, and are unable to utilize more modern payment methods, such as credit/debit card, or e-wallet methods.
- Fraud The more a business expands internationally, the more compliance and anti-money-laundering considerations there are that need to be addressed.
International payment processors provide solutions to these issues by streamlining the process. They bring transparency and speed to transactions between importers and exporters, thus solving important cash flow issues. Payment processors also take away all the headaches that come with region-specific challenges in markets where businesses don’t have banking relationships or infrastructure.